-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BSakIJKwLnB/lbxSPTKTf1g6ekDkzgrd/jrXUxf+SphB0D55pfmETdpEj0ZMmfnq TrOFEMuTUK3Wqmu2ke6COw== 0001041994-03-000004.txt : 20030806 0001041994-03-000004.hdr.sgml : 20030806 20030805175811 ACCESSION NUMBER: 0001041994-03-000004 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030531 FILED AS OF DATE: 20030806 EFFECTIVENESS DATE: 20030806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW PROVIDENCE INVESTMENT TRUST CENTRAL INDEX KEY: 0001041994 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08295 FILM NUMBER: 03824656 BUSINESS ADDRESS: STREET 1: 116 SOUTH FRANKLIN STREET STREET 2: PO BOX 69 CITY: ROCKYMOUNT STATE: NC ZIP: 27802-0069 BUSINESS PHONE: 2529729922 MAIL ADDRESS: STREET 1: 116 SOUTH FRANKLIN STREET STREET 2: PO BOX 69 CITY: ROCKY MOUNT STATE: NC ZIP: 27802-0069 N-CSR 1 ncsr0503.txt NEW PROVIDENCE INVESTMENT TRUST 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, P.O. Box 69, Rocky Mount, North Carolina 27802 --------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) C. Frank Watson III 116 South Franklin Street, P.O. 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, 2003 ------------ Date of reporting period: May 31, 2003 ------------ ITEM 1. Reports to Stockholders. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust INSTITUTIONAL CLASS SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2003 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. For more information about the Fund, including charges and expenses, call the Fund's distributor for a free prospectus. You should read the prospectus carefully before you invest or send money. Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC 27803, Phone 1-800-773-3863 WISDOM FUND Annual Report to Shareholders July 23, 2003 To Our Fellow Shareholders: What a difference a quarter makes. Investors should never underestimate the ability of the stock market to surprise and humble investors over the short term. That is why we rely on valuation analysis, which we believe, is a primary driver of investment returns over several years and longer. Several risks impacted returns over the last year: o Structural risks including high debt levels and the sizable U.S. dependence on foreign capital, o Deflation, which could be a by-product of high debt levels, o Inflation, which could eventually be ignited by attempts to fight deflation, and o Geopolitical risks including terrorism. We believe that current asset prices suggest returns of 6-9% for equity-type assets on average, over the next five years. The reality is that returns could be significantly different if growth rates are abnormally high or low or if assets become overvalued or undervalued. So, even though we believe the most likely range of returns is 6-9%, it's not hard to imagine returns being two percentage points higher or lower and, along the way, individual returns could be significantly higher or lower. The sad reality is that returns were so high in the 1990s that they effectively borrowed from the future. The bear market brought things back to reality and beyond and now we've had a bounce back to fair value. How can we do better? We believe that Atlanta Investment Counsel's added value is the function of the quality of the research and our discipline. At times of extreme greed and fear this is particularly difficult because emotion can cloud judgment. We view one of the most important parts of our job as helping to avoid the emotional ties that can lead to buying and selling at the wrong time. As of May 31, 2003, the fund had about a 37% allocation to the financial services and the multiline and property and casualty insurance areas. We like these areas because we believe: (1) valuations tend to be low relative to earnings, (2) great management can make a big difference and add value, (3) most competitors are generally mediocre and above-average managers are rare, (4) growth opportunities are open-ended because market shares tend to be low, markets are large and they are businesses that don't become obsolete, and (5) reported earnings are generally cash earnings. We remain both pleased and proud that the long-term track record of the fund remains positive and solidly ahead of the passive investment alternative of the S&P 500. Our efforts have met our goals and exceeded our own expectations during the fund's operation in the tumultuous time frame of 2000-2002. We advise shareholders to maintain modest positive return expectations and also to sustain their confidence. We have selected portfolio companies that, in our opinion, retain the ability to perform well in their respective industries in an improved economic climate. We find ourselves in an environment that is quite different from what most investors have grown used to over the past two decades. We have gone through the worst bear market in a generation, but have seen investors come back to the market again. We believe that we are well positioned for the environment we are faced with and remain confident we can continue to add substantial value. C. Douglas Davenport, J.D. Portfolio Manager-Wisdom Fund ________________________________________________________________________________ Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the fund and of the market in general and statements of the fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. ________________________________________________________________________________ WISDOM FUND INSTITUTIONAL CLASS SHARES Performance Update - $25,000 Investment For the period from February 16, 1999 (Commencement of Operations) to May 31, 2003 - -------------------------------------------------------------------------------- Wisdom Fund S&P 500 Total Institutional Class Shares Return Index - -------------------------------------------------------------------------------- 02/16/99 $25,000 $25,000 05/31/99 24,889 26,307 08/31/99 24,437 26,767 11/30/99 25,340 28,243 02/29/00 22,113 27,867 05/31/00 25,295 29,063 8/31/2000 26,599 31,135 11/30/2000 28,898 27,052 2/28/2001 28,128 25,582 5/31/2001 28,001 25,996 8/31/2001 27,379 23,542 11/30/2001 27,690 23,745 2/28/2002 28,821 23,158 5/31/2002 30,181 22,396 8/31/2002 27,801 19,305 11/30/2002 27,827 19,824 2/28/2003 25,944 17,898 5/31/2003 29,082 20,591 This graph depicts the performance of the Wisdom Fund - Institutional Class Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns ----------------------- ------------------------ Since 2/16/99 One Year (Commencement of Operations) ----------------------- ------------------------ (3.64)% 3.59 % ----------------------- ------------------------ >> The graph assumes an initial $25,000 investment at February 16, 1999 (commencement of operations). All dividends and distributions are reinvested. >> At May 31, 2003, the value of the Fund's Institutional Class Shares would have grown to $29,082 - a cumulative total investment return of 16.33% since February 16, 1999. >> At May 31, 2003, the value of a similar investment in the S&P 500 Total Return Index would have decreased to $20,591 - a cumulative total investment return of (17.64)% since February 16, 1999. >> Past performance is not a guarantee of future results. A mutual fund's share price and investment return will vary with market conditions, and the principal value of shares, when redeemed, may be worth more or less than the original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 69.00% Apparel Manufacturing - 0.43% (a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902 ------------ Beverages - 7.10% The Coca-Cola Company ................................................. 56,830 2,589,743 ------------ Building Materials - 0.45% Lowe's Companies, Inc. ................................................ 3,230 136,500 (a)USG Corporation ....................................................... 2,400 27,936 ------------ 164,436 ------------ Chemicals - 0.20% Great Lakes Chemical Corporation ...................................... 3,220 74,157 ------------ Commercial Services - 2.09% First American Corporation ............................................ 7,770 210,412 H&R Block, Inc. ....................................................... 3,320 135,921 Moody's Corporation ................................................... 8,005 417,460 ------------ 763,793 ------------ Computer Software & Services - 0.45% First Data Corporation ................................................ 3,970 164,437 ------------ Cosmetics & Personal Care - 2.89% The Gillette Company .................................................. 31,380 1,054,682 ------------ Financial - Banks, Money Center - 2.40% Wells Fargo Company ................................................... 18,122 875,293 ------------ Financial Services - 7.58% American Express Company .............................................. 37,050 1,543,503 M&T Bank Corp. ........................................................ 2,030 180,771 MBIA, Inc. ............................................................ 19,500 975,975 SunTrust Banks, Inc. .................................................. 1,100 65,230 ------------ 2,765,479 ------------ Food - Wholesale - 1.02% Sysco Corporation ..................................................... 12,000 371,280 ------------ Furniture & Home Appliances - 0.43% Ethan Allen Interiors, Inc. ........................................... 4,430 157,841 ------------ Health Care Services - 0.28% (a)Iron Mountain, Inc. ................................................... 2,600 102,700 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Industrial Materials - Specialty - 0.10% Dover Corporation ..................................................... 1,200 $ 36,372 ------------ Insurance - Life & Health - 1.71% AFLAC, INCORPORATED ................................................... 11,060 363,985 Brown & Brown, Inc. ................................................... 7,330 259,848 ------------ 623,833 ------------ Insurance - Multiline - 14.47% Ambac Financial Group, Inc. ........................................... 6,580 438,952 American International Group, Inc. .................................... 23,150 1,339,922 American National Insurance Company ................................... 1,300 111,332 Arthur J. Gallagher & Co. ............................................. 13,100 356,975 Cincinnati Financial Corp. ............................................ 11,400 423,168 Odyssey Re Holdings Corp. ............................................. 14,100 290,883 PartnerRe Ltd. ........................................................ 11,005 584,585 RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867 The Chubb Corporation ................................................. 7,400 473,822 Willis Group Holdings Limited ......................................... 3,800 120,156 ------------ 5,278,662 ------------ Insurance - Property & Casualty - 15.37% ACE Limited ........................................................... 3,847 140,800 Everest Re Group, Ltd. ................................................ 11,215 818,695 Fidelity National Financial, Inc. ..................................... 20,421 634,488 Leucadia National Corporation ......................................... 7,000 266,980 (a)Markel Corporation .................................................... 4,600 1,160,350 The Progressive Corporation ........................................... 21,460 1,545,120 Wesco Financial Corporation ........................................... 386 116,958 White Mountains Insurance Group Ltd. .................................. 900 369,900 XL Capital Ltd. ....................................................... 6,375 554,944 ------------ 5,608,235 ------------ Manufacturing - 0.30% (a)American Standard Company, Inc. ....................................... 1,500 110,985 ------------ Metal Fabrication & Hardware - 0.06% (a)Mueller Industries, Inc. .............................................. 850 22,261 ------------ Oil & Gas - International - 0.21% PetroChina Co., Ltd. .................................................. 3,000 75,960 ------------ Packaging & Containers - 0.10% (a)Sealed Air Corporation ................................................ 852 37,394 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Publishing - Newspapers - 1.37% Gannett Co., Inc. ..................................................... 623 $ 49,217 The Washington Post Company ........................................... 620 449,190 ------------ 498,407 ------------ Real Estate Investment Trusts - 0.45% HRPT Properties Trust ................................................. 575 5,457 Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340 The Town & Country Trust .............................................. 3,156 72,083 ------------ 165,880 ------------ Restaurants & Food Service - 0.75% Wendy's International Inc. ............................................ 4,300 129,473 (a)Yum! Brands Inc. ...................................................... 5,150 143,994 ------------ 273,467 ------------ Retail - Specialty Line - 1.91% La-Z-Boy, Inc. ........................................................ 3,000 65,730 The Sherwin-Williams Company .......................................... 13,970 382,499 (a)Zale Corporation ...................................................... 6,800 247,180 ------------ 695,409 ------------ Retirement/Aged Care - 0.00% (a)Five Star Quality Care, Inc. .......................................... 4 5 ------------ Shoes - Leather - 0.26% Brown Shoe Co., Inc. .................................................. 3,300 93,555 ------------ Textiles - 3.24% (a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766 ------------ Transportation - Miscellaneous - 0.11% GATX Corporation ...................................................... 2,342 39,791 ------------ Utilities - Energy - 3.27% Entergy Corporation ................................................... 4,050 209,344 FPL Group, Inc. ....................................................... 5,865 389,847 Kinder Morgan, Inc. ................................................... 8,700 444,135 Progress Energy, Inc. ................................................. 3,150 148,207 ------------ 1,191,533 ------------ Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 8.46% Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554 PIMCO High Yield Fund .......................................................... 188,453 1,756,383 ------------ Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937 ------------ Principal --------- U.S. GOVERNMENT OBLIGATIONS - 21.93% United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779 (Cost $8,000,884) ---------- ------------ Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974 Other Assets Less Liabilities ................................................... 0.61 % 222,081 ---------- ------------ Net Assets ................................................................ 100.00 % $ 36,484,055 ========== ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments for financial reporting and federal income tax purposes is as follows: Unrealized appreciation ......................................................................... $ 3,015,979 Unrealized depreciation ......................................................................... (573,033) ------------ Net unrealized appreciation ..................................................................... $ 2,442,946 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2003 ASSETS Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974 Income receivable ............................................................................... 30,869 Receivable for fund shares sold ................................................................. 237,728 Other assets .................................................................................... 9,133 ------------ Total assets ............................................................................... 36,539,704 ------------ LIABILITIES Accrued expenses ................................................................................ 52,637 Payable for fund shares redeemed ................................................................ 3,012 ------------ Total liabilities .......................................................................... 55,649 ------------ NET ASSETS ............................................................................................ $ 36,484,055 ============ NET ASSETS CONSIST OF Paid-in capital ................................................................................. $ 34,464,630 Accumulated net realized loss on investments .................................................... (413,124) Net unrealized appreciation on investments ...................................................... 2,432,549 ------------ $ 36,484,055 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,228,602/380,431 shares) ................................................................ $ 11.12 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($13,824,651/1,245,792 shares) ............................................................. $ 11.10 ============ Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($12,795,975/1,166,958 shares) ............................................................. $ 10.97 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($5,634,827/511,666 shares) ................................................................ $ 11.01 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2003 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 72,117 Dividends ..................................................................................... 266,529 ------------ Total income .............................................................................. 338,646 ------------ Expenses Investment advisory fees (note 2) ............................................................. 125,108 Fund administration fees (note 2) ............................................................. 31,277 Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154 Distribution and service fees - Class B Shares (note 3) ....................................... 87,376 Distribution and service fees - Class C Shares (note 3) ....................................... 35,604 Custody fees .................................................................................. 9,275 Registration and filing administration fees (note 2) .......................................... 23,931 Fund accounting fees (note 2) ................................................................. 56,502 Audit fees .................................................................................... 16,475 Legal fees .................................................................................... 21,458 Securities pricing fees ....................................................................... 4,866 Shareholder recordkeeping fees ................................................................ 38,859 Other accounting fees (note 2) ................................................................ 1,052 Shareholder servicing expenses ................................................................ 10,018 Registration and filing expenses .............................................................. 50,159 Printing expenses ............................................................................. 13,335 Trustee fees and meeting expenses ............................................................. 3,890 Other operating expenses ...................................................................... 10,249 ------------ Total expenses ............................................................................ 561,588 ------------ Less: Expense reimbursements (note 2) ...................................................... (624) Investment advisory fees waived (note 2) ............................................. (9,452) ------------ Net expenses .............................................................................. 551,512 ------------ Net investment loss .................................................................. (212,866) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized loss from investment transactions ..................................................... (179,255) Increase in unrealized appreciation on investments ................................................. 1,023,603 ------------ Net realized and unrealized gain on investments ............................................... 844,348 ------------ Net increase in net assets resulting from operations ...................................... $ 631,482 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ INCREASE IN NET ASSETS Operations Net investment loss ....................................................... $ (212,866) $ (55,987) Net realized loss from investment transactions ............................ (179,255) (233,249) Increase in unrealized appreciation on investments ........................ 1,023,603 972,562 ------------ ------------ Net increase in net assets resulting from operations ................. 631,482 683,326 ------------ ------------ Distributions to shareholders from Net realized gain from investment transactions - Institutional Class Shares 0 (30,682) Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741) Net realized gain from investment transactions - Class B Shares ........... 0 (15,865) Net realized gain from investment transactions - Class C Shares ........... 0 (10,533) ------------ ------------ Decrease in net assets resulting from distributions .................. 0 (72,821) ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991 ------------ ------------ Total increase in net assets .................................. 23,704,593 5,577,496 NET ASSETS Beginning of year ............................................................. 12,779,462 7,201,966 ------------ ------------ End of year ................................................................... $ 36,484,055 $ 12,779,462 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------------------------- 2003 2002 Shares Value Shares Value - --------------------------------------------------- ------------------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606 Shares issued for reinvestment of distributions .. 0 0 2,873 30,682 Shares redeemed .................................. (19,266) (200,123) (10) (106) ------------ ------------ ------------ ------------ Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182 ============ ============ ============ ============ - --------------------------------------------------- INVESTOR CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701 Shares issued for reinvestment of distributions .. 0 0 1,412 15,119 Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651) ------------ ------------ ------------ ------------ Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169 ============ ============ ============ ============ - --------------------------------------------------- CLASS B SHARES - --------------------------------------------------- Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636 Shares issued for reinvestment of distributions .. 0 0 984 10,520 Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873) ------------ ------------ ------------ ------------ Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283 ============ ============ ============ ============ - --------------------------------------------------- CLASS C SHARES - --------------------------------------------------- Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685 Shares issued for reinvestment of distributions .. 0 0 971 10,423 Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751) ------------ ------------ ------------ ------------ Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357 ============ ============ ============ ============ - --------------------------------------------------- FUND SUMMARY - --------------------------------------------------- Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628 Shares issued for reinvestment of distributions .. 0 0 6,240 66,744 Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381) ------------ ------------ ------------ ------------ Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INSTITUTIONAL CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00 (Loss) income from investment operations Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04 Net realized and unrealized (loss) gain on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09) ----------- ----------- ----------- ----------- ----------- Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 =========== =========== =========== =========== =========== Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b) After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b) After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INVESTOR CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00 (Loss) income from investment operations Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02 Net realized and unrealized (loss) gain on investments ......................... (0.42) 0.85 0.91 0.01 (0.08) ----------- ----------- ----------- ----------- ----------- Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 =========== =========== =========== =========== =========== Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b) After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b) After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04 Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03 Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B shares and Class C shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $212,866 has been made on the statement of assets and liabilities to decrease accumulated net investment loss, bringing it to zero, and decreasing paid-in capital. The Fund has capital loss carryforwards for federal income tax purposes of $339,603, of which $174,661 expires in the year 2010 and $164,942 expires in the year 2011. It is the intention of the Trustees not to distribute any realized gains until the carryforwards have been offset or expire. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, a maximum of 2.00% of the average daily net assets of the Fund's Investor Class Shares, and a maximum of 2.75% of the average daily net assets of the Fund's Class B Shares and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Advisor has voluntarily waived a portion of its fee amounting to $9,452 and reimbursed $624 of the operating expenses incurred by the Fund for the year ended May 31, 2003. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2003, the Distributor retained sales charges in the amount of $24,085. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2003. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other than short-term investments, aggregated $19,893,795 and $1,999,410, respectively, for the year ended May 31, 2003. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2003 (Unaudited) INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED) The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27802. The Trustee received aggregate compensation of $3,000 during the fiscal year ended May 31, 2003 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Number of Portfolios in Fund Position(s) Length Complex Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Independent Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) President of Brinson and three series of that trust; Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust II for the eight series of that trust; Hillman Capital Management Investment Trust for two series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Officers - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of LLC Principal the Fund); previously, stockbroker 3717 Haddon Hall Road, NW Executive at Lehman Brothers Suite 200 Officer, Atlanta, GA 30327 and Principal Financial Officer - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (Administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company; previously, Assistant Fund Accountant at The Nottingham Secretary Company - ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com Deloitte & Touche INDEPENDENT AUDITORS' REPORT To the Board of Trustees of New Providence Investment Trust and Shareholders of Wisdom Fund: We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the portfolio of investments, as of May 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2003, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP June 27, 2003 ___________ Deloitte Touche Tohmatsu ___________ (This page was intentionally left blank) (This page was intentionally left blank) ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust INVESTOR CLASS SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2003 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. For more information about the Fund, including charges and expenses, call the Fund's distributor for a free prospectus. You should read the prospectus carefully before you invest or send money. Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC 27803, Phone 1-800-773-3863 WISDOM FUND Annual Report to Shareholders July 23, 2003 To Our Fellow Shareholders: What a difference a quarter makes. Investors should never underestimate the ability of the stock market to surprise and humble investors over the short term. That is why we rely on valuation analysis, which we believe, is a primary driver of investment returns over several years and longer. Several risks impacted returns over the last year: o Structural risks including high debt levels and the sizable U.S. dependence on foreign capital, o Deflation, which could be a by-product of high debt levels, o Inflation, which could eventually be ignited by attempts to fight deflation, and o Geopolitical risks including terrorism. We believe that current asset prices suggest returns of 6-9% for equity-type assets on average, over the next five years. The reality is that returns could be significantly different if growth rates are abnormally high or low or if assets become overvalued or undervalued. So, even though we believe the most likely range of returns is 6-9%, it's not hard to imagine returns being two percentage points higher or lower and, along the way, individual returns could be significantly higher or lower. The sad reality is that returns were so high in the 1990s that they effectively borrowed from the future. The bear market brought things back to reality and beyond and now we've had a bounce back to fair value. How can we do better? We believe that Atlanta Investment Counsel's added value is the function of the quality of the research and our discipline. At times of extreme greed and fear this is particularly difficult because emotion can cloud judgment. We view one of the most important parts of our job as helping to avoid the emotional ties that can lead to buying and selling at the wrong time. As of May 31, 2003, the fund had about a 37% allocation to the financial services and the multiline and property and casualty insurance areas. We like these areas because we believe: (1) valuations tend to be low relative to earnings, (2) great management can make a big difference and add value, (3) most competitors are generally mediocre and above-average managers are rare, (4) growth opportunities are open-ended because market shares tend to be low, markets are large and they are businesses that don't become obsolete, and (5) reported earnings are generally cash earnings. We remain both pleased and proud that the long-term track record of the fund remains positive and solidly ahead of the passive investment alternative of the S&P 500. Our efforts have met our goals and exceeded our own expectations during the fund's operation in the tumultuous time frame of 2000-2002. We advise shareholders to maintain modest positive return expectations and also to sustain their confidence. We have selected portfolio companies that, in our opinion, retain the ability to perform well in their respective industries in an improved economic climate. We find ourselves in an environment that is quite different from what most investors have grown used to over the past two decades. We have gone through the worst bear market in a generation, but have seen investors come back to the market again. We believe that we are well positioned for the environment we are faced with and remain confident we can continue to add substantial value. C. Douglas Davenport, J.D. Portfolio Manager-Wisdom Fund ________________________________________________________________________________ Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the fund and of the market in general and statements of the fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. ________________________________________________________________________________ WISDOM FUND INVESTOR CLASS SHARES Performance Update - $10,000 Investment For the period from February 16, 1999 (Commencement of Operations) to May 31, 2003 - -------------------------------------------------------------------------------- Wisdom Fund S&P 500 Total Investor Class Shares Return Index - -------------------------------------------------------------------------------- 02/16/99 $ 9,425 $10,000 05/31/99 9,370 10,523 08/31/99 9,191 10,707 11/30/99 9,551 11,297 02/29/00 8,311 11,147 05/31/00 9,498 11,625 8/31/2000 9,986 12,454 11/30/2000 10,847 10,821 2/28/2001 10,545 10,233 5/31/2001 10,487 10,399 8/31/2001 10,255 9,417 11/30/2001 10,361 9,498 2/28/2002 10,783 9,259 5/31/2002 11,281 8,959 8/31/2002 10,383 7,722 11/30/2002 10,373 7,930 2/28/2003 9,671 7,159 5/31/2003 10,832 8,236 This graph depicts the performance of the Wisdom Fund - Investor Class Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns ------------------------------ --------------- ------------------ Since 2/16/99 One Year (Commencement Of Operations) ------------------------------ --------------- ------------------ No Sales Load (3.98)% 3.30 % ------------------------------ --------------- ------------------ 5.75% Maximum Sales Load (9.50)% 1.88 % ------------------------------ --------------- ------------------ >> The graph assumes an initial $10,000 investment ($9,425 after maximum sales load of 5.75%) at February 16, 1999 (commencement of operations). All dividends and distributions are reinvested. >> At May 31, 2003, the value of the Fund's Investor Class Shares would have increased to $10,832 - a cumulative total investment return of 8.32% since February 16, 1999. Without the deduction of the 5.75% maximum sales load, the value of the Fund's Investor Class Shares would have grown to $11,493 - a cumulative total investment return of 14.93% since February 16, 1999. The sales load may be reduced or eliminated for larger purchases. >> At May 31, 2003, the value of a similar investment in the S&P 500 Total Return Index would have decreased to $8,236 - a cumulative total investment return of (17.64)% since February 16, 1999. >> Past performance is not a guarantee of future results. A mutual fund's share price and investment return will vary with market conditions, and the principal value of shares, when redeemed, may be worth more or less than the original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 69.00% Apparel Manufacturing - 0.43% (a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902 ------------ Beverages - 7.10% The Coca-Cola Company ................................................. 56,830 2,589,743 ------------ Building Materials - 0.45% Lowe's Companies, Inc. ................................................ 3,230 136,500 (a)USG Corporation ....................................................... 2,400 27,936 ------------ 164,436 ------------ Chemicals - 0.20% Great Lakes Chemical Corporation ...................................... 3,220 74,157 ------------ Commercial Services - 2.09% First American Corporation ............................................ 7,770 210,412 H&R Block, Inc. ....................................................... 3,320 135,921 Moody's Corporation ................................................... 8,005 417,460 ------------ 763,793 ------------ Computer Software & Services - 0.45% First Data Corporation ................................................ 3,970 164,437 ------------ Cosmetics & Personal Care - 2.89% The Gillette Company .................................................. 31,380 1,054,682 ------------ Financial - Banks, Money Center - 2.40% Wells Fargo Company ................................................... 18,122 875,293 ------------ Financial Services - 7.58% American Express Company .............................................. 37,050 1,543,503 M&T Bank Corp. ........................................................ 2,030 180,771 MBIA, Inc. ............................................................ 19,500 975,975 SunTrust Banks, Inc. .................................................. 1,100 65,230 ------------ 2,765,479 ------------ Food - Wholesale - 1.02% Sysco Corporation ..................................................... 12,000 371,280 ------------ Furniture & Home Appliances - 0.43% Ethan Allen Interiors, Inc. ........................................... 4,430 157,841 ------------ Health Care Services - 0.28% (a)Iron Mountain, Inc. ................................................... 2,600 102,700 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Industrial Materials - Specialty - 0.10% Dover Corporation ..................................................... 1,200 $ 36,372 ------------ Insurance - Life & Health - 1.71% AFLAC, INCORPORATED ................................................... 11,060 363,985 Brown & Brown, Inc. ................................................... 7,330 259,848 ------------ 623,833 ------------ Insurance - Multiline - 14.47% Ambac Financial Group, Inc. ........................................... 6,580 438,952 American International Group, Inc. .................................... 23,150 1,339,922 American National Insurance Company ................................... 1,300 111,332 Arthur J. Gallagher & Co. ............................................. 13,100 356,975 Cincinnati Financial Corp. ............................................ 11,400 423,168 Odyssey Re Holdings Corp. ............................................. 14,100 290,883 PartnerRe Ltd. ........................................................ 11,005 584,585 RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867 The Chubb Corporation ................................................. 7,400 473,822 Willis Group Holdings Limited ......................................... 3,800 120,156 ------------ 5,278,662 ------------ Insurance - Property & Casualty - 15.37% ACE Limited ........................................................... 3,847 140,800 Everest Re Group, Ltd. ................................................ 11,215 818,695 Fidelity National Financial, Inc. ..................................... 20,421 634,488 Leucadia National Corporation ......................................... 7,000 266,980 (a)Markel Corporation .................................................... 4,600 1,160,350 The Progressive Corporation ........................................... 21,460 1,545,120 Wesco Financial Corporation ........................................... 386 116,958 White Mountains Insurance Group Ltd. .................................. 900 369,900 XL Capital Ltd. ....................................................... 6,375 554,944 ------------ 5,608,235 ------------ Manufacturing - 0.30% (a)American Standard Company, Inc. ....................................... 1,500 110,985 ------------ Metal Fabrication & Hardware - 0.06% (a)Mueller Industries, Inc. .............................................. 850 22,261 ------------ Oil & Gas - International - 0.21% PetroChina Co., Ltd. .................................................. 3,000 75,960 ------------ Packaging & Containers - 0.10% (a)Sealed Air Corporation ................................................ 852 37,394 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Publishing - Newspapers - 1.37% Gannett Co., Inc. ..................................................... 623 $ 49,217 The Washington Post Company ........................................... 620 449,190 ------------ 498,407 ------------ Real Estate Investment Trusts - 0.45% HRPT Properties Trust ................................................. 575 5,457 Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340 The Town & Country Trust .............................................. 3,156 72,083 ------------ 165,880 ------------ Restaurants & Food Service - 0.75% Wendy's International Inc. ............................................ 4,300 129,473 (a)Yum! Brands Inc. ...................................................... 5,150 143,994 ------------ 273,467 ------------ Retail - Specialty Line - 1.91% La-Z-Boy, Inc. ........................................................ 3,000 65,730 The Sherwin-Williams Company .......................................... 13,970 382,499 (a)Zale Corporation ...................................................... 6,800 247,180 ------------ 695,409 ------------ Retirement/Aged Care - 0.00% (a)Five Star Quality Care, Inc. .......................................... 4 5 ------------ Shoes - Leather - 0.26% Brown Shoe Co., Inc. .................................................. 3,300 93,555 ------------ Textiles - 3.24% (a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766 ------------ Transportation - Miscellaneous - 0.11% GATX Corporation ...................................................... 2,342 39,791 ------------ Utilities - Energy - 3.27% Entergy Corporation ................................................... 4,050 209,344 FPL Group, Inc. ....................................................... 5,865 389,847 Kinder Morgan, Inc. ................................................... 8,700 444,135 Progress Energy, Inc. ................................................. 3,150 148,207 ------------ 1,191,533 ------------ Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 8.46% Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554 PIMCO High Yield Fund .......................................................... 188,453 1,756,383 ------------ Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937 ------------ Principal --------- U.S. GOVERNMENT OBLIGATIONS - 21.93% United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779 (Cost $8,000,884) ---------- ------------ Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974 Other Assets Less Liabilities ................................................... 0.61 % 222,081 ---------- ------------ Net Assets ................................................................ 100.00 % $ 36,484,055 ========== ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments for financial reporting and federal income tax purposes is as follows: Unrealized appreciation ......................................................................... $ 3,015,979 Unrealized depreciation ......................................................................... (573,033) ------------ Net unrealized appreciation ..................................................................... $ 2,442,946 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2003 ASSETS Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974 Income receivable ............................................................................... 30,869 Receivable for fund shares sold ................................................................. 237,728 Other assets .................................................................................... 9,133 ------------ Total assets ............................................................................... 36,539,704 ------------ LIABILITIES Accrued expenses ................................................................................ 52,637 Payable for fund shares redeemed ................................................................ 3,012 ------------ Total liabilities .......................................................................... 55,649 ------------ NET ASSETS ............................................................................................ $ 36,484,055 ============ NET ASSETS CONSIST OF Paid-in capital ................................................................................. $ 34,464,630 Accumulated net realized loss on investments .................................................... (413,124) Net unrealized appreciation on investments ...................................................... 2,432,549 ------------ $ 36,484,055 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,228,602/380,431 shares) ................................................................ $ 11.12 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($13,824,651/1,245,792 shares) ............................................................. $ 11.10 ============ Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($12,795,975/1,166,958 shares) ............................................................. $ 10.97 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($5,634,827/511,666 shares) ................................................................ $ 11.01 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2003 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 72,117 Dividends ..................................................................................... 266,529 ------------ Total income .............................................................................. 338,646 ------------ Expenses Investment advisory fees (note 2) ............................................................. 125,108 Fund administration fees (note 2) ............................................................. 31,277 Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154 Distribution and service fees - Class B Shares (note 3) ....................................... 87,376 Distribution and service fees - Class C Shares (note 3) ....................................... 35,604 Custody fees .................................................................................. 9,275 Registration and filing administration fees (note 2) .......................................... 23,931 Fund accounting fees (note 2) ................................................................. 56,502 Audit fees .................................................................................... 16,475 Legal fees .................................................................................... 21,458 Securities pricing fees ....................................................................... 4,866 Shareholder recordkeeping fees ................................................................ 38,859 Other accounting fees (note 2) ................................................................ 1,052 Shareholder servicing expenses ................................................................ 10,018 Registration and filing expenses .............................................................. 50,159 Printing expenses ............................................................................. 13,335 Trustee fees and meeting expenses ............................................................. 3,890 Other operating expenses ...................................................................... 10,249 ------------ Total expenses ............................................................................ 561,588 ------------ Less: Expense reimbursements (note 2) ...................................................... (624) Investment advisory fees waived (note 2) ............................................. (9,452) ------------ Net expenses .............................................................................. 551,512 ------------ Net investment loss .................................................................. (212,866) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized loss from investment transactions ..................................................... (179,255) Increase in unrealized appreciation on investments ................................................. 1,023,603 ------------ Net realized and unrealized gain on investments ............................................... 844,348 ------------ Net increase in net assets resulting from operations ...................................... $ 631,482 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ INCREASE IN NET ASSETS Operations Net investment loss ....................................................... $ (212,866) $ (55,987) Net realized loss from investment transactions ............................ (179,255) (233,249) Increase in unrealized appreciation on investments ........................ 1,023,603 972,562 ------------ ------------ Net increase in net assets resulting from operations ................. 631,482 683,326 ------------ ------------ Distributions to shareholders from Net realized gain from investment transactions - Institutional Class Shares 0 (30,682) Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741) Net realized gain from investment transactions - Class B Shares ........... 0 (15,865) Net realized gain from investment transactions - Class C Shares ........... 0 (10,533) ------------ ------------ Decrease in net assets resulting from distributions .................. 0 (72,821) ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991 ------------ ------------ Total increase in net assets .................................. 23,704,593 5,577,496 NET ASSETS Beginning of year ............................................................. 12,779,462 7,201,966 ------------ ------------ End of year ................................................................... $ 36,484,055 $ 12,779,462 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------------------------- 2003 2002 Shares Value Shares Value - --------------------------------------------------- ------------------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606 Shares issued for reinvestment of distributions .. 0 0 2,873 30,682 Shares redeemed .................................. (19,266) (200,123) (10) (106) ------------ ------------ ------------ ------------ Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182 ============ ============ ============ ============ - --------------------------------------------------- INVESTOR CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701 Shares issued for reinvestment of distributions .. 0 0 1,412 15,119 Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651) ------------ ------------ ------------ ------------ Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169 ============ ============ ============ ============ - --------------------------------------------------- CLASS B SHARES - --------------------------------------------------- Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636 Shares issued for reinvestment of distributions .. 0 0 984 10,520 Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873) ------------ ------------ ------------ ------------ Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283 ============ ============ ============ ============ - --------------------------------------------------- CLASS C SHARES - --------------------------------------------------- Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685 Shares issued for reinvestment of distributions .. 0 0 971 10,423 Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751) ------------ ------------ ------------ ------------ Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357 ============ ============ ============ ============ - --------------------------------------------------- FUND SUMMARY - --------------------------------------------------- Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628 Shares issued for reinvestment of distributions .. 0 0 6,240 66,744 Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381) ------------ ------------ ------------ ------------ Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INSTITUTIONAL CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00 (Loss) income from investment operations Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04 Net realized and unrealized (loss) gain on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09) ----------- ----------- ----------- ----------- ----------- Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 =========== =========== =========== =========== =========== Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b) After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b) After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INVESTOR CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00 (Loss) income from investment operations Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02 Net realized and unrealized (loss) gain on investments ......................... (0.42) 0.85 0.91 0.01 (0.08) ----------- ----------- ----------- ----------- ----------- Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 =========== =========== =========== =========== =========== Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b) After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b) After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04 Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03 Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B shares and Class C shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $212,866 has been made on the statement of assets and liabilities to decrease accumulated net investment loss, bringing it to zero, and decreasing paid-in capital. The Fund has capital loss carryforwards for federal income tax purposes of $339,603, of which $174,661 expires in the year 2010 and $164,942 expires in the year 2011. It is the intention of the Trustees not to distribute any realized gains until the carryforwards have been offset or expire. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, a maximum of 2.00% of the average daily net assets of the Fund's Investor Class Shares, and a maximum of 2.75% of the average daily net assets of the Fund's Class B Shares and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Advisor has voluntarily waived a portion of its fee amounting to $9,452 and reimbursed $624 of the operating expenses incurred by the Fund for the year ended May 31, 2003. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2003, the Distributor retained sales charges in the amount of $24,085. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2003. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other than short-term investments, aggregated $19,893,795 and $1,999,410, respectively, for the year ended May 31, 2003. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2003 (Unaudited) INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED) The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27802. The Trustee received aggregate compensation of $3,000 during the fiscal year ended May 31, 2003 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Number of Portfolios in Fund Position(s) Length Complex Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Independent Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) President of Brinson and three series of that trust; Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust II for the eight series of that trust; Hillman Capital Management Investment Trust for two series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Officers - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of LLC Principal the Fund); previously, stockbroker 3717 Haddon Hall Road, NW Executive at Lehman Brothers Suite 200 Officer, Atlanta, GA 30327 and Principal Financial Officer - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (Administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company; previously, Assistant Fund Accountant at The Nottingham Secretary Company - ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com Deloitte & Touche INDEPENDENT AUDITORS' REPORT To the Board of Trustees of New Providence Investment Trust and Shareholders of Wisdom Fund: We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the portfolio of investments, as of May 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2003, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP June 27, 2003 ___________ Deloitte Touche Tohmatsu ___________ (This page was intentionally left blank) (This page was intentionally left blank) ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust CLASS B SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2003 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. For more information about the Fund, including charges and expenses, call the Fund's distributor for a free prospectus. You should read the prospectus carefully before you invest or send money. Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC 27803, Phone 1-800-773-3863 WISDOM FUND Annual Report to Shareholders July 23, 2003 To Our Fellow Shareholders: What a difference a quarter makes. Investors should never underestimate the ability of the stock market to surprise and humble investors over the short term. That is why we rely on valuation analysis, which we believe, is a primary driver of investment returns over several years and longer. Several risks impacted returns over the last year: o Structural risks including high debt levels and the sizable U.S. dependence on foreign capital, o Deflation, which could be a by-product of high debt levels, o Inflation, which could eventually be ignited by attempts to fight deflation, and o Geopolitical risks including terrorism. We believe that current asset prices suggest returns of 6-9% for equity-type assets on average, over the next five years. The reality is that returns could be significantly different if growth rates are abnormally high or low or if assets become overvalued or undervalued. So, even though we believe the most likely range of returns is 6-9%, it's not hard to imagine returns being two percentage points higher or lower and, along the way, individual returns could be significantly higher or lower. The sad reality is that returns were so high in the 1990s that they effectively borrowed from the future. The bear market brought things back to reality and beyond and now we've had a bounce back to fair value. How can we do better? We believe that Atlanta Investment Counsel's added value is the function of the quality of the research and our discipline. At times of extreme greed and fear this is particularly difficult because emotion can cloud judgment. We view one of the most important parts of our job as helping to avoid the emotional ties that can lead to buying and selling at the wrong time. As of May 31, 2003, the fund had about a 37% allocation to the financial services and the multiline and property and casualty insurance areas. We like these areas because we believe: (1) valuations tend to be low relative to earnings, (2) great management can make a big difference and add value, (3) most competitors are generally mediocre and above-average managers are rare, (4) growth opportunities are open-ended because market shares tend to be low, markets are large and they are businesses that don't become obsolete, and (5) reported earnings are generally cash earnings. We remain both pleased and proud that the long-term track record of the fund remains positive and solidly ahead of the passive investment alternative of the S&P 500. Our efforts have met our goals and exceeded our own expectations during the fund's operation in the tumultuous time frame of 2000-2002. We advise shareholders to maintain modest positive return expectations and also to sustain their confidence. We have selected portfolio companies that, in our opinion, retain the ability to perform well in their respective industries in an improved economic climate. We find ourselves in an environment that is quite different from what most investors have grown used to over the past two decades. We have gone through the worst bear market in a generation, but have seen investors come back to the market again. We believe that we are well positioned for the environment we are faced with and remain confident we can continue to add substantial value. C. Douglas Davenport, J.D. Portfolio Manager-Wisdom Fund ________________________________________________________________________________ Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the fund and of the market in general and statements of the fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. ________________________________________________________________________________ WISDOM FUND CLASS B SHARES Performance Update - $10,000 Investment For the period from November 16, 1999 (Commencement of Operations) to May 31, 2003 - -------------------------------------------------------------------------------- Wisdom Fund S&P 500 Total Class B Shares Return Index - -------------------------------------------------------------------------------- 11/16/99 $10,000 $10,000 02/29/00 8,613 9,655 05/31/00 9,815 10,070 08/31/00 10,307 10,787 11/30/00 11,164 9,373 02/28/01 10,841 8,863 05/31/01 10,757 9,007 08/31/01 10,499 8,156 11/30/01 10,588 8,227 02/28/02 11,000 8,020 05/31/02 11,479 7,760 08/31/02 10,551 6,689 11/30/02 10,531 6,868 02/28/03 9,792 6,201 05/31/03 10,650 7,134 This graph depicts the performance of the Wisdom Fund - Class B Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns ------------------------------ -------------- --------------------- Since 11/16/99 One Year (Commencement of Operations) ------------------------------ -------------- --------------------- No Sales Charges (4.61)% 2.60 % ------------------------------ -------------- --------------------- Maximum Sales Charge (8.42)% 1.80 % ------------------------------ -------------- --------------------- >> The graph assumes an initial $10,000 investment at November 16, 1999 (commencement of operations) and reflects the deduction of the applicable maximum contingent deferred sales charge ("CDSC"), taken on the last business day of the most recently completed fiscal year. The table above includes the maximum CDSC corresponding to the length of time that the investment was held as noted. The CDSC for the Class B Shares declines from 4% to 0% over seven years; and the Class B Shares are converted to Investor Class Shares of the Fund after eight years, without the imposition of any sales charges. All dividends and distributions are reinvested. >> At May 31, 2003, the value of the Fund's Class B Shares would have increased to $10,650 - a cumulative total investment return of 6.50% since November 16, 1999. Without the deduction of the 3% maximum CDSC for the length of time the investment was held, the value of the Fund's Class B Shares would have increased to $10,950 - a cumulative total investment return of 9.50% since November 16, 1999. The CDSC may be waived or reduced under certain circumstances. >> At May 31, 2003, a similar investment in the S&P 500 Total Return Index would have decreased to $7,134 - a cumulative total investment return of (28.66)% since November 16, 1999. >> Past performance is not a guarantee of future results. A mutual fund's share price and investment return will vary with market conditions, and the principal value of shares, when redeemed, may be worth more or less than the original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 69.00% Apparel Manufacturing - 0.43% (a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902 ------------ Beverages - 7.10% The Coca-Cola Company ................................................. 56,830 2,589,743 ------------ Building Materials - 0.45% Lowe's Companies, Inc. ................................................ 3,230 136,500 (a)USG Corporation ....................................................... 2,400 27,936 ------------ 164,436 ------------ Chemicals - 0.20% Great Lakes Chemical Corporation ...................................... 3,220 74,157 ------------ Commercial Services - 2.09% First American Corporation ............................................ 7,770 210,412 H&R Block, Inc. ....................................................... 3,320 135,921 Moody's Corporation ................................................... 8,005 417,460 ------------ 763,793 ------------ Computer Software & Services - 0.45% First Data Corporation ................................................ 3,970 164,437 ------------ Cosmetics & Personal Care - 2.89% The Gillette Company .................................................. 31,380 1,054,682 ------------ Financial - Banks, Money Center - 2.40% Wells Fargo Company ................................................... 18,122 875,293 ------------ Financial Services - 7.58% American Express Company .............................................. 37,050 1,543,503 M&T Bank Corp. ........................................................ 2,030 180,771 MBIA, Inc. ............................................................ 19,500 975,975 SunTrust Banks, Inc. .................................................. 1,100 65,230 ------------ 2,765,479 ------------ Food - Wholesale - 1.02% Sysco Corporation ..................................................... 12,000 371,280 ------------ Furniture & Home Appliances - 0.43% Ethan Allen Interiors, Inc. ........................................... 4,430 157,841 ------------ Health Care Services - 0.28% (a)Iron Mountain, Inc. ................................................... 2,600 102,700 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Industrial Materials - Specialty - 0.10% Dover Corporation ..................................................... 1,200 $ 36,372 ------------ Insurance - Life & Health - 1.71% AFLAC, INCORPORATED ................................................... 11,060 363,985 Brown & Brown, Inc. ................................................... 7,330 259,848 ------------ 623,833 ------------ Insurance - Multiline - 14.47% Ambac Financial Group, Inc. ........................................... 6,580 438,952 American International Group, Inc. .................................... 23,150 1,339,922 American National Insurance Company ................................... 1,300 111,332 Arthur J. Gallagher & Co. ............................................. 13,100 356,975 Cincinnati Financial Corp. ............................................ 11,400 423,168 Odyssey Re Holdings Corp. ............................................. 14,100 290,883 PartnerRe Ltd. ........................................................ 11,005 584,585 RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867 The Chubb Corporation ................................................. 7,400 473,822 Willis Group Holdings Limited ......................................... 3,800 120,156 ------------ 5,278,662 ------------ Insurance - Property & Casualty - 15.37% ACE Limited ........................................................... 3,847 140,800 Everest Re Group, Ltd. ................................................ 11,215 818,695 Fidelity National Financial, Inc. ..................................... 20,421 634,488 Leucadia National Corporation ......................................... 7,000 266,980 (a)Markel Corporation .................................................... 4,600 1,160,350 The Progressive Corporation ........................................... 21,460 1,545,120 Wesco Financial Corporation ........................................... 386 116,958 White Mountains Insurance Group Ltd. .................................. 900 369,900 XL Capital Ltd. ....................................................... 6,375 554,944 ------------ 5,608,235 ------------ Manufacturing - 0.30% (a)American Standard Company, Inc. ....................................... 1,500 110,985 ------------ Metal Fabrication & Hardware - 0.06% (a)Mueller Industries, Inc. .............................................. 850 22,261 ------------ Oil & Gas - International - 0.21% PetroChina Co., Ltd. .................................................. 3,000 75,960 ------------ Packaging & Containers - 0.10% (a)Sealed Air Corporation ................................................ 852 37,394 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Publishing - Newspapers - 1.37% Gannett Co., Inc. ..................................................... 623 $ 49,217 The Washington Post Company ........................................... 620 449,190 ------------ 498,407 ------------ Real Estate Investment Trusts - 0.45% HRPT Properties Trust ................................................. 575 5,457 Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340 The Town & Country Trust .............................................. 3,156 72,083 ------------ 165,880 ------------ Restaurants & Food Service - 0.75% Wendy's International Inc. ............................................ 4,300 129,473 (a)Yum! Brands Inc. ...................................................... 5,150 143,994 ------------ 273,467 ------------ Retail - Specialty Line - 1.91% La-Z-Boy, Inc. ........................................................ 3,000 65,730 The Sherwin-Williams Company .......................................... 13,970 382,499 (a)Zale Corporation ...................................................... 6,800 247,180 ------------ 695,409 ------------ Retirement/Aged Care - 0.00% (a)Five Star Quality Care, Inc. .......................................... 4 5 ------------ Shoes - Leather - 0.26% Brown Shoe Co., Inc. .................................................. 3,300 93,555 ------------ Textiles - 3.24% (a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766 ------------ Transportation - Miscellaneous - 0.11% GATX Corporation ...................................................... 2,342 39,791 ------------ Utilities - Energy - 3.27% Entergy Corporation ................................................... 4,050 209,344 FPL Group, Inc. ....................................................... 5,865 389,847 Kinder Morgan, Inc. ................................................... 8,700 444,135 Progress Energy, Inc. ................................................. 3,150 148,207 ------------ 1,191,533 ------------ Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 8.46% Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554 PIMCO High Yield Fund .......................................................... 188,453 1,756,383 ------------ Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937 ------------ Principal --------- U.S. GOVERNMENT OBLIGATIONS - 21.93% United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779 (Cost $8,000,884) ---------- ------------ Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974 Other Assets Less Liabilities ................................................... 0.61 % 222,081 ---------- ------------ Net Assets ................................................................ 100.00 % $ 36,484,055 ========== ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments for financial reporting and federal income tax purposes is as follows: Unrealized appreciation ......................................................................... $ 3,015,979 Unrealized depreciation ......................................................................... (573,033) ------------ Net unrealized appreciation ..................................................................... $ 2,442,946 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2003 ASSETS Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974 Income receivable ............................................................................... 30,869 Receivable for fund shares sold ................................................................. 237,728 Other assets .................................................................................... 9,133 ------------ Total assets ............................................................................... 36,539,704 ------------ LIABILITIES Accrued expenses ................................................................................ 52,637 Payable for fund shares redeemed ................................................................ 3,012 ------------ Total liabilities .......................................................................... 55,649 ------------ NET ASSETS ............................................................................................ $ 36,484,055 ============ NET ASSETS CONSIST OF Paid-in capital ................................................................................. $ 34,464,630 Accumulated net realized loss on investments .................................................... (413,124) Net unrealized appreciation on investments ...................................................... 2,432,549 ------------ $ 36,484,055 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,228,602/380,431 shares) ................................................................ $ 11.12 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($13,824,651/1,245,792 shares) ............................................................. $ 11.10 ============ Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($12,795,975/1,166,958 shares) ............................................................. $ 10.97 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($5,634,827/511,666 shares) ................................................................ $ 11.01 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2003 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 72,117 Dividends ..................................................................................... 266,529 ------------ Total income .............................................................................. 338,646 ------------ Expenses Investment advisory fees (note 2) ............................................................. 125,108 Fund administration fees (note 2) ............................................................. 31,277 Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154 Distribution and service fees - Class B Shares (note 3) ....................................... 87,376 Distribution and service fees - Class C Shares (note 3) ....................................... 35,604 Custody fees .................................................................................. 9,275 Registration and filing administration fees (note 2) .......................................... 23,931 Fund accounting fees (note 2) ................................................................. 56,502 Audit fees .................................................................................... 16,475 Legal fees .................................................................................... 21,458 Securities pricing fees ....................................................................... 4,866 Shareholder recordkeeping fees ................................................................ 38,859 Other accounting fees (note 2) ................................................................ 1,052 Shareholder servicing expenses ................................................................ 10,018 Registration and filing expenses .............................................................. 50,159 Printing expenses ............................................................................. 13,335 Trustee fees and meeting expenses ............................................................. 3,890 Other operating expenses ...................................................................... 10,249 ------------ Total expenses ............................................................................ 561,588 ------------ Less: Expense reimbursements (note 2) ...................................................... (624) Investment advisory fees waived (note 2) ............................................. (9,452) ------------ Net expenses .............................................................................. 551,512 ------------ Net investment loss .................................................................. (212,866) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized loss from investment transactions ..................................................... (179,255) Increase in unrealized appreciation on investments ................................................. 1,023,603 ------------ Net realized and unrealized gain on investments ............................................... 844,348 ------------ Net increase in net assets resulting from operations ...................................... $ 631,482 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ INCREASE IN NET ASSETS Operations Net investment loss ....................................................... $ (212,866) $ (55,987) Net realized loss from investment transactions ............................ (179,255) (233,249) Increase in unrealized appreciation on investments ........................ 1,023,603 972,562 ------------ ------------ Net increase in net assets resulting from operations ................. 631,482 683,326 ------------ ------------ Distributions to shareholders from Net realized gain from investment transactions - Institutional Class Shares 0 (30,682) Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741) Net realized gain from investment transactions - Class B Shares ........... 0 (15,865) Net realized gain from investment transactions - Class C Shares ........... 0 (10,533) ------------ ------------ Decrease in net assets resulting from distributions .................. 0 (72,821) ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991 ------------ ------------ Total increase in net assets .................................. 23,704,593 5,577,496 NET ASSETS Beginning of year ............................................................. 12,779,462 7,201,966 ------------ ------------ End of year ................................................................... $ 36,484,055 $ 12,779,462 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------------------------- 2003 2002 Shares Value Shares Value - --------------------------------------------------- ------------------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606 Shares issued for reinvestment of distributions .. 0 0 2,873 30,682 Shares redeemed .................................. (19,266) (200,123) (10) (106) ------------ ------------ ------------ ------------ Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182 ============ ============ ============ ============ - --------------------------------------------------- INVESTOR CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701 Shares issued for reinvestment of distributions .. 0 0 1,412 15,119 Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651) ------------ ------------ ------------ ------------ Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169 ============ ============ ============ ============ - --------------------------------------------------- CLASS B SHARES - --------------------------------------------------- Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636 Shares issued for reinvestment of distributions .. 0 0 984 10,520 Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873) ------------ ------------ ------------ ------------ Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283 ============ ============ ============ ============ - --------------------------------------------------- CLASS C SHARES - --------------------------------------------------- Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685 Shares issued for reinvestment of distributions .. 0 0 971 10,423 Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751) ------------ ------------ ------------ ------------ Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357 ============ ============ ============ ============ - --------------------------------------------------- FUND SUMMARY - --------------------------------------------------- Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628 Shares issued for reinvestment of distributions .. 0 0 6,240 66,744 Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381) ------------ ------------ ------------ ------------ Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INSTITUTIONAL CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00 (Loss) income from investment operations Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04 Net realized and unrealized (loss) gain on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09) ----------- ----------- ----------- ----------- ----------- Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 =========== =========== =========== =========== =========== Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b) After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b) After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INVESTOR CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00 (Loss) income from investment operations Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02 Net realized and unrealized (loss) gain on investments ......................... (0.42) 0.85 0.91 0.01 (0.08) ----------- ----------- ----------- ----------- ----------- Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 =========== =========== =========== =========== =========== Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b) After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b) After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04 Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03 Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B shares and Class C shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $212,866 has been made on the statement of assets and liabilities to decrease accumulated net investment loss, bringing it to zero, and decreasing paid-in capital. The Fund has capital loss carryforwards for federal income tax purposes of $339,603, of which $174,661 expires in the year 2010 and $164,942 expires in the year 2011. It is the intention of the Trustees not to distribute any realized gains until the carryforwards have been offset or expire. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, a maximum of 2.00% of the average daily net assets of the Fund's Investor Class Shares, and a maximum of 2.75% of the average daily net assets of the Fund's Class B Shares and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Advisor has voluntarily waived a portion of its fee amounting to $9,452 and reimbursed $624 of the operating expenses incurred by the Fund for the year ended May 31, 2003. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2003, the Distributor retained sales charges in the amount of $24,085. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2003. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other than short-term investments, aggregated $19,893,795 and $1,999,410, respectively, for the year ended May 31, 2003. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2003 (Unaudited) INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED) The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27802. The Trustee received aggregate compensation of $3,000 during the fiscal year ended May 31, 2003 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Number of Portfolios in Fund Position(s) Length Complex Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Independent Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) President of Brinson and three series of that trust; Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust II for the eight series of that trust; Hillman Capital Management Investment Trust for two series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Officers - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of LLC Principal the Fund); previously, stockbroker 3717 Haddon Hall Road, NW Executive at Lehman Brothers Suite 200 Officer, Atlanta, GA 30327 and Principal Financial Officer - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (Administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company; previously, Assistant Fund Accountant at The Nottingham Secretary Company - ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com Deloitte & Touche INDEPENDENT AUDITORS' REPORT To the Board of Trustees of New Providence Investment Trust and Shareholders of Wisdom Fund: We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the portfolio of investments, as of May 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2003, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP June 27, 2003 ___________ Deloitte Touche Tohmatsu ___________ (This page was intentionally left blank) (This page was intentionally left blank) ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust CLASS C SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2003 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. For more information about the Fund, including charges and expenses, call the Fund's distributor for a free prospectus. You should read the prospectus carefully before you invest or send money. Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC 27803, Phone 1-800-773-3863 WISDOM FUND Annual Report to Shareholders July 23, 2003 To Our Fellow Shareholders: What a difference a quarter makes. Investors should never underestimate the ability of the stock market to surprise and humble investors over the short term. That is why we rely on valuation analysis, which we believe, is a primary driver of investment returns over several years and longer. Several risks impacted returns over the last year: o Structural risks including high debt levels and the sizable U.S. dependence on foreign capital, o Deflation, which could be a by-product of high debt levels, o Inflation, which could eventually be ignited by attempts to fight deflation, and o Geopolitical risks including terrorism. We believe that current asset prices suggest returns of 6-9% for equity-type assets on average, over the next five years. The reality is that returns could be significantly different if growth rates are abnormally high or low or if assets become overvalued or undervalued. So, even though we believe the most likely range of returns is 6-9%, it's not hard to imagine returns being two percentage points higher or lower and, along the way, individual returns could be significantly higher or lower. The sad reality is that returns were so high in the 1990s that they effectively borrowed from the future. The bear market brought things back to reality and beyond and now we've had a bounce back to fair value. How can we do better? We believe that Atlanta Investment Counsel's added value is the function of the quality of the research and our discipline. At times of extreme greed and fear this is particularly difficult because emotion can cloud judgment. We view one of the most important parts of our job as helping to avoid the emotional ties that can lead to buying and selling at the wrong time. As of May 31, 2003, the fund had about a 37% allocation to the financial services and the multiline and property and casualty insurance areas. We like these areas because we believe: (1) valuations tend to be low relative to earnings, (2) great management can make a big difference and add value, (3) most competitors are generally mediocre and above-average managers are rare, (4) growth opportunities are open-ended because market shares tend to be low, markets are large and they are businesses that don't become obsolete, and (5) reported earnings are generally cash earnings. We remain both pleased and proud that the long-term track record of the fund remains positive and solidly ahead of the passive investment alternative of the S&P 500. Our efforts have met our goals and exceeded our own expectations during the fund's operation in the tumultuous time frame of 2000-2002. We advise shareholders to maintain modest positive return expectations and also to sustain their confidence. We have selected portfolio companies that, in our opinion, retain the ability to perform well in their respective industries in an improved economic climate. We find ourselves in an environment that is quite different from what most investors have grown used to over the past two decades. We have gone through the worst bear market in a generation, but have seen investors come back to the market again. We believe that we are well positioned for the environment we are faced with and remain confident we can continue to add substantial value. C. Douglas Davenport, J.D. Portfolio Manager-Wisdom Fund ________________________________________________________________________________ Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the fund and of the market in general and statements of the fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. ________________________________________________________________________________ WISDOM FUND CLASS C SHARES Performance Update - $10,000 Investment For the period from November 16, 1999 (Commencement of Operations) to May 31, 2003 - -------------------------------------------------------------------------------- Wisdom Fund S&P 500 Total Class C Shares Return Index - -------------------------------------------------------------------------------- 11/16/99 $10,000 $10,000 02/29/00 8,613 9,655 05/31/00 9,814 10,070 08/31/00 10,306 10,787 11/30/00 11,161 9,373 02/28/01 10,839 8,863 5/31/2001 10,760 9,007 08/31/01 10,494 8,156 11/30/01 10,592 8,227 02/28/02 10,993 8,020 5/31/2002 11,480 7,760 08/31/02 10,565 6,689 11/30/02 10,535 6,868 02/28/03 9,809 6,201 5/31/2003 10,953 7,134 This graph depicts the performance of the Wisdom Fund - Class C Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns ------------------------------ ------------- --------------------- Since 11/16/99 One Year (Commencement of Operations) ------------------------------ ------------- --------------------- No Sales Charges (4.59)% 2.60 % ------------------------------ ------------- --------------------- 1% Maximum Sales Charge (5.55)% 2.60 % ------------------------------ ------------- --------------------- >> The graph assumes an initial $10,000 investment at November 16, 1999 (commencement of operations). The deduction of the maximum contingent deferred sales charge ("CDSC") is not reflected in the graph because the CDSC for the Class C Shares declines to 0% after the first year. However, the CDSC is reflected in the return table above as applicable. The CDSC may be waived or reduced under certain circumstances. All dividends and distributions are reinvested. >> At May 31, 2003, the value of the Fund's Class C Shares would have increased to $10,953 - a cumulative total investment return of 9.53% since November 16, 1999. >> At May 31, 2003, a similar investment in the S&P 500 Total Return Index would have decreased to $7,134 - a cumulative total investment return of (28.66)% since November 16, 1999. >> Past performance is not a guarantee of future results. A mutual fund's share price and investment return will vary with market conditions, and the principal value of shares, when redeemed, may be worth more or less than the original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 69.00% Apparel Manufacturing - 0.43% (a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902 ------------ Beverages - 7.10% The Coca-Cola Company ................................................. 56,830 2,589,743 ------------ Building Materials - 0.45% Lowe's Companies, Inc. ................................................ 3,230 136,500 (a)USG Corporation ....................................................... 2,400 27,936 ------------ 164,436 ------------ Chemicals - 0.20% Great Lakes Chemical Corporation ...................................... 3,220 74,157 ------------ Commercial Services - 2.09% First American Corporation ............................................ 7,770 210,412 H&R Block, Inc. ....................................................... 3,320 135,921 Moody's Corporation ................................................... 8,005 417,460 ------------ 763,793 ------------ Computer Software & Services - 0.45% First Data Corporation ................................................ 3,970 164,437 ------------ Cosmetics & Personal Care - 2.89% The Gillette Company .................................................. 31,380 1,054,682 ------------ Financial - Banks, Money Center - 2.40% Wells Fargo Company ................................................... 18,122 875,293 ------------ Financial Services - 7.58% American Express Company .............................................. 37,050 1,543,503 M&T Bank Corp. ........................................................ 2,030 180,771 MBIA, Inc. ............................................................ 19,500 975,975 SunTrust Banks, Inc. .................................................. 1,100 65,230 ------------ 2,765,479 ------------ Food - Wholesale - 1.02% Sysco Corporation ..................................................... 12,000 371,280 ------------ Furniture & Home Appliances - 0.43% Ethan Allen Interiors, Inc. ........................................... 4,430 157,841 ------------ Health Care Services - 0.28% (a)Iron Mountain, Inc. ................................................... 2,600 102,700 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Industrial Materials - Specialty - 0.10% Dover Corporation ..................................................... 1,200 $ 36,372 ------------ Insurance - Life & Health - 1.71% AFLAC, INCORPORATED ................................................... 11,060 363,985 Brown & Brown, Inc. ................................................... 7,330 259,848 ------------ 623,833 ------------ Insurance - Multiline - 14.47% Ambac Financial Group, Inc. ........................................... 6,580 438,952 American International Group, Inc. .................................... 23,150 1,339,922 American National Insurance Company ................................... 1,300 111,332 Arthur J. Gallagher & Co. ............................................. 13,100 356,975 Cincinnati Financial Corp. ............................................ 11,400 423,168 Odyssey Re Holdings Corp. ............................................. 14,100 290,883 PartnerRe Ltd. ........................................................ 11,005 584,585 RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867 The Chubb Corporation ................................................. 7,400 473,822 Willis Group Holdings Limited ......................................... 3,800 120,156 ------------ 5,278,662 ------------ Insurance - Property & Casualty - 15.37% ACE Limited ........................................................... 3,847 140,800 Everest Re Group, Ltd. ................................................ 11,215 818,695 Fidelity National Financial, Inc. ..................................... 20,421 634,488 Leucadia National Corporation ......................................... 7,000 266,980 (a)Markel Corporation .................................................... 4,600 1,160,350 The Progressive Corporation ........................................... 21,460 1,545,120 Wesco Financial Corporation ........................................... 386 116,958 White Mountains Insurance Group Ltd. .................................. 900 369,900 XL Capital Ltd. ....................................................... 6,375 554,944 ------------ 5,608,235 ------------ Manufacturing - 0.30% (a)American Standard Company, Inc. ....................................... 1,500 110,985 ------------ Metal Fabrication & Hardware - 0.06% (a)Mueller Industries, Inc. .............................................. 850 22,261 ------------ Oil & Gas - International - 0.21% PetroChina Co., Ltd. .................................................. 3,000 75,960 ------------ Packaging & Containers - 0.10% (a)Sealed Air Corporation ................................................ 852 37,394 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Publishing - Newspapers - 1.37% Gannett Co., Inc. ..................................................... 623 $ 49,217 The Washington Post Company ........................................... 620 449,190 ------------ 498,407 ------------ Real Estate Investment Trusts - 0.45% HRPT Properties Trust ................................................. 575 5,457 Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340 The Town & Country Trust .............................................. 3,156 72,083 ------------ 165,880 ------------ Restaurants & Food Service - 0.75% Wendy's International Inc. ............................................ 4,300 129,473 (a)Yum! Brands Inc. ...................................................... 5,150 143,994 ------------ 273,467 ------------ Retail - Specialty Line - 1.91% La-Z-Boy, Inc. ........................................................ 3,000 65,730 The Sherwin-Williams Company .......................................... 13,970 382,499 (a)Zale Corporation ...................................................... 6,800 247,180 ------------ 695,409 ------------ Retirement/Aged Care - 0.00% (a)Five Star Quality Care, Inc. .......................................... 4 5 ------------ Shoes - Leather - 0.26% Brown Shoe Co., Inc. .................................................. 3,300 93,555 ------------ Textiles - 3.24% (a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766 ------------ Transportation - Miscellaneous - 0.11% GATX Corporation ...................................................... 2,342 39,791 ------------ Utilities - Energy - 3.27% Entergy Corporation ................................................... 4,050 209,344 FPL Group, Inc. ....................................................... 5,865 389,847 Kinder Morgan, Inc. ................................................... 8,700 444,135 Progress Energy, Inc. ................................................. 3,150 148,207 ------------ 1,191,533 ------------ Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 8.46% Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554 PIMCO High Yield Fund .......................................................... 188,453 1,756,383 ------------ Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937 ------------ Principal --------- U.S. GOVERNMENT OBLIGATIONS - 21.93% United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779 (Cost $8,000,884) ---------- ------------ Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974 Other Assets Less Liabilities ................................................... 0.61 % 222,081 ---------- ------------ Net Assets ................................................................ 100.00 % $ 36,484,055 ========== ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments for financial reporting and federal income tax purposes is as follows: Unrealized appreciation ......................................................................... $ 3,015,979 Unrealized depreciation ......................................................................... (573,033) ------------ Net unrealized appreciation ..................................................................... $ 2,442,946 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2003 ASSETS Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974 Income receivable ............................................................................... 30,869 Receivable for fund shares sold ................................................................. 237,728 Other assets .................................................................................... 9,133 ------------ Total assets ............................................................................... 36,539,704 ------------ LIABILITIES Accrued expenses ................................................................................ 52,637 Payable for fund shares redeemed ................................................................ 3,012 ------------ Total liabilities .......................................................................... 55,649 ------------ NET ASSETS ............................................................................................ $ 36,484,055 ============ NET ASSETS CONSIST OF Paid-in capital ................................................................................. $ 34,464,630 Accumulated net realized loss on investments .................................................... (413,124) Net unrealized appreciation on investments ...................................................... 2,432,549 ------------ $ 36,484,055 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,228,602/380,431 shares) ................................................................ $ 11.12 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($13,824,651/1,245,792 shares) ............................................................. $ 11.10 ============ Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($12,795,975/1,166,958 shares) ............................................................. $ 10.97 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($5,634,827/511,666 shares) ................................................................ $ 11.01 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2003 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 72,117 Dividends ..................................................................................... 266,529 ------------ Total income .............................................................................. 338,646 ------------ Expenses Investment advisory fees (note 2) ............................................................. 125,108 Fund administration fees (note 2) ............................................................. 31,277 Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154 Distribution and service fees - Class B Shares (note 3) ....................................... 87,376 Distribution and service fees - Class C Shares (note 3) ....................................... 35,604 Custody fees .................................................................................. 9,275 Registration and filing administration fees (note 2) .......................................... 23,931 Fund accounting fees (note 2) ................................................................. 56,502 Audit fees .................................................................................... 16,475 Legal fees .................................................................................... 21,458 Securities pricing fees ....................................................................... 4,866 Shareholder recordkeeping fees ................................................................ 38,859 Other accounting fees (note 2) ................................................................ 1,052 Shareholder servicing expenses ................................................................ 10,018 Registration and filing expenses .............................................................. 50,159 Printing expenses ............................................................................. 13,335 Trustee fees and meeting expenses ............................................................. 3,890 Other operating expenses ...................................................................... 10,249 ------------ Total expenses ............................................................................ 561,588 ------------ Less: Expense reimbursements (note 2) ...................................................... (624) Investment advisory fees waived (note 2) ............................................. (9,452) ------------ Net expenses .............................................................................. 551,512 ------------ Net investment loss .................................................................. (212,866) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized loss from investment transactions ..................................................... (179,255) Increase in unrealized appreciation on investments ................................................. 1,023,603 ------------ Net realized and unrealized gain on investments ............................................... 844,348 ------------ Net increase in net assets resulting from operations ...................................... $ 631,482 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ INCREASE IN NET ASSETS Operations Net investment loss ....................................................... $ (212,866) $ (55,987) Net realized loss from investment transactions ............................ (179,255) (233,249) Increase in unrealized appreciation on investments ........................ 1,023,603 972,562 ------------ ------------ Net increase in net assets resulting from operations ................. 631,482 683,326 ------------ ------------ Distributions to shareholders from Net realized gain from investment transactions - Institutional Class Shares 0 (30,682) Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741) Net realized gain from investment transactions - Class B Shares ........... 0 (15,865) Net realized gain from investment transactions - Class C Shares ........... 0 (10,533) ------------ ------------ Decrease in net assets resulting from distributions .................. 0 (72,821) ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991 ------------ ------------ Total increase in net assets .................................. 23,704,593 5,577,496 NET ASSETS Beginning of year ............................................................. 12,779,462 7,201,966 ------------ ------------ End of year ................................................................... $ 36,484,055 $ 12,779,462 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------------------------- 2003 2002 Shares Value Shares Value - --------------------------------------------------- ------------------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606 Shares issued for reinvestment of distributions .. 0 0 2,873 30,682 Shares redeemed .................................. (19,266) (200,123) (10) (106) ------------ ------------ ------------ ------------ Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182 ============ ============ ============ ============ - --------------------------------------------------- INVESTOR CLASS SHARES - --------------------------------------------------- Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701 Shares issued for reinvestment of distributions .. 0 0 1,412 15,119 Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651) ------------ ------------ ------------ ------------ Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169 ============ ============ ============ ============ - --------------------------------------------------- CLASS B SHARES - --------------------------------------------------- Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636 Shares issued for reinvestment of distributions .. 0 0 984 10,520 Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873) ------------ ------------ ------------ ------------ Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283 ============ ============ ============ ============ - --------------------------------------------------- CLASS C SHARES - --------------------------------------------------- Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685 Shares issued for reinvestment of distributions .. 0 0 971 10,423 Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751) ------------ ------------ ------------ ------------ Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357 ============ ============ ============ ============ - --------------------------------------------------- FUND SUMMARY - --------------------------------------------------- Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628 Shares issued for reinvestment of distributions .. 0 0 6,240 66,744 Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381) ------------ ------------ ------------ ------------ Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INSTITUTIONAL CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00 (Loss) income from investment operations Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04 Net realized and unrealized (loss) gain on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09) ----------- ----------- ----------- ----------- ----------- Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 =========== =========== =========== =========== =========== Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b) After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b) After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) INVESTOR CLASS SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00 (Loss) income from investment operations Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02 Net realized and unrealized (loss) gain on investments ......................... (0.42) 0.85 0.91 0.01 (0.08) ----------- ----------- ----------- ----------- ----------- Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02) Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 =========== =========== =========== =========== =========== Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b) After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b) After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 % (a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04 Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES For the Periods ended May 31, - ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 (a) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20 (Loss) income from investment operations Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03 Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- Total from investment operations ................. (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ................................ 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- Total distributions .............................. 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B shares and Class C shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $212,866 has been made on the statement of assets and liabilities to decrease accumulated net investment loss, bringing it to zero, and decreasing paid-in capital. The Fund has capital loss carryforwards for federal income tax purposes of $339,603, of which $174,661 expires in the year 2010 and $164,942 expires in the year 2011. It is the intention of the Trustees not to distribute any realized gains until the carryforwards have been offset or expire. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, a maximum of 2.00% of the average daily net assets of the Fund's Investor Class Shares, and a maximum of 2.75% of the average daily net assets of the Fund's Class B Shares and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Advisor has voluntarily waived a portion of its fee amounting to $9,452 and reimbursed $624 of the operating expenses incurred by the Fund for the year ended May 31, 2003. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2003 NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2003, the Distributor retained sales charges in the amount of $24,085. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2003. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other than short-term investments, aggregated $19,893,795 and $1,999,410, respectively, for the year ended May 31, 2003. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2003 (Unaudited) INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED) The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27802. The Trustee received aggregate compensation of $3,000 during the fiscal year ended May 31, 2003 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Number of Portfolios in Fund Position(s) Length Complex Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Independent Trustee - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) President of Brinson and three series of that trust; Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust II for the eight series of that trust; Hillman Capital Management Investment Trust for two series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Officers - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of LLC Principal the Fund); previously, stockbroker 3717 Haddon Hall Road, NW Executive at Lehman Brothers Suite 200 Officer, Atlanta, GA 30327 and Principal Financial Officer - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (Administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ---------------------------- ----------- -------- ------------------------------------- ------------ ------------------------------- Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company; previously, Assistant Fund Accountant at The Nottingham Secretary Company - ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com Deloitte & Touche INDEPENDENT AUDITORS' REPORT To the Board of Trustees of New Providence Investment Trust and Shareholders of Wisdom Fund: We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the portfolio of investments, as of May 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2003, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP June 27, 2003 ___________ Deloitte Touche Tohmatsu ___________ (This page was intentionally left blank) (This page was intentionally left blank) ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. ITEM 2. Code of Ethics. Not applicable. ITEM 3. Audit Committee Financial Expert. Not applicable. ITEM 4. Principal Accountant Fees and Services. Not applicable. ITEMS 5-6. [Reserved] ITEM 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. ITEM 8. [Reserved] ITEM 9. Controls and Procedures. (a) The Principal Executive Officer and the Principal Financial Officer has concluded that the registrant's disclosure controls and procedures are effective based on his evaluation of the disclosure controls and procedures as of a date within 90 days of the filing of this report. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. Exhibits. (a)(1) Not applicable. (a)(2) Certifications required by Item 10(a)(2) of Form N-CSR are filed herewith as Exhibit (a)(2) attached as Exhibit 99.CERT. (b) Certifications required by Item 10(b) of Form N-CSR are filed herewith as Exhibit (b) attached as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. New Providence Investment Trust By: (Signature and Title) /s/ C. Douglas Davenport ________________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer Date: July 21, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: (Signature and Title) /s/ C. Douglas Davenport ________________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer New Providence Investment Trust Date: July 21, 2003
EX-99.CERTS 3 cert302.txt SECTION 302 OFFICER CERTIFICATIONS EXHIBIT (a)(2) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002 I, C. Douglas Davenport, certify that: 1. I have reviewed this report on Form N-CSR of New Providence Investment Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial information included in this report, and the financial statements on which the financial information is based, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: July 21, 2003 /s/ C. Douglas Davenport _________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer New Providence Investment Trust EX-99.906CERTS 4 cert906.txt SECTION 906 OFFICER CERTIFICATIONS EXHIBIT (b) NEW PROVIDENCE INVESTMENT TRUST CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of the Wisdom Fund (the "Funds") of the New Providence Investment Trust on Form N-CSR for the period ended May 31, 2003, as filed with the Securities and Exchange Commission (the "Report"), the undersigned, C. Douglas Davenport, chief executive officer (or equivalent thereof) of the Funds, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Funds. Date: July 21, 2003 By: /s/ C. Douglas Davenport ________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer New Providence Investment Trust A signed original of this written statement required by Section 906 has been provided to the Funds and will be retained by the Funds and furnished to the Securities and Exchange Commission or its staff upon request.
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