-----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, Wx6z0ZSJ+v1kI8Hs1cF/r+5qVJ9BuJ2sHM0yT7iko7xKLmfHDjTgRIhQJGtSX1d4 rjA1Ivirb0AO/K2Ooxsv2A== 0001041994-04-000004.txt : 20040809 0001041994-04-000004.hdr.sgml : 20040809 20040809153027 ACCESSION NUMBER: 0001041994-04-000004 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040531 FILED AS OF DATE: 20040809 EFFECTIVENESS DATE: 20040809 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: 04961151 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 ncsr0504.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, Post Office Box 69, Rocky Mount, North Carolina 27802 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) C. Frank Watson III 116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 252-972-9922 ------------ Date of fiscal year end: May 31, 2004 ------------ Date of reporting period: May 31, 2004 ------------ Item 1. REPORTS TO STOCKHOLDERS. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust INSTITUTIONAL CLASS SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2004 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 DISTRIBUTOR Capital Investment Group, Inc. P.O. Box 4365 Rocky Mount, NC 27803 1-800-773-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. - -------------------------------------------------------------------------------- Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the Wisdom Fund ("Fund") and of the market in general and statements of the Fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include, without limitation, general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. Investments in the Fund are subject to investment risks, including, without limitation, market risk, investment style risk, investment advisor risk, market sector risk, equity securities risk, portfolio turnover risk, and other risks as set forth in the Fund's prospectus. Investment in the Fund is subject to investment risks, including, without limitation, tracking risks (an investor in the Fund should not expect that the investment performance of the Fund will be able to track the investment performance of Berkshire Hathaway, Inc.), non-diversified risk, industry concentration risk and other risks as set forth in the Fund's prospectus. More information about these risks and other risks can be found in the Fund's prospectus. The performance information quoted in this annual report represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. An investor should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. A copy of the prospectus is available by calling Shareholder Services at 1-877-892-4226. The prospectus should be read carefully before investing. - -------------------------------------------------------------------------------- WISDOM FUND Annual Report to Shareholders July 26, 2004 Dear fellow Shareholders, For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24% for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and 13.49% for the Institutional Class of shares. These returns are less than the 18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for the same period. The reason why the Fund under performed the S&P 500 Index is primarily because the Fund held on average about 25% of its assets in short-term treasury bills and money market instruments. Since the objective of the Fund is to emulate both the public and private holdings of Berkshire Hathaway, Inc. ("Berkshire"), we try to keep our short term fixed income holdings as close as possible to at the same percentage as Berkshire's. Warren Buffett is not afraid to hold cash and holding cash is like holding an option - the option to take advantage of volatility. The value of this option rises when market volatility rises. Many market participants neglect this important aspect of investing and stay fully invested at all times. When the market drops, they cannot do anything but watch (or sell out at the bottom). Being fully invested goes hand-in-hand with a focus on relative returns. We care only about absolute returns, not relative returns. By investing only when we believe stocks are selling at a large discount to value, we have benefited from a cushion that Benjamin Graham, a Columbia University professor and known as the "father of value investing," referred to as a "margin of safety." While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by Mr. Graham. Mr. Graham believed the most critical piece of investment information was a company's intrinsic value. He believed that the core task for investors is to accurately calculate this value and then maintain the discipline to buy a stock only when the price is below that calculated amount and that buying below that calculated value gives you a margin of safety. Mr. Buffett also believes that one should not even think about the direction of the market, because it is impossible to predict with any consistency. (Source: "The Warren Buffett Portfolio" by Robert Hagstrom) The Stock Market We believe the equity market has failed to fully benefit from the slight easing in interest rate worries that have recently helped the Treasury market. There is a nagging concern that profits will be in jeopardy because margins show signs of peaking (albeit from record highs) even before labor costs have heated up. Corporate guidance is much more supportive than in 2001-2003, but we believe investors are wary having been so badly burned by shady accounting practices and biased opinions from Wall Street. Thus, we see more upside in equities, once investors move beyond interest rate worries and return to reacting to bullish near-run profit trends. The downside of this forecast is that it could be the final phase of the post-2002 rally, as the interest rate reprieve should prove temporary. The three drags on equities since early this year have recently improved, but only slightly. Rate fears have calmed, oil prices have corrected a bit and the dollar has stopped strengthening. We believe that the economic backdrop will stay supportive and any deceleration in earnings growth in the next six months should be modest, as higher selling prices will provide some offset to increased input costs. We believe the stock market's prospective returns are still attractive compared to other asset classes. We also believe that the higher share valuations make this a stockpicker's market. Values do exist, but they are becoming harder to find. The rigors of our disciplined, bottom-up investment process, which focuses on finding undervalued stocks, helps us to take advantage of market volatility and to unearth value in today's market. We believe that our patient, long-term approach, which helps us avoid over reacting to short term events, gives us that extra edge. This is especially important when we have to select "proxies" for the private holding of Berkshire. Berkshire has only purchased one stock in the last ten months and that was HCA, Inc.* Following our investment guidelines, we purchased the same stock as soon as the news became public. Thank you for your continued investment and confidence in the Wisdom Fund. We welcome your questions, thoughts and comments. You can reach us via email at contactwisdom@wisdomfund.com. C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC Portfolio Manager of the Wisdom Fund * HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004. WISDOM FUND INSTITUTIONAL CLASS SHARES Performance Update - $25,000 Investment For the period from February 16, 1999 (Commencement of Operations) to May 31, 2004 [Graph Here] - -------------------------------------------------------------------------------- Wisdom Fund - Institutional S&P 500 Total Class Shares Return Index - -------------------------------------------------------------------------------- 02/16/99 $25,000 $25,000 05/31/99 24,889 26,307 08/31/99 24,437 26,767 11/30/99 25,340 28,243 02/29/00 22,113 27,867 05/31/00 25,295 29,063 8/31/2000 26,599 31,135 11/30/2000 28,898 27,052 2/28/2001 28,128 25,582 5/31/2001 28,001 25,996 8/31/2001 27,379 23,542 11/30/2001 27,690 23,745 2/28/2002 28,821 23,158 5/31/2002 30,181 22,396 8/31/2002 27,801 19,305 11/30/2002 27,827 19,824 2/28/2003 25,944 17,898 5/31/2003 29,082 20,591 8/31/2003 29,344 21,635 11/30/2003 30,678 22,815 2/29/2004 33,241 24,792 5/31/2004 33,005 24,365 This graph depicts the performance of the Wisdom Fund - Institutional Class Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns ----------------------- ------------------------ ----------------------- Since 2/16/99 One Year Five Year (Commencement of Operations) ----------------------- ------------------------ ----------------------- 13.49 % 5.81 % 5.39 % ----------------------- ------------------------ ----------------------- >> The graph assumes an initial $25,000 investment at February 16, 1999 (commencement of operations). All dividends and distributions are reinvested. >> At May 31, 2004, the value of the Fund's Institutional Class Shares would have grown to $33,005 - a cumulative total investment return of 32.02% since February 16, 1999. >> At May 31, 2004, the value of a similar investment in the S&P 500 Total Return Index would have decreased to $24,365 - a cumulative total investment return of (2.54)% since February 16, 1999. The performance information quoted above represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 74.30% Apparel - 0.24% Nike, Inc. .............................................................. 1,600 $ 113,840 ------------ Banks - 2.84% M & T Bank Corporation .................................................. 2,030 183,857 SunTrust Banks, Inc. .................................................... 1,100 71,588 Wells Fargo Company ..................................................... 18,922 1,112,614 ------------ 1,368,059 ------------ Beverages - 7.40% The Coca-Cola Company ................................................... 69,430 3,565,231 ------------ Building Materials - 0.64% (a)American Standard Companies, Inc. ....................................... 8,190 307,289 ------------ Chemicals - 1.14% The Sherwin-Williams Company ............................................ 13,970 549,021 ------------ Commercial Services - 3.10% Cendant Corporation ..................................................... 9,000 206,460 H&R Block, Inc. ......................................................... 3,320 162,182 (a)Iron Mountain Incorporated .............................................. 5,100 225,777 Moody's Corporation ..................................................... 13,705 896,170 ------------ 1,490,589 ------------ Cosmetics & Personal Care - 2.81% The Gillette Company .................................................... 31,380 1,352,164 ------------ Diversified Financial Services - 3.90% American Express Company ................................................ 37,050 1,878,435 ------------ Electric - 1.33% FPL Group, Inc. ......................................................... 5,865 373,894 (a)Reliant Energy, Inc. .................................................... 27,000 267,570 ------------ 641,464 ------------ Food - 2.57% Cadbury Schweppes PLC ................................................... 6,500 224,250 Sysco Corporation ....................................................... 18,166 681,225 WM Wrigley Jr. Company .................................................. 5,300 332,840 ------------ 1,238,315 ------------ Health Care Services - 0.78% (a)Five Star Quality Care, Inc. ............................................ 4 15 HCA Inc. ................................................................ 9,700 376,651 ------------ 376,666 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Holding Companies - Diversified - 1.06% Leucadia National Corporation ............................................. 10,300 $ 511,910 ------------ Home Builders - 0.13% (a)Champion Enterprises Inc. ................................................. 6,700 62,645 ------------ Home Furnishings - 0.36% Ethan Allen Interiors, Inc. ............................................... 4,430 172,637 ------------ Insurance - Multiline - 17.57% Ambac Financial Group, Inc. ............................................... 8,380 579,477 American International Group, Inc. ........................................ 32,150 2,356,595 Aon Corporation ........................................................... 6,000 165,780 Everest Re Group, Ltd. .................................................... 20,015 1,638,228 PartnerRe Ltd. ............................................................ 11,005 614,959 Platinum Underwriters Holding Limited ..................................... 2,000 62,200 RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287 The Allstate Corporation .................................................. 24,750 1,088,505 ------------ 8,460,031 ------------ Insurance - Property & Casualty - 16.01% ACE Limited ............................................................... 15,547 640,225 Fidelity National Financial, Inc. ......................................... 23,463 881,974 Infinity Property & Casualty Corporation .................................. 6,900 215,280 (a)Markel Corporation ........................................................ 7,200 2,070,000 (a)ProAssurance Corporation .................................................. 6,900 228,183 SAFECO Corporation ........................................................ 6,000 251,700 The Chubb Corporation ..................................................... 15,400 1,037,498 The Progressive Corporation ............................................... 9,360 802,807 Wesco Financial Corporation ............................................... 386 145,503 White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000 ------------ 7,708,170 ------------ Media - 2.22% Gannett Company, Inc. ..................................................... 1,698 149,084 The Washington Post Company ............................................... 970 922,228 ------------ 1,071,312 ------------ Miscellaneous Manufacturing - 0.31% Dover Corporation ......................................................... 3,800 148,048 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Oil & Gas - 1.22% Exxon Mobil Corporation ............................................... 7,000 $ 302,750 PetroChina Company Limited ............................................ 6,000 285,000 ------------ 587,750 ------------ Packaging & Containers - 0.44% (a)Sealed Air Corporation ................................................ 4,252 213,748 ------------ Pipelines - 1.67% Kinder Morgan, Inc. ................................................... 13,400 804,000 ------------ Real Estate Investment Trusts - 0.38% Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173 The Town & Country Trust .............................................. 3,156 76,785 ------------ 182,958 ------------ Retail - 1.57% Brown Shoe Company, Inc. .............................................. 3,300 136,389 (a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260 Wendy's International, Inc. ........................................... 5,150 194,619 (a)Yum! Brands, Inc. ..................................................... 5,150 193,125 (a)Zale Corporation ...................................................... 3,400 185,538 ------------ 754,931 ------------ Software - 1.45% Automatic Data Processing, Inc. ....................................... 7,200 319,896 First Data Corporation ................................................ 8,770 379,653 ------------ 699,549 ------------ Textiles - 3.16% (a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549 ------------ Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311 ------------ MUTUAL FUNDS - 4.00% PIMCO High Yield Fund ...................................................... 188,453 1,762,036 Templeton Global Income Fund Inc. .......................................... 20,200 164,428 ------------ Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 4.99% Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067 Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598 ------------ Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665 ------------ Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440 Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455 --------- ------------ Net Assets ......................................................................... 100.00 % $ 48,152,895 ========= ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments for federal income tax purposes is as follows: Unrealized appreciation ............................................................ $ 6,596,391 Unrealized depreciation ............................................................ (63,263) ------------ Net unrealized appreciation ............................................. $ 6,533,128 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2004 ASSETS Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440 Cash ............................................................................................. 7,931,538 Income receivable ................................................................................ 56,999 Receivable for fund shares sold .................................................................. 109,178 Other assets ..................................................................................... 13,756 ------------ Total assets ................................................................................ 48,218,911 ------------ LIABILITIES Accrued expenses ................................................................................. 65,880 Payable for fund shares redeemed ................................................................. 136 ------------ Total liabilities ........................................................................... 66,016 ------------ NET ASSETS ............................................................................................. $ 48,152,895 ============ NET ASSETS CONSIST OF Paid-in capital .................................................................................. $ 40,919,006 Undistributed net realized gain on investments ................................................... 699,889 Net unrealized appreciation on investments ....................................................... 6,534,000 ------------ $ 48,152,895 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,811,294 / 381,177 shares) ............................................................... $ 12.62 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57 ============ Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($8,681,811 / 701,203 shares) ............................................................... $ 12.38 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2004 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 39,091 Dividends ..................................................................................... 574,457 ------------ Total income .............................................................................. 613,548 ------------ Expenses Investment advisory fees (note 2) ............................................................. 214,245 Fund administration fees (note 2) ............................................................. 53,561 Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316 Distribution and service fees - Class B Shares (note 3) ....................................... 140,978 Distribution and service fees - Class C Shares (note 3) ....................................... 69,724 Custody fees (note 2) ......................................................................... 12,949 Registration and filing administration fees (note 2) .......................................... 26,381 Fund accounting fees (note 2) ................................................................. 58,285 Audit and tax preparation fees ................................................................ 14,150 Legal fees .................................................................................... 28,671 Securities pricing fees ....................................................................... 5,560 Shareholder recordkeeping fees (note 2) ....................................................... 49,178 Shareholder servicing expenses ................................................................ 10,824 Registration and filing expenses .............................................................. 46,732 Printing expenses ............................................................................. 13,014 Trustee fees and meeting expenses ............................................................. 4,422 Other operating expenses ...................................................................... 14,909 ------------ Total expenses ............................................................................ 806,899 ------------ Net investment loss .................................................................. (193,351) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investment transactions ..................................................... 1,219,133 Change in unrealized appreciation on investments ................................................... 4,101,451 ------------ Net realized and unrealized gain on investments ............................................... 5,320,584 ------------ Net increase in net assets resulting from operations ...................................... $ 5,127,233 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, ------------------------------------------------- 2004 2003 -------------------------------------------------- INCREASE IN NET ASSETS Operations Net investment loss ................................................ $ (193,351) $ (212,866) Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255) Change in unrealized appreciation on investments ................... 4,101,451 1,023,603 ------------ ------------ Net increase in net assets resulting from operations .......... 5,127,233 631,482 ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111 ------------ ------------ Total increase in net assets ........................... 11,668,840 23,704,593 NET ASSETS Beginning of year ...................................................... 36,484,055 12,779,462 ------------ ------------ End of year ............................................................ $ 48,152,895 $ 36,484,055 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------ 2004 2003 Shares Value Shares Value ------------------------------------------------------------- - ---------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968 Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123) ------------ ------------ ------------ ------------ Net increase .................................................... 746 $ 31,772 40,267 $ 429,845 ============ ============ ============ ============ - ---------------------------------------------------------------------- INVESTOR CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955 Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784) ------------ ------------ ------------ ------------ Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS B SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351 Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003) ------------ ------------ ------------ ------------ Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS C SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789 Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042) ------------ ------------ ------------ ------------ Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747 ============ ============ ============ ============ - ---------------------------------------------------------------------- FUND SUMMARY - ---------------------------------------------------------------------- Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063 Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952) ------------ ------------ ------------ ------------ Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INSTITUTIONAL CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 Income (loss) from investment operations Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18 Net realized and unrealized gain (loss) on investments.............................. 1.48 (0.39) 0.85 0.90 (0.01) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90 =========== =========== =========== =========== =========== Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 % After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 % Ratio of net investment income (loss) to average net assets Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)% After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INVESTOR CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 Income (loss) from investment operations Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12 Net realized and unrealized gain (loss) on investments............................... 1.48 (0.42) 0.85 0.91 0.01 ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93 =========== =========== =========== =========== =========== Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 % After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 % Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)% After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) Total return does not reflect payment of a sales charge (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20 Income (loss) from investment operations Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04 Net realized and unrealized gain (loss) on investments ............................... 1.46 (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== =========== Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period .......................... $14,870,965 $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20 Income (loss) from investment operations Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03 Net realized and unrealized gain (loss) on investments .............................. 1.46 (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== =========== Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B Shares and Class C Shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $106,120 has been charged to undistributed net realized gains, $87,231 has been charged to paid-in capital, and accumulated net investment loss has been credited $193,351, bringing it to zero. C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, Investor Class Shares, Class B Shares, and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities, which are believed to be immaterial in amount. NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. The Transfer Agent is compensated for its services based upon a $15 fee per shareholder per year, subject to a minimum fee of $1,500 per month, plus $500 per month for each additional class of shares. In addition, the Transfer Agent shall be entitled to reimbursement of actual out-of-pocket expenses incurred by the Transfer Agent on behalf of the Trust or the Fund. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2004, the Distributor retained sales charges in the amount of $17,739. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $43,316, $140,978, and $69,724, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2004. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, aggregated $13,296,089 and $7,840,435, respectively, for the year ended May 31, 2004. Purchases and sales of long-term U.S. government securities aggregated $58,971,025 and $67,011,000, respectively, for the year ended May 31, 2004. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) PROXY VOTING POLICY A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy Voting and Disclosure Policy are included as Appendix B to the Fund's Statement of Additional Information and is available, without charge, upon request, by calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004, the Fund will file Form N-PX stating how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 within 60 days after the end of such period. Information regarding how the Fund voted proxies as set forth in its most recent filing of Form N-PX will be available (i) without charge, upon request, by calling the Fund at 1-800-773-3863; and (ii) on the SEC's website at http://www.sec.gov. INFORMATION ABOUT TRUSTEES AND OFFICERS The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27804. The Trustee received aggregate compensation of $3,250 during the fiscal year ended May 31, 2004 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Independent Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) and President of three series of that trust; Th Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II dealership) for the eight series of that trust; Hillman Capital Management Investment Trust for the two series of that trust; Trust for the one series of that trust; MurphyMorris Investment Trust for the one series of that trust; Merit Advisors Investment Trust for the one series of that trust; Merit Advisors Investment Trust II for the one series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Officers - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of 3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker Suite 200 Executive at Lehman Brothers Atlanta, GA 30327 Officer, and Principal Financial Officer - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Frank Watson III, 33 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Julian G. Winters, 35 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company. Assistant Secretary - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of New Providence Investment Trust and the Shareholders of Wisdom Fund We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the schedule of investments, as of May 31, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2004, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP July 19,2004 Member of Deloitte Touche Tohmatsu ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust INVESTOR CLASS SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2004 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 DISTRIBUTOR Capital Investment Group, Inc. P.O. Box 4365 Rocky Mount, NC 27803 1-800-773-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. - -------------------------------------------------------------------------------- Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the Wisdom Fund ("Fund") and of the market in general and statements of the Fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include, without limitation, general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. Investments in the Fund are subject to investment risks, including, without limitation, market risk, investment style risk, investment advisor risk, market sector risk, equity securities risk, portfolio turnover risk, and other risks as set forth in the Fund's prospectus. Investment in the Fund is subject to investment risks, including, without limitation, tracking risks (an investor in the Fund should not expect that the investment performance of the Fund will be able to track the investment performance of Berkshire Hathaway, Inc.), non-diversified risk, industry concentration risk and other risks as set forth in the Fund's prospectus. More information about these risks and other risks can be found in the Fund's prospectus. The performance information quoted in this annual report represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. An investor should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. A copy of the prospectus is available by calling Shareholder Services at 1-877-892-4226. The prospectus should be read carefully before investing. - -------------------------------------------------------------------------------- WISDOM FUND Annual Report to Shareholders July 26, 2004 Dear fellow Shareholders, For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24% for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and 13.49% for the Institutional Class of shares. These returns are less than the 18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for the same period. The reason why the Fund under performed the S&P 500 Index is primarily because the Fund held on average about 25% of its assets in short-term treasury bills and money market instruments. Since the objective of the Fund is to emulate both the public and private holdings of Berkshire Hathaway, Inc. ("Berkshire"), we try to keep our short term fixed income holdings as close as possible to at the same percentage as Berkshire's. Warren Buffett is not afraid to hold cash and holding cash is like holding an option - the option to take advantage of volatility. The value of this option rises when market volatility rises. Many market participants neglect this important aspect of investing and stay fully invested at all times. When the market drops, they cannot do anything but watch (or sell out at the bottom). Being fully invested goes hand-in-hand with a focus on relative returns. We care only about absolute returns, not relative returns. By investing only when we believe stocks are selling at a large discount to value, we have benefited from a cushion that Benjamin Graham, a Columbia University professor and known as the "father of value investing," referred to as a "margin of safety." While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by Mr. Graham. Mr. Graham believed the most critical piece of investment information was a company's intrinsic value. He believed that the core task for investors is to accurately calculate this value and then maintain the discipline to buy a stock only when the price is below that calculated amount and that buying below that calculated value gives you a margin of safety. Mr. Buffett also believes that one should not even think about the direction of the market, because it is impossible to predict with any consistency. (Source: "The Warren Buffett Portfolio" by Robert Hagstrom) The Stock Market We believe the equity market has failed to fully benefit from the slight easing in interest rate worries that have recently helped the Treasury market. There is a nagging concern that profits will be in jeopardy because margins show signs of peaking (albeit from record highs) even before labor costs have heated up. Corporate guidance is much more supportive than in 2001-2003, but we believe investors are wary having been so badly burned by shady accounting practices and biased opinions from Wall Street. Thus, we see more upside in equities, once investors move beyond interest rate worries and return to reacting to bullish near-run profit trends. The downside of this forecast is that it could be the final phase of the post-2002 rally, as the interest rate reprieve should prove temporary. The three drags on equities since early this year have recently improved, but only slightly. Rate fears have calmed, oil prices have corrected a bit and the dollar has stopped strengthening. We believe that the economic backdrop will stay supportive and any deceleration in earnings growth in the next six months should be modest, as higher selling prices will provide some offset to increased input costs. We believe the stock market's prospective returns are still attractive compared to other asset classes. We also believe that the higher share valuations make this a stockpicker's market. Values do exist, but they are becoming harder to find. The rigors of our disciplined, bottom-up investment process, which focuses on finding undervalued stocks, helps us to take advantage of market volatility and to unearth value in today's market. We believe that our patient, long-term approach, which helps us avoid over reacting to short term events, gives us that extra edge. This is especially important when we have to select "proxies" for the private holding of Berkshire. Berkshire has only purchased one stock in the last ten months and that was HCA, Inc.* Following our investment guidelines, we purchased the same stock as soon as the news became public. Thank you for your continued investment and confidence in the Wisdom Fund. We welcome your questions, thoughts and comments. You can reach us via email at contactwisdom@wisdomfund.com. C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC Portfolio Manager of the Wisdom Fund * HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004. WISDOM FUND INVESTOR CLASS SHARES Performance Update - $10,000 Investment For the period from February 16, 1999 (Commencement of Operations) to May 31, 2004 [Graph Here] - -------------------------------------------------------------------------------- Wisdom Fund - Investor S&P 500 Total Class Shares Return Index - -------------------------------------------------------------------------------- 02/16/99 $9,425 $10,000 05/31/99 9,370 10,523 08/31/99 9,191 10,707 11/30/99 9,551 11,297 02/29/00 8,311 11,147 05/31/00 9,498 11,625 8/31/2000 9,986 12,454 11/30/2000 10,847 10,821 2/28/2001 10,545 10,233 5/31/2001 10,487 10,399 8/31/2001 10,255 9,417 11/30/2001 10,361 9,498 2/28/2002 10,783 9,259 5/31/2002 11,281 8,959 8/31/2002 10,383 7,722 11/30/2002 10,373 7,930 2/28/2003 9,671 7,159 5/31/2003 10,832 8,236 8/31/2003 10,920 8,654 11/30/2003 11,417 9,126 2/29/2004 12,364 9,917 5/31/2004 12,266 9,746 This graph depicts the performance of the Wisdom Fund - Investor Class Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns - ------------------------------ -------------- --------------- ------------------ Since 2/16/99 One Year Five Year (Commencement Of Operations) - ------------------------------ -------------- --------------- ------------------ No Sales Load 13.24 % 5.53 % 5.11 % - ------------------------------ -------------- --------------- ------------------ 5.75% Maximum Sales Load 6.73 % 4.29 % 3.94 % - ------------------------------ -------------- --------------- ------------------ >> The graph assumes an initial $10,000 investment ($9,425 after maximum sales load of 5.75%) at February 16, 1999 (commencement of operations). All dividends and distributions are reinvested. >> At May 31, 2004, the value of the Fund's Investor Class Shares would have increased to $12,266 - a cumulative total investment return of 22.66% since February 16, 1999. Without the deduction of the 5.75% maximum sales load, the value of the Fund's Investor Class Shares would have grown to $13,015 - a cumulative total investment return of 30.15% since February 16, 1999. The sales load may be reduced or eliminated for larger purchases. >> At May 31, 2004, the value of a similar investment in the S&P 500 Total Return Index would have decreased to $9,746 - a cumulative total investment return of (2.54)% since February 16, 1999. The performance information quoted above represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 74.30% Apparel - 0.24% Nike, Inc. .............................................................. 1,600 $ 113,840 ------------ Banks - 2.84% M & T Bank Corporation .................................................. 2,030 183,857 SunTrust Banks, Inc. .................................................... 1,100 71,588 Wells Fargo Company ..................................................... 18,922 1,112,614 ------------ 1,368,059 ------------ Beverages - 7.40% The Coca-Cola Company ................................................... 69,430 3,565,231 ------------ Building Materials - 0.64% (a)American Standard Companies, Inc. ....................................... 8,190 307,289 ------------ Chemicals - 1.14% The Sherwin-Williams Company ............................................ 13,970 549,021 ------------ Commercial Services - 3.10% Cendant Corporation ..................................................... 9,000 206,460 H&R Block, Inc. ......................................................... 3,320 162,182 (a)Iron Mountain Incorporated .............................................. 5,100 225,777 Moody's Corporation ..................................................... 13,705 896,170 ------------ 1,490,589 ------------ Cosmetics & Personal Care - 2.81% The Gillette Company .................................................... 31,380 1,352,164 ------------ Diversified Financial Services - 3.90% American Express Company ................................................ 37,050 1,878,435 ------------ Electric - 1.33% FPL Group, Inc. ......................................................... 5,865 373,894 (a)Reliant Energy, Inc. .................................................... 27,000 267,570 ------------ 641,464 ------------ Food - 2.57% Cadbury Schweppes PLC ................................................... 6,500 224,250 Sysco Corporation ....................................................... 18,166 681,225 WM Wrigley Jr. Company .................................................. 5,300 332,840 ------------ 1,238,315 ------------ Health Care Services - 0.78% (a)Five Star Quality Care, Inc. ............................................ 4 15 HCA Inc. ................................................................ 9,700 376,651 ------------ 376,666 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Holding Companies - Diversified - 1.06% Leucadia National Corporation ............................................. 10,300 $ 511,910 ------------ Home Builders - 0.13% (a)Champion Enterprises Inc. ................................................. 6,700 62,645 ------------ Home Furnishings - 0.36% Ethan Allen Interiors, Inc. ............................................... 4,430 172,637 ------------ Insurance - Multiline - 17.57% Ambac Financial Group, Inc. ............................................... 8,380 579,477 American International Group, Inc. ........................................ 32,150 2,356,595 Aon Corporation ........................................................... 6,000 165,780 Everest Re Group, Ltd. .................................................... 20,015 1,638,228 PartnerRe Ltd. ............................................................ 11,005 614,959 Platinum Underwriters Holding Limited ..................................... 2,000 62,200 RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287 The Allstate Corporation .................................................. 24,750 1,088,505 ------------ 8,460,031 ------------ Insurance - Property & Casualty - 16.01% ACE Limited ............................................................... 15,547 640,225 Fidelity National Financial, Inc. ......................................... 23,463 881,974 Infinity Property & Casualty Corporation .................................. 6,900 215,280 (a)Markel Corporation ........................................................ 7,200 2,070,000 (a)ProAssurance Corporation .................................................. 6,900 228,183 SAFECO Corporation ........................................................ 6,000 251,700 The Chubb Corporation ..................................................... 15,400 1,037,498 The Progressive Corporation ............................................... 9,360 802,807 Wesco Financial Corporation ............................................... 386 145,503 White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000 ------------ 7,708,170 ------------ Media - 2.22% Gannett Company, Inc. ..................................................... 1,698 149,084 The Washington Post Company ............................................... 970 922,228 ------------ 1,071,312 ------------ Miscellaneous Manufacturing - 0.31% Dover Corporation ......................................................... 3,800 148,048 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Oil & Gas - 1.22% Exxon Mobil Corporation ............................................... 7,000 $ 302,750 PetroChina Company Limited ............................................ 6,000 285,000 ------------ 587,750 ------------ Packaging & Containers - 0.44% (a)Sealed Air Corporation ................................................ 4,252 213,748 ------------ Pipelines - 1.67% Kinder Morgan, Inc. ................................................... 13,400 804,000 ------------ Real Estate Investment Trusts - 0.38% Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173 The Town & Country Trust .............................................. 3,156 76,785 ------------ 182,958 ------------ Retail - 1.57% Brown Shoe Company, Inc. .............................................. 3,300 136,389 (a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260 Wendy's International, Inc. ........................................... 5,150 194,619 (a)Yum! Brands, Inc. ..................................................... 5,150 193,125 (a)Zale Corporation ...................................................... 3,400 185,538 ------------ 754,931 ------------ Software - 1.45% Automatic Data Processing, Inc. ....................................... 7,200 319,896 First Data Corporation ................................................ 8,770 379,653 ------------ 699,549 ------------ Textiles - 3.16% (a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549 ------------ Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311 ------------ MUTUAL FUNDS - 4.00% PIMCO High Yield Fund ...................................................... 188,453 1,762,036 Templeton Global Income Fund Inc. .......................................... 20,200 164,428 ------------ Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 4.99% Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067 Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598 ------------ Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665 ------------ Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440 Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455 --------- ------------ Net Assets ......................................................................... 100.00 % $ 48,152,895 ========= ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments for federal income tax purposes is as follows: Unrealized appreciation ............................................................ $ 6,596,391 Unrealized depreciation ............................................................ (63,263) ------------ Net unrealized appreciation ............................................. $ 6,533,128 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2004 ASSETS Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440 Cash ............................................................................................. 7,931,538 Income receivable ................................................................................ 56,999 Receivable for fund shares sold .................................................................. 109,178 Other assets ..................................................................................... 13,756 ------------ Total assets ................................................................................ 48,218,911 ------------ LIABILITIES Accrued expenses ................................................................................. 65,880 Payable for fund shares redeemed ................................................................. 136 ------------ Total liabilities ........................................................................... 66,016 ------------ NET ASSETS ............................................................................................. $ 48,152,895 ============ NET ASSETS CONSIST OF Paid-in capital .................................................................................. $ 40,919,006 Undistributed net realized gain on investments ................................................... 699,889 Net unrealized appreciation on investments ....................................................... 6,534,000 ------------ $ 48,152,895 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,811,294 / 381,177 shares) ............................................................... $ 12.62 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57 ============ Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($8,681,811 / 701,203 shares) ............................................................... $ 12.38 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2004 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 39,091 Dividends ..................................................................................... 574,457 ------------ Total income .............................................................................. 613,548 ------------ Expenses Investment advisory fees (note 2) ............................................................. 214,245 Fund administration fees (note 2) ............................................................. 53,561 Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316 Distribution and service fees - Class B Shares (note 3) ....................................... 140,978 Distribution and service fees - Class C Shares (note 3) ....................................... 69,724 Custody fees (note 2) ......................................................................... 12,949 Registration and filing administration fees (note 2) .......................................... 26,381 Fund accounting fees (note 2) ................................................................. 58,285 Audit and tax preparation fees ................................................................ 14,150 Legal fees .................................................................................... 28,671 Securities pricing fees ....................................................................... 5,560 Shareholder recordkeeping fees (note 2) ....................................................... 49,178 Shareholder servicing expenses ................................................................ 10,824 Registration and filing expenses .............................................................. 46,732 Printing expenses ............................................................................. 13,014 Trustee fees and meeting expenses ............................................................. 4,422 Other operating expenses ...................................................................... 14,909 ------------ Total expenses ............................................................................ 806,899 ------------ Net investment loss .................................................................. (193,351) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investment transactions ..................................................... 1,219,133 Change in unrealized appreciation on investments ................................................... 4,101,451 ------------ Net realized and unrealized gain on investments ............................................... 5,320,584 ------------ Net increase in net assets resulting from operations ...................................... $ 5,127,233 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, ------------------------------------------------- 2004 2003 -------------------------------------------------- INCREASE IN NET ASSETS Operations Net investment loss ................................................ $ (193,351) $ (212,866) Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255) Change in unrealized appreciation on investments ................... 4,101,451 1,023,603 ------------ ------------ Net increase in net assets resulting from operations .......... 5,127,233 631,482 ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111 ------------ ------------ Total increase in net assets ........................... 11,668,840 23,704,593 NET ASSETS Beginning of year ...................................................... 36,484,055 12,779,462 ------------ ------------ End of year ............................................................ $ 48,152,895 $ 36,484,055 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------ 2004 2003 Shares Value Shares Value ------------------------------------------------------------- - ---------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968 Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123) ------------ ------------ ------------ ------------ Net increase .................................................... 746 $ 31,772 40,267 $ 429,845 ============ ============ ============ ============ - ---------------------------------------------------------------------- INVESTOR CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955 Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784) ------------ ------------ ------------ ------------ Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS B SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351 Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003) ------------ ------------ ------------ ------------ Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS C SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789 Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042) ------------ ------------ ------------ ------------ Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747 ============ ============ ============ ============ - ---------------------------------------------------------------------- FUND SUMMARY - ---------------------------------------------------------------------- Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063 Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952) ------------ ------------ ------------ ------------ Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INSTITUTIONAL CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 Income (loss) from investment operations Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18 Net realized and unrealized gain (loss) on investments.............................. 1.48 (0.39) 0.85 0.90 (0.01) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90 =========== =========== =========== =========== =========== Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 % After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 % Ratio of net investment income (loss) to average net assets Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)% After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INVESTOR CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 Income (loss) from investment operations Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12 Net realized and unrealized gain (loss) on investments............................... 1.48 (0.42) 0.85 0.91 0.01 ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93 =========== =========== =========== =========== =========== Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 % After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 % Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)% After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) Total return does not reflect payment of a sales charge (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20 Income (loss) from investment operations Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04 Net realized and unrealized gain (loss) on investments ............................... 1.46 (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== =========== Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period .......................... $14,870,965 $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20 Income (loss) from investment operations Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03 Net realized and unrealized gain (loss) on investments .............................. 1.46 (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== =========== Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B Shares and Class C Shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $106,120 has been charged to undistributed net realized gains, $87,231 has been charged to paid-in capital, and accumulated net investment loss has been credited $193,351, bringing it to zero. C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, Investor Class Shares, Class B Shares, and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities, which are believed to be immaterial in amount. NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. The Transfer Agent is compensated for its services based upon a $15 fee per shareholder per year, subject to a minimum fee of $1,500 per month, plus $500 per month for each additional class of shares. In addition, the Transfer Agent shall be entitled to reimbursement of actual out-of-pocket expenses incurred by the Transfer Agent on behalf of the Trust or the Fund. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2004, the Distributor retained sales charges in the amount of $17,739. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $43,316, $140,978, and $69,724, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2004. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, aggregated $13,296,089 and $7,840,435, respectively, for the year ended May 31, 2004. Purchases and sales of long-term U.S. government securities aggregated $58,971,025 and $67,011,000, respectively, for the year ended May 31, 2004. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) PROXY VOTING POLICY A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy Voting and Disclosure Policy are included as Appendix B to the Fund's Statement of Additional Information and is available, without charge, upon request, by calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004, the Fund will file Form N-PX stating how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 within 60 days after the end of such period. Information regarding how the Fund voted proxies as set forth in its most recent filing of Form N-PX will be available (i) without charge, upon request, by calling the Fund at 1-800-773-3863; and (ii) on the SEC's website at http://www.sec.gov. INFORMATION ABOUT TRUSTEES AND OFFICERS The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27804. The Trustee received aggregate compensation of $3,250 during the fiscal year ended May 31, 2004 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Independent Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) and President of three series of that trust; Th Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II dealership) for the eight series of that trust; Hillman Capital Management Investment Trust for the two series of that trust; Trust for the one series of that trust; MurphyMorris Investment Trust for the one series of that trust; Merit Advisors Investment Trust for the one series of that trust; Merit Advisors Investment Trust II for the one series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Officers - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of 3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker Suite 200 Executive at Lehman Brothers Atlanta, GA 30327 Officer, and Principal Financial Officer - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Frank Watson III, 33 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Julian G. Winters, 35 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company. Assistant Secretary - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of New Providence Investment Trust and the Shareholders of Wisdom Fund We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the schedule of investments, as of May 31, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2004, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP July 19,2004 Member of Deloitte Touche Tohmatsu ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust CLASS B SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2004 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 DISTRIBUTOR Capital Investment Group, Inc. P.O. Box 4365 Rocky Mount, NC 27803 1-800-773-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. - -------------------------------------------------------------------------------- Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the Wisdom Fund ("Fund") and of the market in general and statements of the Fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include, without limitation, general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. Investments in the Fund are subject to investment risks, including, without limitation, market risk, investment style risk, investment advisor risk, market sector risk, equity securities risk, portfolio turnover risk, and other risks as set forth in the Fund's prospectus. Investment in the Fund is subject to investment risks, including, without limitation, tracking risks (an investor in the Fund should not expect that the investment performance of the Fund will be able to track the investment performance of Berkshire Hathaway, Inc.), non-diversified risk, industry concentration risk and other risks as set forth in the Fund's prospectus. More information about these risks and other risks can be found in the Fund's prospectus. The performance information quoted in this annual report represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. An investor should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. A copy of the prospectus is available by calling Shareholder Services at 1-877-892-4226. The prospectus should be read carefully before investing. - -------------------------------------------------------------------------------- WISDOM FUND Annual Report to Shareholders July 26, 2004 Dear fellow Shareholders, For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24% for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and 13.49% for the Institutional Class of shares. These returns are less than the 18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for the same period. The reason why the Fund under performed the S&P 500 Index is primarily because the Fund held on average about 25% of its assets in short-term treasury bills and money market instruments. Since the objective of the Fund is to emulate both the public and private holdings of Berkshire Hathaway, Inc. ("Berkshire"), we try to keep our short term fixed income holdings as close as possible to at the same percentage as Berkshire's. Warren Buffett is not afraid to hold cash and holding cash is like holding an option - the option to take advantage of volatility. The value of this option rises when market volatility rises. Many market participants neglect this important aspect of investing and stay fully invested at all times. When the market drops, they cannot do anything but watch (or sell out at the bottom). Being fully invested goes hand-in-hand with a focus on relative returns. We care only about absolute returns, not relative returns. By investing only when we believe stocks are selling at a large discount to value, we have benefited from a cushion that Benjamin Graham, a Columbia University professor and known as the "father of value investing," referred to as a "margin of safety." While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by Mr. Graham. Mr. Graham believed the most critical piece of investment information was a company's intrinsic value. He believed that the core task for investors is to accurately calculate this value and then maintain the discipline to buy a stock only when the price is below that calculated amount and that buying below that calculated value gives you a margin of safety. Mr. Buffett also believes that one should not even think about the direction of the market, because it is impossible to predict with any consistency. (Source: "The Warren Buffett Portfolio" by Robert Hagstrom) The Stock Market We believe the equity market has failed to fully benefit from the slight easing in interest rate worries that have recently helped the Treasury market. There is a nagging concern that profits will be in jeopardy because margins show signs of peaking (albeit from record highs) even before labor costs have heated up. Corporate guidance is much more supportive than in 2001-2003, but we believe investors are wary having been so badly burned by shady accounting practices and biased opinions from Wall Street. Thus, we see more upside in equities, once investors move beyond interest rate worries and return to reacting to bullish near-run profit trends. The downside of this forecast is that it could be the final phase of the post-2002 rally, as the interest rate reprieve should prove temporary. The three drags on equities since early this year have recently improved, but only slightly. Rate fears have calmed, oil prices have corrected a bit and the dollar has stopped strengthening. We believe that the economic backdrop will stay supportive and any deceleration in earnings growth in the next six months should be modest, as higher selling prices will provide some offset to increased input costs. We believe the stock market's prospective returns are still attractive compared to other asset classes. We also believe that the higher share valuations make this a stockpicker's market. Values do exist, but they are becoming harder to find. The rigors of our disciplined, bottom-up investment process, which focuses on finding undervalued stocks, helps us to take advantage of market volatility and to unearth value in today's market. We believe that our patient, long-term approach, which helps us avoid over reacting to short term events, gives us that extra edge. This is especially important when we have to select "proxies" for the private holding of Berkshire. Berkshire has only purchased one stock in the last ten months and that was HCA, Inc.* Following our investment guidelines, we purchased the same stock as soon as the news became public. Thank you for your continued investment and confidence in the Wisdom Fund. We welcome your questions, thoughts and comments. You can reach us via email at contactwisdom@wisdomfund.com. C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC Portfolio Manager of the Wisdom Fund * HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004. WISDOM FUND CLASS B SHARES Performance Update - $10,000 Investment For the period from November 16, 1999 (Commencement of Operations) to May 31, 2004 [Graph Here] - -------------------------------------------------------------------------------- Wisdom Fund - S&P 500 Total Class B Shares Return Index - -------------------------------------------------------------------------------- 11/16/99 $10,000 $10,000 02/29/00 8,613 9,655 05/31/00 9,815 10,070 08/31/00 10,307 10,787 11/30/00 11,164 9,373 02/28/01 10,841 8,863 05/31/01 10,757 9,007 08/31/01 10,499 8,156 11/30/01 10,588 8,227 02/28/02 11,000 8,020 05/31/02 11,479 7,760 08/31/02 10,551 6,689 11/30/02 10,531 6,868 02/28/03 9,792 6,201 05/31/03 10,950 7,134 08/31/03 11,020 7,496 11/30/03 11,499 7,905 02/29/04 12,428 8,590 05/31/04 12,108 8,442 This graph depicts the performance of the Wisdom Fund - Class B Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns ------------------------------ -------------- --------------------- Since 11/16/99 One Year (Commencement of Operations) ------------------------------ -------------- --------------------- No Sales Charges 12.40 % 4.68 % ------------------------------ -------------- --------------------- Maximum Sales Charge 8.40 % 4.30 % ------------------------------ -------------- --------------------- >> The graph assumes an initial $10,000 investment at November 16, 1999 (commencement of operations) and reflects the deduction of the applicable maximum contingent deferred sales charge ("CDSC"), taken on the last business day of the most recently completed fiscal year. The table above includes the maximum CDSC corresponding to the length of time that the investment was held as noted. The CDSC for the Class B Shares declines from 4% to 0% over seven years; and the Class B Shares are converted to Investor Class Shares of the Fund after eight years, without the imposition of any sales charges. All dividends and distributions are reinvested. >> At May 31, 2004, the value of the Fund's Class B Shares would have increased to $12,108 - a cumulative total investment return of 21.08% since November 16, 1999. Without the deduction of the 2% maximum CDSC for the length of time the investment was held, the value of the Fund's Class B Shares would have increased to $12,308 - a cumulative total investment return of 23.08% since November 16, 1999. The CDSC may be waived or reduced under certain circumstances. >> At May 31, 2004, a similar investment in the S&P 500 Total Return Index would have decreased to $8,442 - a cumulative total investment return of (15.58)% since November 16, 1999. The performance information quoted above represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 74.30% Apparel - 0.24% Nike, Inc. .............................................................. 1,600 $ 113,840 ------------ Banks - 2.84% M & T Bank Corporation .................................................. 2,030 183,857 SunTrust Banks, Inc. .................................................... 1,100 71,588 Wells Fargo Company ..................................................... 18,922 1,112,614 ------------ 1,368,059 ------------ Beverages - 7.40% The Coca-Cola Company ................................................... 69,430 3,565,231 ------------ Building Materials - 0.64% (a)American Standard Companies, Inc. ....................................... 8,190 307,289 ------------ Chemicals - 1.14% The Sherwin-Williams Company ............................................ 13,970 549,021 ------------ Commercial Services - 3.10% Cendant Corporation ..................................................... 9,000 206,460 H&R Block, Inc. ......................................................... 3,320 162,182 (a)Iron Mountain Incorporated .............................................. 5,100 225,777 Moody's Corporation ..................................................... 13,705 896,170 ------------ 1,490,589 ------------ Cosmetics & Personal Care - 2.81% The Gillette Company .................................................... 31,380 1,352,164 ------------ Diversified Financial Services - 3.90% American Express Company ................................................ 37,050 1,878,435 ------------ Electric - 1.33% FPL Group, Inc. ......................................................... 5,865 373,894 (a)Reliant Energy, Inc. .................................................... 27,000 267,570 ------------ 641,464 ------------ Food - 2.57% Cadbury Schweppes PLC ................................................... 6,500 224,250 Sysco Corporation ....................................................... 18,166 681,225 WM Wrigley Jr. Company .................................................. 5,300 332,840 ------------ 1,238,315 ------------ Health Care Services - 0.78% (a)Five Star Quality Care, Inc. ............................................ 4 15 HCA Inc. ................................................................ 9,700 376,651 ------------ 376,666 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Holding Companies - Diversified - 1.06% Leucadia National Corporation ............................................. 10,300 $ 511,910 ------------ Home Builders - 0.13% (a)Champion Enterprises Inc. ................................................. 6,700 62,645 ------------ Home Furnishings - 0.36% Ethan Allen Interiors, Inc. ............................................... 4,430 172,637 ------------ Insurance - Multiline - 17.57% Ambac Financial Group, Inc. ............................................... 8,380 579,477 American International Group, Inc. ........................................ 32,150 2,356,595 Aon Corporation ........................................................... 6,000 165,780 Everest Re Group, Ltd. .................................................... 20,015 1,638,228 PartnerRe Ltd. ............................................................ 11,005 614,959 Platinum Underwriters Holding Limited ..................................... 2,000 62,200 RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287 The Allstate Corporation .................................................. 24,750 1,088,505 ------------ 8,460,031 ------------ Insurance - Property & Casualty - 16.01% ACE Limited ............................................................... 15,547 640,225 Fidelity National Financial, Inc. ......................................... 23,463 881,974 Infinity Property & Casualty Corporation .................................. 6,900 215,280 (a)Markel Corporation ........................................................ 7,200 2,070,000 (a)ProAssurance Corporation .................................................. 6,900 228,183 SAFECO Corporation ........................................................ 6,000 251,700 The Chubb Corporation ..................................................... 15,400 1,037,498 The Progressive Corporation ............................................... 9,360 802,807 Wesco Financial Corporation ............................................... 386 145,503 White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000 ------------ 7,708,170 ------------ Media - 2.22% Gannett Company, Inc. ..................................................... 1,698 149,084 The Washington Post Company ............................................... 970 922,228 ------------ 1,071,312 ------------ Miscellaneous Manufacturing - 0.31% Dover Corporation ......................................................... 3,800 148,048 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Oil & Gas - 1.22% Exxon Mobil Corporation ............................................... 7,000 $ 302,750 PetroChina Company Limited ............................................ 6,000 285,000 ------------ 587,750 ------------ Packaging & Containers - 0.44% (a)Sealed Air Corporation ................................................ 4,252 213,748 ------------ Pipelines - 1.67% Kinder Morgan, Inc. ................................................... 13,400 804,000 ------------ Real Estate Investment Trusts - 0.38% Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173 The Town & Country Trust .............................................. 3,156 76,785 ------------ 182,958 ------------ Retail - 1.57% Brown Shoe Company, Inc. .............................................. 3,300 136,389 (a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260 Wendy's International, Inc. ........................................... 5,150 194,619 (a)Yum! Brands, Inc. ..................................................... 5,150 193,125 (a)Zale Corporation ...................................................... 3,400 185,538 ------------ 754,931 ------------ Software - 1.45% Automatic Data Processing, Inc. ....................................... 7,200 319,896 First Data Corporation ................................................ 8,770 379,653 ------------ 699,549 ------------ Textiles - 3.16% (a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549 ------------ Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311 ------------ MUTUAL FUNDS - 4.00% PIMCO High Yield Fund ...................................................... 188,453 1,762,036 Templeton Global Income Fund Inc. .......................................... 20,200 164,428 ------------ Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 4.99% Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067 Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598 ------------ Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665 ------------ Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440 Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455 --------- ------------ Net Assets ......................................................................... 100.00 % $ 48,152,895 ========= ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments for federal income tax purposes is as follows: Unrealized appreciation ............................................................ $ 6,596,391 Unrealized depreciation ............................................................ (63,263) ------------ Net unrealized appreciation ............................................. $ 6,533,128 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2004 ASSETS Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440 Cash ............................................................................................. 7,931,538 Income receivable ................................................................................ 56,999 Receivable for fund shares sold .................................................................. 109,178 Other assets ..................................................................................... 13,756 ------------ Total assets ................................................................................ 48,218,911 ------------ LIABILITIES Accrued expenses ................................................................................. 65,880 Payable for fund shares redeemed ................................................................. 136 ------------ Total liabilities ........................................................................... 66,016 ------------ NET ASSETS ............................................................................................. $ 48,152,895 ============ NET ASSETS CONSIST OF Paid-in capital .................................................................................. $ 40,919,006 Undistributed net realized gain on investments ................................................... 699,889 Net unrealized appreciation on investments ....................................................... 6,534,000 ------------ $ 48,152,895 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,811,294 / 381,177 shares) ............................................................... $ 12.62 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57 ============ Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($8,681,811 / 701,203 shares) ............................................................... $ 12.38 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2004 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 39,091 Dividends ..................................................................................... 574,457 ------------ Total income .............................................................................. 613,548 ------------ Expenses Investment advisory fees (note 2) ............................................................. 214,245 Fund administration fees (note 2) ............................................................. 53,561 Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316 Distribution and service fees - Class B Shares (note 3) ....................................... 140,978 Distribution and service fees - Class C Shares (note 3) ....................................... 69,724 Custody fees (note 2) ......................................................................... 12,949 Registration and filing administration fees (note 2) .......................................... 26,381 Fund accounting fees (note 2) ................................................................. 58,285 Audit and tax preparation fees ................................................................ 14,150 Legal fees .................................................................................... 28,671 Securities pricing fees ....................................................................... 5,560 Shareholder recordkeeping fees (note 2) ....................................................... 49,178 Shareholder servicing expenses ................................................................ 10,824 Registration and filing expenses .............................................................. 46,732 Printing expenses ............................................................................. 13,014 Trustee fees and meeting expenses ............................................................. 4,422 Other operating expenses ...................................................................... 14,909 ------------ Total expenses ............................................................................ 806,899 ------------ Net investment loss .................................................................. (193,351) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investment transactions ..................................................... 1,219,133 Change in unrealized appreciation on investments ................................................... 4,101,451 ------------ Net realized and unrealized gain on investments ............................................... 5,320,584 ------------ Net increase in net assets resulting from operations ...................................... $ 5,127,233 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, ------------------------------------------------- 2004 2003 -------------------------------------------------- INCREASE IN NET ASSETS Operations Net investment loss ................................................ $ (193,351) $ (212,866) Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255) Change in unrealized appreciation on investments ................... 4,101,451 1,023,603 ------------ ------------ Net increase in net assets resulting from operations .......... 5,127,233 631,482 ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111 ------------ ------------ Total increase in net assets ........................... 11,668,840 23,704,593 NET ASSETS Beginning of year ...................................................... 36,484,055 12,779,462 ------------ ------------ End of year ............................................................ $ 48,152,895 $ 36,484,055 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------ 2004 2003 Shares Value Shares Value ------------------------------------------------------------- - ---------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968 Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123) ------------ ------------ ------------ ------------ Net increase .................................................... 746 $ 31,772 40,267 $ 429,845 ============ ============ ============ ============ - ---------------------------------------------------------------------- INVESTOR CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955 Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784) ------------ ------------ ------------ ------------ Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS B SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351 Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003) ------------ ------------ ------------ ------------ Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS C SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789 Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042) ------------ ------------ ------------ ------------ Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747 ============ ============ ============ ============ - ---------------------------------------------------------------------- FUND SUMMARY - ---------------------------------------------------------------------- Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063 Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952) ------------ ------------ ------------ ------------ Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INSTITUTIONAL CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 Income (loss) from investment operations Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18 Net realized and unrealized gain (loss) on investments.............................. 1.48 (0.39) 0.85 0.90 (0.01) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90 =========== =========== =========== =========== =========== Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 % After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 % Ratio of net investment income (loss) to average net assets Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)% After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INVESTOR CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 Income (loss) from investment operations Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12 Net realized and unrealized gain (loss) on investments............................... 1.48 (0.42) 0.85 0.91 0.01 ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93 =========== =========== =========== =========== =========== Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 % After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 % Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)% After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) Total return does not reflect payment of a sales charge (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20 Income (loss) from investment operations Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04 Net realized and unrealized gain (loss) on investments ............................... 1.46 (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== =========== Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period .......................... $14,870,965 $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20 Income (loss) from investment operations Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03 Net realized and unrealized gain (loss) on investments .............................. 1.46 (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== =========== Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B Shares and Class C Shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $106,120 has been charged to undistributed net realized gains, $87,231 has been charged to paid-in capital, and accumulated net investment loss has been credited $193,351, bringing it to zero. C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, Investor Class Shares, Class B Shares, and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities, which are believed to be immaterial in amount. NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. The Transfer Agent is compensated for its services based upon a $15 fee per shareholder per year, subject to a minimum fee of $1,500 per month, plus $500 per month for each additional class of shares. In addition, the Transfer Agent shall be entitled to reimbursement of actual out-of-pocket expenses incurred by the Transfer Agent on behalf of the Trust or the Fund. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2004, the Distributor retained sales charges in the amount of $17,739. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $43,316, $140,978, and $69,724, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2004. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, aggregated $13,296,089 and $7,840,435, respectively, for the year ended May 31, 2004. Purchases and sales of long-term U.S. government securities aggregated $58,971,025 and $67,011,000, respectively, for the year ended May 31, 2004. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) PROXY VOTING POLICY A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy Voting and Disclosure Policy are included as Appendix B to the Fund's Statement of Additional Information and is available, without charge, upon request, by calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004, the Fund will file Form N-PX stating how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 within 60 days after the end of such period. Information regarding how the Fund voted proxies as set forth in its most recent filing of Form N-PX will be available (i) without charge, upon request, by calling the Fund at 1-800-773-3863; and (ii) on the SEC's website at http://www.sec.gov. INFORMATION ABOUT TRUSTEES AND OFFICERS The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27804. The Trustee received aggregate compensation of $3,250 during the fiscal year ended May 31, 2004 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Independent Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) and President of three series of that trust; Th Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II dealership) for the eight series of that trust; Hillman Capital Management Investment Trust for the two series of that trust; Trust for the one series of that trust; MurphyMorris Investment Trust for the one series of that trust; Merit Advisors Investment Trust for the one series of that trust; Merit Advisors Investment Trust II for the one series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Officers - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of 3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker Suite 200 Executive at Lehman Brothers Atlanta, GA 30327 Officer, and Principal Financial Officer - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Frank Watson III, 33 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Julian G. Winters, 35 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company. Assistant Secretary - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of New Providence Investment Trust and the Shareholders of Wisdom Fund We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the schedule of investments, as of May 31, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2004, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP July 19,2004 Member of Deloitte Touche Tohmatsu ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust CLASS C SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2004 INVESTMENT ADVISOR Atlanta Investment Counsel, LLC 3717 Haddon Hall Road, NW Suite 200 Atlanta, Georgia 30327 WISDOM FUND 116 South Franklin Street Post Office Drawer 4365 Rocky Mount, North Carolina 27803 1-800-525-3863 DISTRIBUTOR Capital Investment Group, Inc. P.O. Box 4365 Rocky Mount, NC 27803 1-800-773-3863 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Wisdom Fund (the "Fund"). This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested. Neither the Fund nor the Fund's distributor is a bank. - -------------------------------------------------------------------------------- Statements in this Annual Report that reflect projections or expectations of future financial or economic performance of the Wisdom Fund ("Fund") and of the market in general and statements of the Fund's plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to the other factors noted with such forward-looking statements, include, without limitation, general economic conditions such as inflation, recession and interest rates. Past performance is not a guarantee of future results. Investments in the Fund are subject to investment risks, including, without limitation, market risk, investment style risk, investment advisor risk, market sector risk, equity securities risk, portfolio turnover risk, and other risks as set forth in the Fund's prospectus. Investment in the Fund is subject to investment risks, including, without limitation, tracking risks (an investor in the Fund should not expect that the investment performance of the Fund will be able to track the investment performance of Berkshire Hathaway, Inc.), non-diversified risk, industry concentration risk and other risks as set forth in the Fund's prospectus. More information about these risks and other risks can be found in the Fund's prospectus. The performance information quoted in this annual report represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. An investor should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. A copy of the prospectus is available by calling Shareholder Services at 1-877-892-4226. The prospectus should be read carefully before investing. - -------------------------------------------------------------------------------- WISDOM FUND Annual Report to Shareholders July 26, 2004 Dear fellow Shareholders, For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24% for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and 13.49% for the Institutional Class of shares. These returns are less than the 18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for the same period. The reason why the Fund under performed the S&P 500 Index is primarily because the Fund held on average about 25% of its assets in short-term treasury bills and money market instruments. Since the objective of the Fund is to emulate both the public and private holdings of Berkshire Hathaway, Inc. ("Berkshire"), we try to keep our short term fixed income holdings as close as possible to at the same percentage as Berkshire's. Warren Buffett is not afraid to hold cash and holding cash is like holding an option - the option to take advantage of volatility. The value of this option rises when market volatility rises. Many market participants neglect this important aspect of investing and stay fully invested at all times. When the market drops, they cannot do anything but watch (or sell out at the bottom). Being fully invested goes hand-in-hand with a focus on relative returns. We care only about absolute returns, not relative returns. By investing only when we believe stocks are selling at a large discount to value, we have benefited from a cushion that Benjamin Graham, a Columbia University professor and known as the "father of value investing," referred to as a "margin of safety." While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by Mr. Graham. Mr. Graham believed the most critical piece of investment information was a company's intrinsic value. He believed that the core task for investors is to accurately calculate this value and then maintain the discipline to buy a stock only when the price is below that calculated amount and that buying below that calculated value gives you a margin of safety. Mr. Buffett also believes that one should not even think about the direction of the market, because it is impossible to predict with any consistency. (Source: "The Warren Buffett Portfolio" by Robert Hagstrom) The Stock Market We believe the equity market has failed to fully benefit from the slight easing in interest rate worries that have recently helped the Treasury market. There is a nagging concern that profits will be in jeopardy because margins show signs of peaking (albeit from record highs) even before labor costs have heated up. Corporate guidance is much more supportive than in 2001-2003, but we believe investors are wary having been so badly burned by shady accounting practices and biased opinions from Wall Street. Thus, we see more upside in equities, once investors move beyond interest rate worries and return to reacting to bullish near-run profit trends. The downside of this forecast is that it could be the final phase of the post-2002 rally, as the interest rate reprieve should prove temporary. The three drags on equities since early this year have recently improved, but only slightly. Rate fears have calmed, oil prices have corrected a bit and the dollar has stopped strengthening. We believe that the economic backdrop will stay supportive and any deceleration in earnings growth in the next six months should be modest, as higher selling prices will provide some offset to increased input costs. We believe the stock market's prospective returns are still attractive compared to other asset classes. We also believe that the higher share valuations make this a stockpicker's market. Values do exist, but they are becoming harder to find. The rigors of our disciplined, bottom-up investment process, which focuses on finding undervalued stocks, helps us to take advantage of market volatility and to unearth value in today's market. We believe that our patient, long-term approach, which helps us avoid over reacting to short term events, gives us that extra edge. This is especially important when we have to select "proxies" for the private holding of Berkshire. Berkshire has only purchased one stock in the last ten months and that was HCA, Inc.* Following our investment guidelines, we purchased the same stock as soon as the news became public. Thank you for your continued investment and confidence in the Wisdom Fund. We welcome your questions, thoughts and comments. You can reach us via email at contactwisdom@wisdomfund.com. C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC Portfolio Manager of the Wisdom Fund * HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004. WISDOM FUND CLASS C SHARES Performance Update - $10,000 Investment For the period from November 16, 1999 (Commencement of Operations) to May 31, 2004 - -------------------------------------------------------------------------------- Wisdom Fund - S&P 500 Total Class C Shares Return Index - -------------------------------------------------------------------------------- 11/16/99 $10,000 $10,000 02/29/00 8,613 9,655 05/31/00 9,814 10,070 08/31/00 10,306 10,787 11/30/00 11,161 9,373 02/28/01 10,839 8,863 5/31/2001 10,760 9,007 08/31/01 10,494 8,156 11/30/01 10,592 8,227 02/28/02 10,993 8,020 5/31/2002 11,480 7,760 08/31/02 10,565 6,689 11/30/02 10,535 6,868 02/28/03 9,809 6,201 5/31/2003 10,953 7,134 08/31/03 11,033 7,496 11/30/03 11,510 7,905 02/29/04 12,435 8,590 5/31/2004 12,316 8,442 This graph depicts the performance of the Wisdom Fund - Class C Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to note that the Fund is a professionally managed mutual fund while the index is not available for investment and is unmanaged. The comparison is shown for illustrative purposes only. Average Annual Total Returns --------------------------------- ------------- --------------------- Since 11/16/99 One Year (Commencement of Operations) --------------------------------- ------------- --------------------- No Sales Charges 12.44 % 4.69 % --------------------------------- ------------- --------------------- 1% Maximum Sales Charge 11.44 % 4.69 % --------------------------------- ------------- --------------------- >> The graph assumes an initial $10,000 investment at November 16, 1999 (commencement of operations). The deduction of the maximum contingent deferred sales charge ("CDSC") is not reflected in the graph because the CDSC for the Class C Shares declines to 0% after the first year. However, the CDSC is reflected in the return table above as applicable. The CDSC may be waived or reduced under certain circumstances. All dividends and distributions are reinvested. >> At May 31, 2004, the value of the Fund's Class C Shares would have increased to $12,316 - a cumulative total investment return of 23.16% since November 16, 1999. >> At May 31, 2004, a similar investment in the S&P 500 Total Return Index would have decreased to $8,442 - a cumulative total investment return of (15.58)% since November 16, 1999. The performance information quoted above represents past performance, which is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. An investor may obtain performance data current to the most recent month-end by visiting www.ncfunds.com. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Average annual total returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends. WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 74.30% Apparel - 0.24% Nike, Inc. .............................................................. 1,600 $ 113,840 ------------ Banks - 2.84% M & T Bank Corporation .................................................. 2,030 183,857 SunTrust Banks, Inc. .................................................... 1,100 71,588 Wells Fargo Company ..................................................... 18,922 1,112,614 ------------ 1,368,059 ------------ Beverages - 7.40% The Coca-Cola Company ................................................... 69,430 3,565,231 ------------ Building Materials - 0.64% (a)American Standard Companies, Inc. ....................................... 8,190 307,289 ------------ Chemicals - 1.14% The Sherwin-Williams Company ............................................ 13,970 549,021 ------------ Commercial Services - 3.10% Cendant Corporation ..................................................... 9,000 206,460 H&R Block, Inc. ......................................................... 3,320 162,182 (a)Iron Mountain Incorporated .............................................. 5,100 225,777 Moody's Corporation ..................................................... 13,705 896,170 ------------ 1,490,589 ------------ Cosmetics & Personal Care - 2.81% The Gillette Company .................................................... 31,380 1,352,164 ------------ Diversified Financial Services - 3.90% American Express Company ................................................ 37,050 1,878,435 ------------ Electric - 1.33% FPL Group, Inc. ......................................................... 5,865 373,894 (a)Reliant Energy, Inc. .................................................... 27,000 267,570 ------------ 641,464 ------------ Food - 2.57% Cadbury Schweppes PLC ................................................... 6,500 224,250 Sysco Corporation ....................................................... 18,166 681,225 WM Wrigley Jr. Company .................................................. 5,300 332,840 ------------ 1,238,315 ------------ Health Care Services - 0.78% (a)Five Star Quality Care, Inc. ............................................ 4 15 HCA Inc. ................................................................ 9,700 376,651 ------------ 376,666 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Holding Companies - Diversified - 1.06% Leucadia National Corporation ............................................. 10,300 $ 511,910 ------------ Home Builders - 0.13% (a)Champion Enterprises Inc. ................................................. 6,700 62,645 ------------ Home Furnishings - 0.36% Ethan Allen Interiors, Inc. ............................................... 4,430 172,637 ------------ Insurance - Multiline - 17.57% Ambac Financial Group, Inc. ............................................... 8,380 579,477 American International Group, Inc. ........................................ 32,150 2,356,595 Aon Corporation ........................................................... 6,000 165,780 Everest Re Group, Ltd. .................................................... 20,015 1,638,228 PartnerRe Ltd. ............................................................ 11,005 614,959 Platinum Underwriters Holding Limited ..................................... 2,000 62,200 RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287 The Allstate Corporation .................................................. 24,750 1,088,505 ------------ 8,460,031 ------------ Insurance - Property & Casualty - 16.01% ACE Limited ............................................................... 15,547 640,225 Fidelity National Financial, Inc. ......................................... 23,463 881,974 Infinity Property & Casualty Corporation .................................. 6,900 215,280 (a)Markel Corporation ........................................................ 7,200 2,070,000 (a)ProAssurance Corporation .................................................. 6,900 228,183 SAFECO Corporation ........................................................ 6,000 251,700 The Chubb Corporation ..................................................... 15,400 1,037,498 The Progressive Corporation ............................................... 9,360 802,807 Wesco Financial Corporation ............................................... 386 145,503 White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000 ------------ 7,708,170 ------------ Media - 2.22% Gannett Company, Inc. ..................................................... 1,698 149,084 The Washington Post Company ............................................... 970 922,228 ------------ 1,071,312 ------------ Miscellaneous Manufacturing - 0.31% Dover Corporation ......................................................... 3,800 148,048 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - (Continued) Oil & Gas - 1.22% Exxon Mobil Corporation ............................................... 7,000 $ 302,750 PetroChina Company Limited ............................................ 6,000 285,000 ------------ 587,750 ------------ Packaging & Containers - 0.44% (a)Sealed Air Corporation ................................................ 4,252 213,748 ------------ Pipelines - 1.67% Kinder Morgan, Inc. ................................................... 13,400 804,000 ------------ Real Estate Investment Trusts - 0.38% Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173 The Town & Country Trust .............................................. 3,156 76,785 ------------ 182,958 ------------ Retail - 1.57% Brown Shoe Company, Inc. .............................................. 3,300 136,389 (a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260 Wendy's International, Inc. ........................................... 5,150 194,619 (a)Yum! Brands, Inc. ..................................................... 5,150 193,125 (a)Zale Corporation ...................................................... 3,400 185,538 ------------ 754,931 ------------ Software - 1.45% Automatic Data Processing, Inc. ....................................... 7,200 319,896 First Data Corporation ................................................ 8,770 379,653 ------------ 699,549 ------------ Textiles - 3.16% (a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549 ------------ Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311 ------------ MUTUAL FUNDS - 4.00% PIMCO High Yield Fund ...................................................... 188,453 1,762,036 Templeton Global Income Fund Inc. .......................................... 20,200 164,428 ------------ Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464 ------------ (Continued)
WISDOM FUND PORTFOLIO OF INVESTMENTS May 31, 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Value Shares (note 1) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 4.99% Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067 Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598 ------------ Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665 ------------ Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440 Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455 --------- ------------ Net Assets ......................................................................... 100.00 % $ 48,152,895 ========= ============ (a) Non-income producing investment. (b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments for federal income tax purposes is as follows: Unrealized appreciation ............................................................ $ 6,596,391 Unrealized depreciation ............................................................ (63,263) ------------ Net unrealized appreciation ............................................. $ 6,533,128 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES May 31, 2004 ASSETS Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440 Cash ............................................................................................. 7,931,538 Income receivable ................................................................................ 56,999 Receivable for fund shares sold .................................................................. 109,178 Other assets ..................................................................................... 13,756 ------------ Total assets ................................................................................ 48,218,911 ------------ LIABILITIES Accrued expenses ................................................................................. 65,880 Payable for fund shares redeemed ................................................................. 136 ------------ Total liabilities ........................................................................... 66,016 ------------ NET ASSETS ............................................................................................. $ 48,152,895 ============ NET ASSETS CONSIST OF Paid-in capital .................................................................................. $ 40,919,006 Undistributed net realized gain on investments ................................................... 699,889 Net unrealized appreciation on investments ....................................................... 6,534,000 ------------ $ 48,152,895 ============ INSTITUTIONAL CLASS SHARES Net asset value, redemption and offering price per share ($4,811,294 / 381,177 shares) ............................................................... $ 12.62 ============ INVESTOR CLASS SHARES Net asset value, redemption and offering price per share ($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57 ============ Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34 ============ CLASS B SHARES Net asset value, redemption and offering price per share ($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33 ============ CLASS C SHARES Net asset value, redemption and offering price per share ($8,681,811 / 701,203 shares) ............................................................... $ 12.38 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENT OF OPERATIONS Year ended May 31, 2004 NET INVESTMENT LOSS Income Interest ...................................................................................... $ 39,091 Dividends ..................................................................................... 574,457 ------------ Total income .............................................................................. 613,548 ------------ Expenses Investment advisory fees (note 2) ............................................................. 214,245 Fund administration fees (note 2) ............................................................. 53,561 Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316 Distribution and service fees - Class B Shares (note 3) ....................................... 140,978 Distribution and service fees - Class C Shares (note 3) ....................................... 69,724 Custody fees (note 2) ......................................................................... 12,949 Registration and filing administration fees (note 2) .......................................... 26,381 Fund accounting fees (note 2) ................................................................. 58,285 Audit and tax preparation fees ................................................................ 14,150 Legal fees .................................................................................... 28,671 Securities pricing fees ....................................................................... 5,560 Shareholder recordkeeping fees (note 2) ....................................................... 49,178 Shareholder servicing expenses ................................................................ 10,824 Registration and filing expenses .............................................................. 46,732 Printing expenses ............................................................................. 13,014 Trustee fees and meeting expenses ............................................................. 4,422 Other operating expenses ...................................................................... 14,909 ------------ Total expenses ............................................................................ 806,899 ------------ Net investment loss .................................................................. (193,351) ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investment transactions ..................................................... 1,219,133 Change in unrealized appreciation on investments ................................................... 4,101,451 ------------ Net realized and unrealized gain on investments ............................................... 5,320,584 ------------ Net increase in net assets resulting from operations ...................................... $ 5,127,233 ============ See accompanying notes to financial statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Years ended May 31, ------------------------------------------------- 2004 2003 -------------------------------------------------- INCREASE IN NET ASSETS Operations Net investment loss ................................................ $ (193,351) $ (212,866) Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255) Change in unrealized appreciation on investments ................... 4,101,451 1,023,603 ------------ ------------ Net increase in net assets resulting from operations .......... 5,127,233 631,482 ------------ ------------ Capital share transactions Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111 ------------ ------------ Total increase in net assets ........................... 11,668,840 23,704,593 NET ASSETS Beginning of year ...................................................... 36,484,055 12,779,462 ------------ ------------ End of year ............................................................ $ 48,152,895 $ 36,484,055 ============ ============ (a) A summary of capital share activity follows: ------------------------------------------------------------ 2004 2003 Shares Value Shares Value ------------------------------------------------------------- - ---------------------------------------------------------------------- INSTITUTIONAL CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968 Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123) ------------ ------------ ------------ ------------ Net increase .................................................... 746 $ 31,772 40,267 $ 429,845 ============ ============ ============ ============ - ---------------------------------------------------------------------- INVESTOR CLASS SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955 Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784) ------------ ------------ ------------ ------------ Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS B SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351 Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003) ------------ ------------ ------------ ------------ Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348 ============ ============ ============ ============ - ---------------------------------------------------------------------- CLASS C SHARES - ---------------------------------------------------------------------- Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789 Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042) ------------ ------------ ------------ ------------ Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747 ============ ============ ============ ============ - ---------------------------------------------------------------------- FUND SUMMARY - ---------------------------------------------------------------------- Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063 Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952) ------------ ------------ ------------ ------------ Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111 ============ ============ ============ ============ See accompanying notes to financial statements
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INSTITUTIONAL CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91 Income (loss) from investment operations Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18 Net realized and unrealized gain (loss) on investments.............................. 1.48 (0.39) 0.85 0.90 (0.01) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90 =========== =========== =========== =========== =========== Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 % After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 % Ratio of net investment income (loss) to average net assets Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)% After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Year) INVESTOR CLASS SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92 Income (loss) from investment operations Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12 Net realized and unrealized gain (loss) on investments............................... 1.48 (0.42) 0.85 0.91 0.01 ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13 ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12) ----------- ----------- ----------- ----------- ----------- Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93 =========== =========== =========== =========== =========== Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 % =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 % After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 % Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)% After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 % Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) Total return does not reflect payment of a sales charge (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS B SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20 Income (loss) from investment operations Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04 Net realized and unrealized gain (loss) on investments ............................... 1.46 (0.43) 0.79 0.90 (0.23) ----------- ----------- ----------- ----------- ----------- Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97 =========== =========== =========== =========== =========== Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period .......................... $14,870,965 $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.28 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period) CLASS C SHARES - ------------------------------------------------------------------------------------------------------------------------------------ For the Years ended May 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20 Income (loss) from investment operations Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03 Net realized and unrealized gain (loss) on investments .............................. 1.46 (0.44) 0.82 0.93 (0.22) ----------- ----------- ----------- ----------- ----------- Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19) ----------- ----------- ----------- ----------- ----------- Distributions to shareholders from Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03) Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00 ----------- ----------- ----------- ----------- ----------- Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98 =========== =========== =========== =========== =========== Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)% =========== =========== =========== =========== =========== Ratios/supplemental data Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395 =========== =========== =========== =========== =========== Ratio of expenses to average net assets Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b) After expense reimbursements and waived fees 2.29 % 2.62 % 2.71 % 1.41 % 1.00 %(b) Ratio of net investment (loss) income to average net assets Before expense reimbursements and waived fees (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b) After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b) Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 % (a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000. (b) Annualized. (c) Total return does not reflect payment of a sales charge. See accompanying notes to financial statements
WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION The Wisdom Fund (the "Fund") is a diversified series of shares of beneficial interest of the New Providence Investment Trust (the "Trust"), an open-ended management investment company. The Trust was organized on July 9, 1997 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940, as amended (the "Act"). The Fund began operations on February 16, 1999. The investment objective of the Fund is to seek maximum total return consisting of any combination of capital appreciation, realized and unrealized, and income under the constantly varying market conditions. The Board of Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a plan to authorize two new classes of shares designated as Class B Shares and Class C Shares. On November 16, 1999, the Class B Shares and Class C Shares became effective. The Fund has an unlimited number of authorized shares, which are divided into four classes - Institutional Class Shares, Investor Class Shares, Class B Shares and Class C Shares. Each class of shares has equal rights as to assets of the Fund, and the classes are identical except for differences in their sales charge structures and ongoing distribution and service fees. Income, expenses (other than distribution and service fees, which are not attributable to the Institutional Class Shares), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., Eastern Time. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by using an independent pricing service or by following procedures approved by the Trustees. Short-term investments are valued at cost, which approximates value. B. Federal Income Taxes - No provision has been made for federal income taxes since substantially all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and income tax purposes primarily because of losses incurred subsequent to October 31, which are deferred for income tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. As a result of the Fund's operating net investment loss, a reclassification adjustment of $106,120 has been charged to undistributed net realized gains, $87,231 has been charged to paid-in capital, and accumulated net investment loss has been credited $193,351, bringing it to zero. C. Investment Transactions - Investment transactions are recorded on trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on an accrual basis. Dividend income is recorded on the ex-dividend date. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September, and December on a date selected by the Trustees. Distributions to shareholders are recorded on the ex-dividend date. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. Distributions to shareholders are recorded on the ex-dividend date. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending May 31. E. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS Pursuant to an investment advisory agreement, Atlanta Investment Counsel, LLC (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Advisor receives a fee at the annual rate of 0.50% of the first $500 million of the Fund's average daily net assets and 0.40% of all assets over $500 million. The Advisor currently intends to voluntarily waive all or a portion of its fee and to reimburse expenses of the Fund to limit total Fund operating expenses to a maximum of 1.75% of the average daily net assets of the Fund's Institutional Class Shares, Investor Class Shares, Class B Shares, and Class C Shares. There can be no assurance that the foregoing voluntary fee waivers or reimbursements will continue. The Fund's administrator, The Nottingham Company (the "Administrator"), provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.125% of the Fund's first $50 million of average daily net assets, 0.100% of the next $50 million, and 0.075% of average daily net assets over $100 million. The contract with the Administrator provides that the aggregate fees for the aforementioned administration shall not be less than $2,000 per month. The Administrator also receives a monthly fee of $2,250 for accounting and record-keeping services for the initial class of shares and $750 per month for each additional class of shares, plus 0.01% of the average annual net assets. The Administrator also receives the following to procure and pay the custodian for the Trust: 0.02% on the first $100 million of the Fund's net assets and 0.009% on all assets over $100 million, including transaction fees, with a minimum annual fee of $4,800. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities, which are believed to be immaterial in amount. NC Shareholder Services, LLC (the "Transfer Agent") serves as the Fund's transfer, dividend paying, and shareholder servicing agent. The Transfer Agent maintains the records of each shareholder's account, answers shareholder inquiries concerning accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent, and performs other shareholder servicing functions. The Transfer Agent is compensated for its services based upon a $15 fee per shareholder per year, subject to a minimum fee of $1,500 per month, plus $500 per month for each additional class of shares. In addition, the Transfer Agent shall be entitled to reimbursement of actual out-of-pocket expenses incurred by the Transfer Agent on behalf of the Trust or the Fund. (Continued) WISDOM FUND NOTES TO FINANCIAL STATEMENTS May 31, 2004 Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended May 31, 2004, the Distributor retained sales charges in the amount of $17,739. Certain Trustees and officers of the Trust are also officers or directors of the Advisor, the Distributor, or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Trustees, including the Trustees who are not "interested persons" of the Trust as defined in the Act, adopted distribution and service plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the Investor Class Shares, Class B Shares, and Class C Shares. The Act regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plans provide that the Fund may incur certain costs, which may not exceed 0.25% per annum of the Investor Class Shares' average daily net assets or 1.00% per annum of the Class B Shares or Class C Shares for each year elapsed subsequent to adoption of the Plans, for payment to the Distributor and others for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of Investor Class Shares, Class B Shares and Class C Shares in the Fund or support servicing of those classes' shareholder accounts. The Fund incurred $43,316, $140,978, and $69,724, in distribution and service fees under the Plans with respect to Investor Class Shares, Class B Shares, and Class C Shares, respectively, for the year ended May 31, 2004. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, excluding long-term U.S. government securities and short-term obligations, aggregated $13,296,089 and $7,840,435, respectively, for the year ended May 31, 2004. Purchases and sales of long-term U.S. government securities aggregated $58,971,025 and $67,011,000, respectively, for the year ended May 31, 2004. (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) PROXY VOTING POLICY A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy Voting and Disclosure Policy are included as Appendix B to the Fund's Statement of Additional Information and is available, without charge, upon request, by calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004, the Fund will file Form N-PX stating how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 within 60 days after the end of such period. Information regarding how the Fund voted proxies as set forth in its most recent filing of Form N-PX will be available (i) without charge, upon request, by calling the Fund at 1-800-773-3863; and (ii) on the SEC's website at http://www.sec.gov. INFORMATION ABOUT TRUSTEES AND OFFICERS The business and affairs of the Fund and the Trust are managed under the direction of the Trustees. Information concerning the Trustee and officers of the Trust and Fund is set forth below. Generally, each Trustee and officer serves an indefinite term or until certain circumstances such as their resignation, death, or otherwise as specified in the Trust's organizational documents. Any Trustee may be removed at a meeting of shareholders by a vote meeting the requirements of the Trust's organizational documents. The Statement of Additional Information of the Fund includes additional information about the Trustee and officers and is available, without charge, upon request by calling the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer, unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount, North Carolina 27804. The Trustee received aggregate compensation of $3,250 during the fiscal year ended May 31, 2004 from the Fund for his services to the Fund and Trust. The officers did not receive compensation from the Fund for their services to the Fund and Trust. - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Independent Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner 1997 Brinson Investment Co. (personal Lewis Investment Trust for the investments) and President of three series of that trust; Th Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II dealership) for the eight series of that trust; Hillman Capital Management Investment Trust for the two series of that trust; Trust for the one series of that trust; MurphyMorris Investment Trust for the one series of that trust; Merit Advisors Investment Trust for the one series of that trust; Merit Advisors Investment Trust II for the one series of that trust; and de Leon Funds Trust for the one series of that trust (all registered investment companies) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ (Continued) WISDOM FUND ADDITIONAL INFORMATION May 31, 2004 (Unaudited) - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by And Age Fund/Trust Served During Past 5 Years Trustee Trustee - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Officers - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of 3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker Suite 200 Executive at Lehman Brothers Atlanta, GA 30327 Officer, and Principal Financial Officer - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ C. Frank Watson III, 33 Secretary Since President and Chief Operating n/a n/a 1997 Officer (since 1999) of The Nottingham Company (administrator to the Fund); previously, Chief Operating Officer of The Nottingham Company - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------ Julian G. Winters, 35 Assistant Since Vice President-Compliance n/a n/a Treasurer 2003 Administration (since 1998) of The and Nottingham Company. Assistant Secretary - ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte Deloitte & Touche LLP Two World Financial Center New York, New York 10281-1414 Tel: (212) 436-2000 Fax: (212) 436-5000 www.deloitte.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of New Providence Investment Trust and the Shareholders of Wisdom Fund We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund") (a portfolio of New Providence Investment Trust), including the schedule of investments, as of May 31, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2004, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Wisdom Fund as of May 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP July 19,2004 Member of Deloitte Touche Tohmatsu ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. Item 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to its Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer(s), or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (c) There have been no amendments during the period covered by this report. (d) The registrant has not granted, during the period covered by this report, any waivers, including an implicit waiver. (f)(1) A copy of the code of ethics that applies to the registrant's Principal Executive Officer and Principal Financial Officer is filed pursuant to Item 11(a)(1) below. Item 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The registrant does not have an audit committee financial expert serving on its audit committee. (a)(2) Not applicable. (a)(3) At this time, the registrant believes that the experience provided by the audit committee offers the registrant adequate oversight for the registrant's level of financial complexity. Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees - Audit fees billed for the registrant for the fiscal years ended May 31, 2003 and 2004 were $9,400 and $10,500, respectively. These amounts represent aggregate fees billed by the registrants' independent accountant, Deloitte & Touche LLP ("Accountant"), in connection with the annual audit of the registrant's financial statements and for services normally provided by the Accountant in connection with the statutory and regulatory filings. (b) Audit-Related Fees - There were no additional fees billed in the fiscal years ended May 31, 2003 or 2004 for assurance and related services by the Accountant that were reasonably related to the performance of the audit of the registrant's financial statements that were not reported under paragraph (a) of this Item. (c) Tax Fees - The tax fees billed in the fiscal years ended May 31, 2003 and 2004 for professional services rendered by Accountant for tax compliance, tax advice, and tax planning were $4,575 and $4,875, respectively. These services were for the completion of the fund's federal, state, and excise tax returns. (d) All Other Fees -There were no other fees billed by the Accountant, which were not disclosed in Items (a) through (c) above during the last two fiscal years. (e)(1) The registrant's board of trustees pre-approved the engagement of the Accountant for the last two fiscal years at an audit committee meeting of board of trustees called for such purpose and will pre-approve the Accountant for each fiscal year thereafter at an audit committee meeting called for such purpose. The charter of the audit committee states that the audit committee should pre-approve any audit services and, when appropriate, evaluate and pre-approve any non-audit services provided by the Accountant to the registrant and to pre-approve, when appropriate, any non-audit services provided by the Accountant to the registrant's investment adviser, or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant if the engagement relates directly to the operations and financial reporting of the registrant. (2) There were no services as described in each of paragraph (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not Applicable. (g) There were no non-audit fees billed by the Accountant for services rendered to the registrant, the registrant's investment adviser, or any other entity controlling, controlled by, or under common control with the registrant's investment adviser. (h) Not applicable. Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. Item 6. SCHEDULE OF INVESTMENTS. Not applicable to the reporting period covered by this report. Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. Item 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. Item 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS. Not applicable. Item 10. CONTROLS AND PROCEDURES. (a) The Principal Executive Officer and the Principal Financial Officer have concluded that the registrant's disclosure controls and procedures are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing of this report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. EXHIBITS. (a)(1) Code of Ethics required by Item 2 of Form N-CSR is filed herewith as Exhibit 11.(a)(1). (a)(2) Certifications required by Item 11.(a)(2) of Form N-CSR are filed herewith as Exhibit 11.(a)(2). (a)(3) Not applicable. (b) Certifications required by Item 11.(b) of Form N-CSR are filed herewith as Exhibit 11.(b). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. New Providence Investment Trust By: (Signature and Title) /s/ C. Douglas Davenport ________________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer Date: August 5, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: (Signature and Title) /s/ C. Douglas Davenport ________________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer New Providence Investment Trust Date: August 5, 2004 EX-99.CODE ETHICS 2 coe.txt CODE OF ETHICS FOR PRINCIPAL OFFICER Exhibit 11.(a)(1) NEW PROVIDENCE INVESTMENT TRUST CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code This code of ethics (this "Code") for New Providence Investment Trust (the "Trust") applies to the Trust's Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer(s) (the "Covered Officers" each of whom are set forth in Exhibit A) for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Trust; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest in any material respect interferes with the interests of, or his service to, the Trust. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Trust. Certain conflicts of interest arise out of the relationships between Covered Officers and the Trust and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property, other than shares of beneficial interest of the Trust) with the Trust because of their status as "affiliated persons" of the Trust. The Trust's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Trust and the investment adviser/administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Trust or for the adviser/administrator, or for both), be involved in establishing policies and implementing decisions that may have different effects on the adviser/administrator and the Trust. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Trust and the adviser/administrator and is consistent with the performance by the Covered Officers of their duties as officers of the Trust. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Trust's Board of Trustees ("Board") that the Covered Officers may also be officers or employees of one or more investment companies covered by other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trust. Each Covered Officer must: o not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Trust whereby the Covered Officer would benefit personally to the detriment of the Trust; o not cause the Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer to the detriment of the Trust; o not use material non-public knowledge of portfolio transactions made or contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; and o report at least annually any affiliations or other relationships related to conflicts of interest that the Trust's Trustees and Officers Questionnaire covers. There are some conflict of interest situations that should always be discussed with the Audit Committee of the Trust ("Audit Committee") if such situations might have a material adverse effect on the Trust. Examples of these include: o service as a director/trustee on the board of any public company; o the receipt of non-nominal gifts (currently gifts in excess of $200.00); o the receipt of entertainment from any company with which the Trust has current or prospective business dealings, including investments in such companies, unless such entertainment is business-related, 2 reasonable in cost, appropriate as to time and place, and not so frequent as to raise any questions of impropriety; o any ownership interest in, or any consulting or employment relationship with, any of the Trust's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; and o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Trust for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance o each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the Trust; o each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Trust to others, whether within or outside the Trust, including to the Trust's trustees and auditors, and to governmental regulators and self-regulatory organizations; o each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Trust (including, as appropriate, the Trust's Disclosure Control Committee) and the adviser/administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Trust files with, or submits to, the SEC and in other public communications made by the Trust; and o it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he has received, read, and understands the Code; o annually thereafter affirm to the Board that he has complied with the requirements of the Code; o not retaliate against any other Covered Officer or any employee of the Trust or their affiliated persons for reports of potential violations that are made in good faith; and o notify the Chairman of the Audit Committee for the Trust promptly if he/she knows of any material violation of this Code. 3 The Audit Committee is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. In addition, any approvals or waivers sought by a Covered Officer will be considered by the Audit Committee. The Trust will follow the following procedures in investigating and enforcing this Code: o the compliance officer of the investment adviser to the Trust, Atlanta Investment Counsel, LLC (or such other Trust officer or other investigator as the Audit Committee may from time to time designate) (the "Investigator"), shall take appropriate action to investigate any potential violations reported to him; o if, after such investigation, the Investigator believes that no violation has occurred, the Investigator is not required to take any further action; o any matter that the Investigator believes is a violation will be reported to the Audit Committee; o if the Audit Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser/administrator or its board; or a recommendation to dismiss the Covered Officer; o the Audit Committee will be responsible for granting waivers, as appropriate; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. Any potential violation of this Code by the Investigator shall be reported to the Chairman of the Audit Committee and the Audit Committee shall appoint an alternate Trust officer or other investigator to investigate the matter. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Trust for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Trust, the Trust's adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Trust's and its investment adviser's and principal underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. 4 VI. Amendments Any material amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent trustees. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or regulation or this Code, such matters shall not be disclosed to anyone other than the Board and the Audit Committee. VIII. Internal Use The Code is intended solely for the internal use by the Trust and does not constitute an admission, by or on behalf of the Trust, as to any fact, circumstance, or legal conclusion. Date: January 20, 2004 5 Exhibit A Persons Covered by this Code of Ethics -------------------------------------- C. Douglas Davenport, President, Treasurer, Principal Executive Officer and Principal Financial Officer 6 EX-99.CERT 3 cert302.txt SECTION 302 OFFICER CERTIFICATION EXHIBIT 11.(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 statements, and other financial information included in this report, 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 officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 5, 2004 /s/ C. Douglas Davenport ________________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer New Providence Investment Trust EX-99.906 CERTS 4 cert906.txt SECTION 906 OFFICER CERTIFICATION EXHIBIT 11.(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 "Fund") of the New Providence Investment Trust on Form N-CSR for the period ended May 31, 2004, as filed with the Securities and Exchange Commission (the "Report"), the undersigned, C. Douglas Davenport, chief executive officer (or equivalent thereof) and chief financial officer (or equivalent thereof) of the Fund, 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 Fund. Date: August 5, 2004 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 Wisdom Fund and will be retained by the Wisdom Fund and furnished to the Securities and Exchange Commission or its staff upon request. This certification is being furnished to the Commission pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----