-----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, P1a1HOpwt+4iVw+ngoLe/1cKMk5+M4f3S4otTD1vQADJK6tS711f8as7ZF2tVPmL /gTzZ+xdhsqa4G/nIEZ7Ig== 0001041994-05-000007.txt : 20050802 0001041994-05-000007.hdr.sgml : 20050802 20050802121502 ACCESSION NUMBER: 0001041994-05-000007 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050531 FILED AS OF DATE: 20050802 DATE AS OF CHANGE: 20050802 EFFECTIVENESS DATE: 20050802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW PROVIDENCE INVESTMENT TRUST CENTRAL INDEX KEY: 0001041994 IRS NUMBER: 000000000 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: 05990814 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 ncsr0505.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) Julian G. Winters 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 ------ Date of reporting period: May 31, 2005 ------------ Item 1. REPORTS TO STOCKHOLDERS. ________________________________________________________________________________ WISDOM FUND ________________________________________________________________________________ a series of the New Providence Investment Trust INSTITUTIONAL CLASS SHARES INVESTOR CLASS SHARES CLASS B SHARES CLASS C SHARES ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 2005 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. 116 South Franklin Street Rocky Mount, North Carolina 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, 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.nottinghamco.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 22, 2005 Dear Shareholder: For the 12 months ending May 31, 2005, the Wisdom Fund showed modest gains. The performance tables in this report show comparative results for the fund and the S&P 500 Index for the most 12 months and since inception for each class of shares. The fund underperformed the S&P 500 Index due to two main factors: (1) The fund held a high level of short-term money market investments and treasury bills, emulating Berkshire Hathaway's short-term cash holdings. The S&P 500 Index is an index of 500 stocks and holds no short-term cash investments. (2) The financial stocks, which make up the largest percentage of stocks in the fund, were negatively affected by the Federal Reserve's increase in short-term interest rates. Since the fund is a long-term investor, we are very pleased that our performance results since inception of the fund have been greater than if one had invested in the S&P 500 Index over the same period. Human beings have a natural inclination to assume that the future is going to look very similar to the recent past. Bill Safire articulated this tendency on Meet The Press last year: "I can remember back in the 1980's, the expression all the economists were using was `As far as the eye can see.' That's where all the deficits were going to lead us. And when in the 1990's, with the boom leading to the bubble and income tax revenue flowing to the government, surpluses appeared and mushroomed and everybody was saying, `There'll be surpluses as far as the eye can see.' And now here we are again saying, `Deficits as far as the eye can see.' The eye can't see very far." Of course, Mr. Safire wasn't talking about investing, but the phenomenon of which he speaks is alive and well in today's capital markets. For instance, David Pottruck, former CEO of Charles Schwab, recently stated, "At some point, investing seems neither emotionally nor financially rewarding." The statement is shocking (and wrong) on several levels, especially for someone in his position. However, rational or not, the negative returns experienced for the S&P 500 for the last five years have had an effect on investor psychology. The rules of investing have not changed. We believe investors still have a need to: o Preserve capital, o Grow their principal at an above average rate, and o Minimize taxes. Investors face many decisions on the road to prosperity. One of the most critical decisions you make is choosing the right mutual fund. You will place your trust in, and want to do business with a fund that is ethical, hard working, and exhibits positive attributes. Atlanta Investment Counsel, LLC, manager of the Wisdom Fund: o Displays a true commitment to long-term wealth creation, o Remains staunch in its adherence to its investment principles, o Practices what it preaches, o Shares the same concerns as investors, o Delivers exceptional client services, and o Champions transparency. We feel that investors want to do business with a mutual fund that is staunch in its pursuit of principles. If you are an investor with another mutual fund, do you know what their principles are? Have they practiced what they preach? We have, year after year. As you know we think very highly of Warren Buffett and his partner, Charles Munger. These two have achieved an extraordinary investment record over the last 35 years. Theirs has not been a complicated investment strategy; rather, they have kept it very simple. They buy good businesses with great management teams at attractive prices and then hold on to them! There is no secret-that's it. Buffett says that it is surprising that so few imitate what has worked for them. In February of 1999 the Wisdom Fund opened to investors to do just exactly that! To own as closely as possible the publicly held holdings of Berkshire Hathaway and holdings of similar characteristics for the private holdings of Berkshire Hathaway. We have always felt that by owning the Wisdom Fund one would avoid the only problem we see with owning Berkshire Hathaway, that is Berkshire currently WISDOM FUND Annual Report to Shareholders ________________________________________________________________________________ trades at a premium to the market and its peers. As an open-end mutual fund, the Wisdom Fund cannot trade at a premium or discount to its net asset value. In July 14, 2005, Standard and Poor's Research issued a "sell" recommendation on shares of Berkshire Hathaway. The recommendation stated that "The shares currently trade at 22x our $3900 2005 earnings per share estimate, a premium to both the market and its insurance peers. We do not believe that this premium is warranted." As stated above, our investment objective is to invest as closely as possible in securities known to be owned by Berkshire Hathaway. In investing in public companies with similar characteristics to those of privately held companies owned by Berkshire Hathaway, our investment philosophy rests on a set of established investment principles that we follow each day: o We buy businesses, not just shares of stocks, o We buy businesses we understand, and o We measure long-term success, not short-term stock prices. What does this mean to investors? It means that investors can expect consistency and conservatism in our investment approach. Our principles help us determine what to invest in and, more importantly, what not to invest in. We believe that economic factors will not weaken our investment principles. We at Atlanta Investment Counsel, LLC are not influenced by political or economic forecasts. In fact, we see these as expensive distractions to many investors. We believe the following quotation serves well to reaffirm our commitment to this investment principle: "Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, a one day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%. But, surprise - none of these blockbuster events made the slightest dent in Ben Graham's investment principles. Nor did they render unsound the negotiated purchase of fine businesses at sensible prices. Imagine the cost to us, then, if we had let a fear of the unknown cause us to defer or alter the deployment of capital. Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist. A different set of major shocks is sure to occur in the next 30 years. We will neither try to predict these nor profit from them. If we can identify businesses similar to those we have purchased in the past, external surprises will have little effect on our long-term results." (Warren E. Buffett, March 7, 1995) Recent Purchases in the Fund In the past several months the Fund has purchased: o Wal-Mart Stores, o Costco, o Anheuser-Busch, o Proctor and Gamble, o Home Depot, o Allegheny Energy, o Constellation Energy, o The Southern Company, o Duke Energy, and o FPL group^1. Wal-Mart Stores (WMT) is the world's largest retailer. WMT stock reached a price point in May 2005 that we found very attractive. At 19x fiscal 2006 earnings as estimated by Standard and Poor's research, the shares were trading at a PE above that of the S&P 500, but below their historical levels. The stock yielded 1.2% as of May 30, 2005 and we felt it was a strong buy below $48 a share based on the stock's strong fundamentals. The stock is not owned by Berkshire and is a proxy for some of Berkshire Hathaway's private holdings. - ---------------- 1 Please refer to the "Portfolio Investments" section of the attached annual report for a complete listing of fund holdings and the percentage each represents of the portfolio. WISDOM FUND Annual Report to Shareholders ________________________________________________________________________________ Anheuser-Busch (BUD) is a stock Berkshire Hathaway purchased this past spring and we purchased it also. The company controls over 50% of the U.S. beer market and is making strong inroads in to China. The recent drop in share price gave us the opportunity to buy into a dominant company that we believe truly is the king of beers, and at what appears to be a very reasonable discount to its intrinsic value. At Berkshire's annual meeting this year, Mr. Buffett explained his rational for buying BUD. He said that he had been reading BUD's annual report for over 25 years, waiting for the appropriate time to invest. That type of patience is what he and Charles Munger are referring to when they talk about how important temperament is to investment success. We believe most portfolios are well served by owning consumer stalwarts like Anheuser-Busch and other Wisdom Fund holdings like Coca-Cola, Cadbury-Schweppes, William Wrigley Company, Yum Brands International, McDonalds and Outback Steakhouse, Inc. Proctor and Gamble (PG) is a diversified consumer products company that our research indicates has strong fundamentals and should benefit from its planned acquisition of a current holding of the Wisdom Fund and Berkshire, the Gillette Co., which has a dominant position in the wet shaving industry. Gillette's high profit margins and healthy cash flow will be a plus for PG. After the announcement of the Gillette purchase, Berkshire bought shares of PG on the open market. In May of 2005, the Wisdom Fund purchased shares of Home Depot (HD), the world's largest home improvement retailer. We anticipate that there will be continued strength in the housing market, an improving job market, solid demographic trend, and a resilient consumer, which will benefit HD. In our view, HD can achieve strong sales and earnings growth over the next few years. We estimate that the company will open between 170 and 190 new stores in fiscal 2006 and bring its store count to more than 2000 stores. The company's revenues have been rising about 10% per year for the past several years, and we are looking for HD to do about $80 billion in sales for fiscal 2006. More importantly, HD has generated more than $2 billion in free cash flow for the last three years, which allows it to repurchase its own shares. HD is not owned by Berkshire and is a proxy in our portfolio. Our recent purchase of five utility stocks is in response to Berkshire's purchase of PacifiCorp from Scottish Power for $5.1 billion this past spring. PacifiCorp is an electric utility with customers in six different western states. "The energy sector has long interested us, and this is the right fit. We are excited to be making this long-term investment in the premier energy company in the West. PacifiCorp is a great company with outstanding assets," said Buffett. The Wisdom Fund also owns two other electric utilities, Great Plains Energy and Reliant Resources. With regards to a subject we hear about most every day, the rise and fall of the US dollar, Mr. Buffett has been most vocal in his opinion of the ultimate direction of the dollar. "I think, over time, unless we have a major change in trade policies, I don't see how the dollar avoids going down," he told CNBC in January of 2005. "I don't know when it will happen. I don't have any idea whether it will be this month or this year or next year, but we are force-feeding dollars on the rest of the world at a rate of close to a couple of billion dollars a day, and that's going to drive the dollar down," he continued to say. The Wisdom Fund has invested in New Zealand Government Bonds maturing in 2009 and 2011 as our proxy for Berkshire's purchase of foreign currencies. In Closing I would like to remind investors that we are not in the business of managing volatility; we are in the business of managing to optimize the compounding of your capital. Long-term investment results are driven by the ability of the underlying businesses to produce strong and to grow cash flow. Stock price reflections of this underlying value will not be linear as they are impacted by the collective sentiment of the market participants, which include both investors (who may not always be rational and disciplined) as well as speculators (who have a short-term time horizon). However, in the long-term, investors who hold high quality investments and add to them at reduced prices will generally be rewarded with above-average, after-tax compound returns. This is what successful wealth creators like Warren Buffett do. This is the goal of your portfolio management team at Atlanta Investment Counsel, LLC does. This is what we encourage you to do. C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC Portfolio Manager of the Wisdom Fund WISDOM FUND INSTITUTIONAL CLASS SHARES Performance Update - $25,000 Investment For the period from February 16, 1999 (Date of Initial Public Investment) to May 31, 2005 ____________________________________________________________________________________________________________________________________ Wisdom Fund - -------------------------------------------------------------------------------- Institutional S&P 500 Total Performance Returns for the periods ended May 31, 2005 Class Shares Return Index -------------------------------------------------------------------------------- ------------ ------------ Average Annual Total One Five Since Returns Year Year Inception* 2/16/1999 $ 25,000 $ 25,000 -------------------------------------------------------------------------------- 5/31/1999 24,889 26,307 Institutional Class Shares 5.65% 6.63% 5.43% 5/31/2000 25,295 29,063 -------------------------------------------------------------------------------- 5/31/2001 28,001 25,996 Cumulative Total Since Final Value of $25,000 5/31/2002 30,181 22,396 Investment Returns Inception* Investment 5/31/2003 29,082 20,591 -------------------------------------------------------------------------------- 5/31/2004 33,005 24,365 Institutional Class Shares 39.49% $34,871 5/31/2005 34,871 26,372 -------------------------------------------------------------------------------- S&P 500 Total Return Index 5.49% $26,372 -------------------------------------------------------------------------------- *The Fund's inception date - February 16, 1999 (Date of Initial Public Investment). --------------------------------------------------------------------------------
The graph assumes an initial $25,000 investment at February 16, 1999 (Date of Initial Public Investment). All dividends and distributions are reinvested. 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. ________________________________________________________________________________ Performance quoted above represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that 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.nottinghamco.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. Fund Expenses ________________________________________________________________________________ As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses - The first line of the table below provides information about the actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes - The last line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments. Therefore, the last line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Account Value Ending Account Value Expenses Paid During Expense Example June 1, 2004 May 31, 2005 Period* - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Actual $1,000.00 $1,056.50 $12.65 - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Hypothetical (5%annual return before $1,000.00 $1,037.70 $12.53 expenses) - ------------------------------------------- ------------------------- ---------------------------- ------------------------- * Expenses are equal to the Fund's annualized expense ratio 1.23% multiplied by the average account value over the period.
WISDOM FUND INVESTOR CLASS SHARES Performance Update - $10,000 Investment For the period from February 16, 1999 (Date of Initial Public Investment) to May 31, 2005 ____________________________________________________________________________________________________________________________________ Wisdom Fund - S&P 500 Total --------------------------------------------------------------------------- Investor Class Shares Return Index Performance Returns for the periods ended May 31, 2005 --------------------- ------------ --------------------------------------------------------------------------- 2/16/1999 $ 9,425 $ 10,000 Average Annual Total One Five Since 5/31/1999 9,370 10,523 Returns Year Year Inception* 5/31/2000 9,498 11,625 --------------------------------------------------------------------------- 5/31/2001 10,487 10,399 Investor Class Shares - No 5.36% 6.35% 5.15% 5/31/2002 11,281 8,959 Sales Load 5/31/2003 10,832 8,236 --------------------------------------------------------------------------- 5/31/2004 12,266 9,746 Investor Class Shares - (0.70)% 5.10% 4.16% 5/31/2005 12,924 10,549 5.75% Maximum Sales Load --------------------------------------------------------------------------- Cumulative Total Since Final Value of $10,000 Investment Returns Inception* Investment --------------------------------------------------------------------------- Investor Class Shares - No 37.12% $13,712 Sales Load --------------------------------------------------------------------------- Investor Class Shares - 29.24% $12,924 5.75% Maximum Sales Load --------------------------------------------------------------------------- S&P 500 Total Return Index 5.49% $10,549 --------------------------------------------------------------------------- *The Fund's inception date - February 16, 1999 (Date of Initial Public Investment). ---------------------------------------------------------------------------
The graph assumes an initial $10,000 investment ($9,425 after maximum sales load of 5.75%) at February 16, 1999 (Date of Initial Public Investment). All dividends and distributions are reinvested. 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. ________________________________________________________________________________ Performance quoted above represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that 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.nottinghamco.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. Fund Expenses ________________________________________________________________________________ As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses - The first line of the table below provides information about the actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes - The last line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments. Therefore, the last line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Account Value Ending Account Value Expenses Paid During Expense Example June 1, 2004 May 31, 2005 Period* - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Actual $1,000.00 $1,053.60 $15.20 - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Hypothetical (5%annual return before $1,000.00 $1,035.20 $15.06 expenses) - ------------------------------------------- ------------------------- ---------------------------- -------------------------
* Expenses are equal to the Fund's annualized expense ratio 1.48% multiplied by the average account value over the period. WISDOM FUND CLASS B SHARES Performance Update - $10,000 Investment For the period from November 16, 1999 (Date of Initial Public Investment) to May 31, 2005 ____________________________________________________________________________________________________________________________________ Wisdom Fund - S&P 500 Total -------------------------------------------------------------------------------- Class B Shares Return Index Performance Returns for the periods ended May 31, 2005 11/16/1999 $ 10,000 $ 10,000 -------------------------------------------------------------------------------- 5/31/2000 9,815 10,070 Average Annual Total One Five Since 5/31/2001 10,757 9,007 Returns Year Year Inception* 5/31/2002 11,479 7,760 -------------------------------------------------------------------------------- 5/31/2003 10,950 7,134 Class B Shares - No Sales 4.56% 5.57% 4.66% 5/31/2004 12,308 8,442 Charge 5/31/2005 12,769 9,137 -------------------------------------------------------------------------------- Class B Shares - Maximum 0.56% 5.41% 4.51% Sales Charge -------------------------------------------------------------------------------- Cumulative Total Since Final Value of $10,000 Investment Returns Inception* Investment -------------------------------------------------------------------------------- Class B Shares - No Sales 28.69% $12,869 Charge -------------------------------------------------------------------------------- Class B Shares - Maximum 27.69% $12,769 Sales Charge -------------------------------------------------------------------------------- S&P 500 Total Return Index (8.63)% $9,137 -------------------------------------------------------------------------------- *The Fund's inception date - November 16, 1999 (Date of Initial Public Investment). --------------------------------------------------------------------------------
The graph assumes an initial $10,000 investment at November 16, 1999 (Date of Initial Public Investment) 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. 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. ________________________________________________________________________________ Performance quoted above represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that 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.nottinghamco.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. Fund Expenses ________________________________________________________________________________ As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses - The first line of the table below provides information about the actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes - The last line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments. Therefore, the last line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Account Value Ending Account Value Expenses Paid During Expense Example June 1, 2004 May 31, 2005 Period* - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Actual $1,000.00 $1,045.60 $22.81 - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Hypothetical (5%annual return before $1,000.00 $1,027.70 $22.61 expenses) - ------------------------------------------- ------------------------- ---------------------------- ------------------------- * Expenses are equal to the Fund's annualized expense ratio 2.23% multiplied by the average account value over the period.
WISDOM FUND CLASS C SHARES Performance Update - $10,000 Investment For the period from November 16, 1999 (Date of Initial Public Investment) to May 31, 2005 ____________________________________________________________________________________________________________________________________ Wisdom Fund - S&P 500 Total -------------------------------------------------------------------------------- Class C Shares Return Index Performance Returns for the periods ended May 31, 2005 11/16/1999 $ 10,000 $ 10,000 -------------------------------------------------------------------------------- 5/31/2000 9,814 10,070 Average Annual Total One Five Since 5/31/2001 10,760 9,007 Returns Year Year Inception* 5/31/2002 11,480 7,760 -------------------------------------------------------------------------------- 5/31/2003 10,953 7,134 Class C Shares - No Sales 4.63% 5.60% 4.68% 5/31/2004 12,316 8,442 Charge 5/31/2005 12,886 9,137 -------------------------------------------------------------------------------- Cumulative Total Since Final Value of $10,000 Investment Returns Inception* Investment -------------------------------------------------------------------------------- Class C Shares 28.86% $12,886 -------------------------------------------------------------------------------- S&P 500 Total Return Index (8.63)% $9,137 -------------------------------------------------------------------------------- *The Fund's inception date - November 16, 1999 (Date of Initial Public Investment). --------------------------------------------------------------------------------
The graph assumes an initial $10,000 investment at November 16, 1999 (Date of Initial Public Investment). The deduction of the maximum contingent deferred sales charge ("CDSC") is not reflected in the graph because the 1% CDSC for the Class C Shares is imposed on proceeds redeemed within 1 year of the purchase date. The CDSC may be waived or reduced under certain circumstances. All dividends and distributions are reinvested. 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. ________________________________________________________________________________ Performance quoted above represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that 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.nottinghamco.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. Fund Expenses ________________________________________________________________________________ As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses - The first line of the table below provides information about the actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes - The last line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments. Therefore, the last line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Account Value Ending Account Value Expenses Paid During Expense Example June 1, 2004 May 31, 2005 Period* - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Actual $1,000.00 $1,046.30 $22.82 - ------------------------------------------- ------------------------- ---------------------------- ------------------------- Hypothetical (5%annual return before $1,000.00 $1,027.70 $22.61 expenses) - ------------------------------------------- ------------------------- ---------------------------- ------------------------- * Expenses are equal to the Fund's annualized expense ratio 2.23% multiplied by the average account value over the period.
WISDOM FUND Schedule of Investments As of May 31, 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Shares Market Value Shares Market Value or Principal (Note 1) or Principal (Note 1) - ----------------------------------------------------------------- ---------------------------------------------------------------- COMMON STOCKS - 79.12% Foods - 4.11% Cadbury Schweppes PLC 15,500 $ 611,010 Apparel - 0.63% * Dean Foods Company 2,000 77,940 Nike, Inc. 1,600 $ 131,520 Sysco Corporation 18,166 675,049 Wolverine World Wide, Inc. 7,500 172,350 WM Wrigley Jr. Company 9,300 634,911 ------------ ------------ 303,870 1,998,910 ------------ ------------ Banks - 3.40% Health Care Services - 0.00% M & T Bank Corporation 2,030 207,344 * Five Star Quality Care, Inc. 4 26 Wells Fargo Company 23,922 1,445,128 ------------ ------------ 1,652,472 Holding Companies - Diversified - 1.27% ------------ Leucadia National Corporation 15,450 616,300 Beverages - 7.97% ------------ Anheuser-Busch Companies Inc. 7,000 327,950 Coca-Cola Company 79,430 3,544,961 Home Builders - 0.44% ------------ * Champion Enterprises, Inc. 6,700 65,191 3,872,911 Winnebago Industries, Inc. 4,500 147,105 ------------ ------------ Building Materials - 1.07% 212,296 American Standard Comp. Inc. 12,190 521,732 ------------ ------------ Insurance - Multiline - 9.41% Chemicals - 1.28% Alleghany Corporation 1,224 343,026 The Sherwin-Williams Company 13,970 620,967 American International ------------ Group, Inc. 14,150 786,032 * Arch Capital Group Ltd. 2,000 89,300 Commercial Services - 4.45% Aspen Insurance Holdings Ltd. 2,000 55,000 Aaron Rents, Inc. 6,000 135,660 Endurance Specialty Holdings Cendant Corporation 10,000 212,100 Ltd. 18,500 674,325 H&R Block, Inc. 3,000 149,760 Fairfax Financial Holding Ltd. 2,000 320,000 * Iron Mountain, Inc. 11,650 334,355 Old Republic International Corp. 11,000 273,460 Moody's Corporation 29,410 1,272,571 The Allstate Corporation 31,250 1,818,750 The ServiceMaster Company 4,600 59,800 Transatlantic Holdings Inc. 1,000 57,110 ------------ United Fire & Casualty Co. 4,000 157,480 2,164,246 ------------ ------------ 4,574,483 Cosmetics & Personal Care - 4.43% ------------ Proctor & Gamble 9,000 496,350 Insurance - Property & Casualty - 16.89% The Gillette Company 31,380 1,654,981 Fidelity National Financial, ------------ Inc. 17,463 628,493 2,151,331 * Markel Corporation 8,200 2,802,350 ------------ Montpelier Re Holdings Ltd. 3,500 120,225 The Chubb Corporation 15,400 1,297,142 Diversified Financial Services - 4.33% The Progressive Corporation 9,360 899,215 American Express Company 39,050 2,102,842 Wesco Financial Corporation 386 138,296 ------------ White Mountains Ins. Group Ltd. 3,500 2,325,750 Electric - 3.07% ------------ * Allegheny Energy, Inc. 8,400 203,112 8,211,471 Constellation Energy Group, ------------ Inc. 3,800 203,110 Investment Company - 0.22% Duke Energy Corporation 7,500 206,100 American Capital Strategies Ltd. 3,000 105,060 FPL Group, Inc. 4,800 195,120 ------------ Great Plains Energy, Inc. 5,000 157,500 Media - 3.58% * Reliant Energy, Inc. 27,000 332,100 * Comcast Corporation 12,500 402,500 The Southern Company 5,800 196,910 Gannett Company, Inc. 2,698 200,893 ------------ The Washington Post Company 1,370 1,137,100 1,493,952 ------------ ------------ 1,740,493 ------------ (Continued)
WISDOM FUND Schedule of Investments As of May 31, 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Shares Market Value Shares Market Value or Principal (Note 1) or Principal (Note 1) - ----------------------------------------------------------------- ---------------------------------------------------------------- COMMON STOCKS - (Continued) FOREIGN GOVERNMENT OBLIGATIONS - 3.12% Oil & Gas - 0.40% New Zealand Government PetroChina Company Ltd. 3,000 $ 193,440 7.000%, 07/15/09 $ 1,015,000 $ 745,368 ------------ New Zealand Government 6.000%, 11/15/11 1,083,000 773,404 Packaging & Containers - 0.56% ------------ * Sealed Air Corporation 5,252 272,001 ------------ Total Foreign Government Obligations Pipelines - 2.14% (Cost $1,477,746) 1,518,772 Kinder Morgan, Inc. 13,400 1,041,314 ------------ ------------ PRIVATE INVESTMENT COMPANY - 1.28% Retail - 3.62% Costco Wholesale Corporation 4,000 181,680 (beta)Pamlico Enhanced Cash Trust Home Depot Inc. 7,500 295,125 (Cost $620,358) 620,358 620,358 McDonald's Corporation 7,000 216,580 ------------ Outback Steakhouse, Inc. 1,800 79,650 * Payless Shoesource, Inc. 6,000 100,980 Total Investments (Cost $41,344,348) - 99.78% $ 48,495,616 * Red Robin Gourmet Burgers, Inc. 1,500 82,320 Other Assets less Liabilities - 0.22% 112,733 The Gap, Inc. 10,000 210,000 ------------ Wal-Mart Stores, Inc. 7,000 330,610 Net Assets - 100.00% $ 48,608,349 Yum! Brands, Inc. 5,150 264,144 ============ ------------ 1,761,089 ------------ Software - 2.16% * Non-income producing investment. Automatic Data Processing, Inc. 11,200 490,560 (beta)Restricted security - A restricted security cannot be First Data Corporation 14,770 558,749 resold to the general public without prior registration ------------ under the Securities Act of 1933. Restricted securities 1,049,309 are valued according to the guidelines and procedures ------------ adopted by the Board of Trustees. The Fund currently Textiles - 3.69% holds 620,358 shares of Pamlico Enhanced Cash Trust at a * Mohawk Industries, Inc. 21,495 1,793,113 cost of $620,358. The sale of this investment has been ------------ restricted and has been valued in accordance with the guidelines adopted by the Board of Trustees. The total Total Common Stocks (Cost $31,318,522) 38,453,628 fair value of this security at May 31, 2005 is $620,358, ------------ which represents 1.28% of net assets. MUTUAL FUNDS - 3.93% Federated International Bond Fund 148,354 1,731,296 Templeton Global Income Fund 20,200 178,366 ------------ Total Mutual Funds (Cost $1,933,735) 1,909,662 ------------ U.S. GOVERNMENT OBLIGATION - 12.33% United States Treasury Bill 0.000%, 06/16/05 (Cost $5,993,987) $ 6,000,000 5,993,196 ------------ (Continued)
WISDOM FUND Schedule of Investments As of May 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Summary of Investments by Industry % of Net Industry Assets Value - ------------------------------------------------------------------------------- Apparel 0.63% $ 303,870 Banks 3.40% 1,652,472 Beverages 7.97% 3,872,911 Building Materials 1.07% 521,732 Chemicals 1.28% 620,967 Commercial Services 4.45% 2,164,246 Cosmetics & Personal Care 4.43% 2,151,331 Diversified Financial Services 4.33% 2,102,842 Electric 3.07% 1,493,952 Foods 4.11% 1,998,910 Foreign Government Obligations 3.12% 1,518,772 Health Care Services 0.00% 26 Holding Companies - Diversified 1.27% 616,300 Home Builders 0.44% 212,296 Insurance - Multiline 9.41% 4,574,483 Insurance - Property & Casualty 16.89% 8,211,471 Investment Company 0.22% 105,060 Media 3.58% 1,740,493 Mutual Funds 3.93% 1,909,662 Oil & Gas 0.40% 193,440 Packaging & Containers 0.56% 272,001 Pipelines 2.14% 1,041,314 Private Investment Company 1.28% 620,358 Retail 3.62% 1,761,089 Software 2.16% 1,049,309 Textiles 3.69% 1,793,113 U.S. Government Obligation 12.33% 5,993,196 - ------------------------------------------------------------------------------- Total 99.78% $ 48,495,616 See Notes to Financial Statements WISDOM FUND STATEMENT OF ASSETS AND LIABILITIES As of May 31, 2005 - ---------------------------------------------------------------------------------------------------------------- Assets: Investments, at value (cost $41,344,348) $ 48,495,616 Cash 4,610 Receivables: Fund shares sold 81,738 Income (cost $82,861) 82,415 Prepaid expenses 15,747 ------------ Total assets 48,680,126 Liabilities: Accrued expenses 71,228 Other liability 549 ------------ Total liabilities 71,777 Net Assets $ 48,608,349 ============ Net Assets Consist of: Capital (par value and paid in surplus) $ 39,600,099 Undistributed net investment income 2,119 Undistributed net realized gain on investments and foreign currency translations 1,855,309 Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 7,150,822 ------------ Total Net Assets $ 48,608,349 ============ Institutional Class Shares Outstanding, no par value (unlimited shares authorized) 386,742 Net Assets - Institutional Class Shares $ 5,090,119 Net Asset Value, Offering Price and Redemption Price Per Share $ 13.16 Investor Class Shares Outstanding, no par value (unlimited shares authorized) 1,466,914 Net Assets - Investor Class Shares $ 19,176,873 Net Asset Value, Offering Price and Redemption Price Per Share $ 13.07 Maximum Offering Price Per Share (100 / 94.25 of $13.07) $ 13.87 Class B Shares Outstanding, no par value (unlimited shares authorized) 1,152,380 Net Assets - Class B Shares $ 14,660,323 Net Asset Value, Offering Price and Redemption Price Per Share $ 12.72 Class C Shares Outstanding, no par value (unlimited shares authorized) 757,662 Net Assets - Class C Shares $ 9,681,034 Net Asset Value, Offering Price and Redemption Price Per Share $ 12.78 See Notes to Financial Statements
WISDOM FUND STATEMENT OF OPERATIONS For the Fiscal Year ended May 31, 2005 - ---------------------------------------------------------------------------------------------------------------- Investment Income: Interest $ 150,634 Dividends 758,816 ------------ Total Income 909,450 Expenses: Advisory fees (note 2) 249,247 Administration fees (note 2) 62,312 Transfer agent fees (note 2) 53,623 Fund accounting fees (note 2) 58,985 Compliance service fees (note 2) 4,077 Custody fees (note 2) 13,149 Distribution and service fees - Investor Class Shares (note 3) 51,562 Distribution and service fees - Class B Shares (note 3) 150,596 Distribution and service fees - Class C Shares (note 3) 92,121 Legal fees 29,177 Audit and tax preparation fees 20,514 Registration and filing expenses 37,985 Registration and administration filing fees (note 2) 27,482 Shareholder servicing expenses 14,611 Printing expenses 12,586 Trustee fees and meeting expenses 4,448 Securities pricing fees 5,442 Other operating expenses 19,414 ------------ Total Expenses 907,331 ------------ Net Investment Income 2,119 Net Realized and Unrealized Gain on Investments Net realized gain from investment and foreign securities transactions 1,837,541 Change in unrealized appreciation on investments and foreign currency translations 616,822 ------------ Net Realized and Unrealized Gain on Investments 2,454,363 Net Increase in Net Assets Resulting from Operations $ 2,456,482 ============ See Notes to Financial Statements
WISDOM FUND STATEMENTS OF CHANGES IN NET ASSETS For the Fiscal Years ended May 31, 2005 2004 - ------------------------------------------------------------------------------------------------------------------------- Operations: Net investment income (loss) $ 2,119 $ (193,351) Net realized gain from investment and foreign securities transactions 1,837,541 1,219,133 Change in unrealized appreciation on investments and 616,822 4,101,451 foreign currency translations ------------ ------------ Net Increase in Net Assets Resulting from Operations 2,456,482 5,127,233 Distributions to Shareholders: (note 5) Net realized gain from investment transactions - Institutional Class Shares (66,528) 0 Net realized gain from investment transactions - Investor Class Shares (279,815) 0 Net realized gain from investment transactions - Class B Shares (209,450) 0 Net realized gain from investment transactions - Class C Shares (126,328) 0 ------------ ------------ Decrease in Net Assets Resulting from Distributions (682,121) 0 Capital Share Transactions: (note 6) Institutional Class Shares Shares sold 229,150 602,397 Reinvested dividends and distributions 66,296 0 Shares repurchased (225,257) (570,625) Investor Class Shares Shares sold 3,663,038 7,013,977 Reinvested dividends and distributions 264,457 0 Shares repurchased (5,337,005) (3,202,206) Class B Shares Shares sold 1,093,890 2,562,201 Reinvested dividends and distributions 203,679 0 Shares repurchased (1,984,011) (2,123,336) Class C Shares Shares sold 1,818,621 2,712,247 Reinvested dividends and distributions 121,045 0 Shares repurchased (1,232,810) (453,048) ------------ ------------ (Decrease) Increase from Capital Share Transactions (1,318,907) 6,541,607 Net Increase in Net Assets 455,454 11,668,840 Net Assets: Beginning of Year 48,152,895 36,484,055 ------------ ------------ End of Year $ 48,608,349 $ 48,152,895 ============ ============ Undistributed Net Investment Income $ 2,119 $ 0 See Notes to Financial Statements
WISDOM FUND FINANCIAL HIGHLIGHTS Institutional Class Shares For a share outstanding during the fiscal years ended May 31, 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90 Income (Loss) from Investment Operations Net investment income (loss) 0.08 0.02 (0.03) (0.02) 0.17 Net realized and unrealized gain (loss) on 0.63 1.48 (0.39) 0.85 0.90 investment and foreign currency translation -------- -------- -------- -------- -------- Total from Investment Operations 0.71 1.50 (0.42) 0.83 1.07 Less Distributions: Dividends (from net investment income) 0 0 0 0 (0.17) Distributions (from capital gains) (0.17) 0 0 (0.09) 0 -------- -------- -------- -------- -------- Total Distributions (0.17) 0 0 (0.09) (0.17) Net Asset Value, End of Year $ 13.16 $ 12.62 $ 11.12 $ 11.54 $ 10.80 ======== ======== ======== ======== ======== Total return 5.65 % 13.49 % (3.64)% 7.78 % 10.70 % Net Assets, End of Year (in thousands) $ 5,090 $ 4,811 $ 4,229 $ 3,925 $ 3,165 Average Net Assets for the Year (in thousands) $ 4,953 $ 4,452 $ 3,862 $ 3,444 $ 2,983 Ratios of: Gross Expenses to Average Net Assets 1.23 % 1.29 % 1.67 % 3.19 % 3.30 % Net Expenses to Average Net Assets 1.23 % 1.29 % 1.62 % 1.71 % 0.26 % Net Investment Income (Loss) to Average Net Assets 0.60 % 0.14 % (0.25)% (0.17)% 1.57 % Portfolio turnover rate 41.99 % 20.41 % 9.28 % 6.78 % 15.46 % Investor Class Shares For a share outstanding during the fiscal years ended May 31, 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93 Income (Loss) from Investment Operations Net investment income (loss) 0.05 (0.01) (0.04) (0.04) 0.13 Net realized and unrealized gain (loss) on 0.62 1.48 (0.42) 0.85 0.91 investment and foreign currency translation -------- -------- -------- -------- -------- Total from Investment Operations 0.67 1.47 (0.46) 0.81 1.04 Less Distributions: Dividends (from net investment income) 0 0 0 0 (0.13) Distributions (from capital gains) (0.17) 0 0 (0.09) 0 -------- -------- -------- -------- -------- Total Distributions (0.17) 0 0 (0.09) (0.13) Net Asset Value, End of Year $ 13.07 $ 12.57 $ 11.10 $ 11.56 $ 10.84 ======== ======== ======== ======== ======== Total return (a) 5.36 % 13.24 % (3.98)% 7.57 % 10.41 % Net Assets, End of Year (in thousands) $ 19,177 $ 19,789 $ 13,825 $ 2,740 $ 1,254 Average Net Assets for the Year (in thousands) $ 20,625 $ 17,326 $ 8,861 $ 1,794 $ 675 Ratios of: Gross Expenses to Average Net Assets 1.48 % 1.54 % 1.91 % 3.39 % 3.86 % Net Expenses to Average Net Assets 1.48 % 1.54 % 1.87 % 1.96 % 0.68 % Net Investment Income (Loss) to Average Net Assets 0.34 % (0.11)% (0.53)% (0.48)% 1.21 % Portfolio turnover rate 41.99 % 20.41 % 9.28 % 6.78 % 15.46 % (a) Total return does not reflect payment of a sales charge. (Continued)
WISDOM FUND FINANCIAL HIGHLIGHTS Class B Shares For a share outstanding during the fiscal years ended May 31, 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97 Income (Loss) from Investment Operations Net investment (loss) income (0.05) (0.10) (0.10) (0.07) 0.06 Net realized and unrealized gain (loss) on 0.61 1.46 (0.43) 0.79 0.90 investment and foreign currency translation -------- -------- -------- -------- -------- Total from Investment Operations 0.56 1.36 (0.53) 0.72 0.96 Less Distributions: Dividends (from net investment income) 0 0 0 0 (0.06) Distributions (from capital gains) (0.17) 0 0 (0.09) 0 -------- -------- -------- -------- -------- Total Distributions (0.17) 0 0 (0.09) (0.06) Net Asset Value, End of Year $ 12.72 $ 12.33 $ 10.97 $ 11.50 $ 10.87 ======== ======== ======== ======== ======== Total return (a) 4.56 % 12.40 % (4.61)% 6.72 % 9.60 % Net Assets, End of Year (in thousands) $ 14,660 $ 14,871 $ 12,796 $ 4,307 $ 1,797 Average Net Assets for the Year (in thousands) $ 15,060 $ 14,097 $ 8,738 $ 2,146 $ 1,817 Ratios of: Gross Expenses to Average Net Assets 2.23 % 2.29 % 2.66 % 4.14 % 4.33 % Net Expenses to Average Net Assets 2.23 % 2.29 % 2.62 % 2.71 % 1.28 % Net Investment (Loss) Income to Average Net Assets (0.41)% (0.86)% (1.27)% (1.23)% 0.56 % Portfolio turnover rate 41.99 % 20.41 % 9.28 % 6.78 % 15.46 % Class C Shares For a share outstanding during the fiscal years ended May 31, 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98 Income (Loss) from Investment Operations Net investment (loss) income (0.05) (0.09) (0.09) (0.10) 0.03 Net realized and unrealized gain (loss) on 0.62 1.46 (0.44) 0.82 0.93 investment and foreign currency translation -------- -------- -------- -------- -------- Total from Investment Operations 0.57 1.37 (0.53) 0.72 0.96 Less Distributions: Dividends (from net investment income) 0 0 0 0 (0.03) Distributions (from capital gains) (0.17) 0 0 (0.09) 0 -------- -------- -------- -------- -------- Total Distributions (0.17) 0 0 (0.09) (0.03) Net Asset Value, End of Year $ 12.78 $ 12.38 $ 11.01 $ 11.54 $ 10.91 ======== ======== ======== ======== ======== Total return (a) 4.63 % 12.44 % (4.59)% 6.69 % 9.64 % Net Assets, End of Year (in thousands) $ 9,681 $ 8,682 $ 5,635 $ 1,808 $ 987 Average Net Assets for the Year (in thousands) $ 9,212 $ 6,972 $ 3,560 $ 1,274 $ 531 Ratios of: Gross Expenses to Average Net Assets 2.23 % 2.29 % 2.66 % 4.18 % 4.44 % Net Expenses to Average Net Assets 2.23 % 2.29 % 2.62 % 2.71 % 1.41 % Net Investment (Loss) Income to Average Net Assets (0.39)% (0.86)% (1.27)% (1.19)% 0.40 % Portfolio turnover rate 41.99 % 20.41 % 9.28 % 6.78 % 15.46 % (a) Total return does not reflect payment of a sales charge. See Notes to Financial Statements
(This page was intentionally left blank.) WISDOM FUND Notes to Financial Statements ________________________________________________________________________________ 1. Organization and Significant exchange on which the portfolio Accounting Policies security is principally traded closes early or if trading of the particular The Wisdom Fund (the "Fund") is a portfolio security is halted during series fund. The Fund is part of The the day and does not resume prior to New Providence Investment Trust (the the Fund's net asset value "Trust"), which was organized as a calculation) or which cannot be Massachusetts business trust and is accurately valued using the Fund's registered under the Investment normal pricing procedures are valued Company Act of 1940 (the "1940 Act"), at fair value as determined in good as amended, as an open-ended faith under policies approved by the management investment company. The Trustees. A portfolio security's "fair Fund is classified as diversified as value" price may differ from the price defined in the 1940 Act. next available for that portfolio security using the Fund's normal The Wisdom Fund commenced operations pricing procedures. Investment February 16, 1999. The investment companies are valued at net asset objective of the Fund is to seek value. Instruments with maturities of maximum total returns consisting of 60 days or less are valued at any combination of capital amortized cost, which approximates appreciation, realized and unrealized, market value. and income under the constantly varying market conditions. Investment Transactions and Investment Income The Board of Trustees of the Trust Investment transactions are accounted (the "Trustees") approved, on October for as of the date purchased or sold 7, 1999, a plan to authorize two new (trade date). Dividend income is classes of shares designated as Class recorded on the ex-dividend date. B Shares and Class C Shares. On Certain dividends from foreign November 16, 1999, the Class B Shares securities will be recorded as soon as and Class C Shares became effective. the Trust is informed of the dividend The Fund has an unlimited number of if such information is obtained authorized shares, which are divided subsequent to the ex-dividend date. into four classes - Institutional Interest income is recorded on the Class Shares, Investor Class Shares, accrual basis and includes Class B Shares and Class C Shares. amortization of discounts and premiums. Gains and losses are Each class of shares has equal rights determined on the identified cost as to assets of the Fund, and the basis, which is the same base used for classes are identical except for federal income tax purposes. differences in their sales charge structures and ongoing distribution Expenses and service fees. Income, expenses The Fund bears expenses incurred (other than distribution and service specifically on its behalf as well as fees, which are not attributable to a portion of general expenses, which the Institutional Class Shares), and are allocated according to methods realized and unrealized gains or approved annually by the Trustees. losses on investments are allocated to each class of shares based upon its Foreign Currency Translation relative net assets. All classes have Portfolio securities and other assets equal voting privileges, except where and liabilities denominated in foreign otherwise required by law or when the currencies are translated into U.S. Trustees determine that the matter to dollars based on the exchange rate of be voted on affects only the interests such currencies against U.S. dollars of the shareholders of a particular on the date of valuation. Purchases class. and sales of securities and income items denominated in foreign The following accounting policies have currencies are translated into U.S. been consistently followed by the Fund dollars at the exchange rate in effect and are in conformity with accounting on the transaction date. principles generally accepted in the United States of America in the The Fund does not separately report investment company industry. the effect of changes in foreign exchange rates from changes in market Investment Valuation prices on securities held. Such The Fund's investments in securities changes are included in net realized are carried at value. Securities and unrealized gain or loss from listed on an exchange or quoted on a investments. national market system are valued at the last sales price as of 4:00 p.m. Realized foreign exchange gains or Eastern Time. Other securities traded losses arise from sales of foreign in the over-the-counter market and currencies, currency gains or losses listed securities for which no sale realized between the trade and was reported on that date are valued settlement dates on securities at the most recent bid price. transactions and the difference Securities and assets for which between the recorded amounts of representative market quotations are dividends, interest, and foreign not readily available (e.g., if the (Continued) WISDOM FUND Notes to Financial Statements ________________________________________________________________________________ withholding taxes, and the U.S. dollar others that provide for general equivalent of the amounts actually indemnifications. The Fund's maximum received or paid. Net unrealized exposure under these arrangements is foreign exchange gains and losses unknown, as this would involve future arise from changes in foreign exchange claims that may be made against the rates on foreign denominated assets Fund. The Fund expects the risk of and liabilities other than investments loss to be remote. in securities held at the end of the reporting period. Proxy Voting Policies and Voting Record (Unaudited) Restricted Security Transactions A copy of the Trust's Proxy Voting and Restricted securities held by the Fund Disclosure Policy and the Advisor's may not be sold unless registered Proxy Voting and Disclosure Policy are pursuant to an effective registration included as Appendix B to the Fund's statement filed under the Securities Statement of Additional Information Act of 1933, as amended (the and is available, without charge, upon "Securities Act") or offered pursuant request, by calling 1-800-773-3863. to an exemption from, or in a Information regarding how the Fund transaction not subject to, the voted proxies relating to portfolio registration requirements of the securities during the most recent Securities Act. The risk of investing 12-month period ended June 30 will be in such securities is generally available (1) without charge, upon greater than the risk of investing in request, by calling the Fund at the the securities of publicly traded number above and (2) on the SEC's companies. Lack of a secondary market website at http://www.sec.gov. and resale restrictions may result in the inability of the Fund to sell a Quarterly Portfolio Holdings security at a fair price and may (Unaudited) substantially delay the sale of the The Fund files its complete schedule security it seeks to sell. In of portfolio holdings with the SEC for addition, restricted securities may the first and third quarters of each exhibit greater price volatility than fiscal year on Form N-Q. The Fund's securities for which secondary markets Forms N-Q are available on the SEC's exist. website at http://www.sec.gov. You may review and make copies at the SEC's Dividend Distributions Public Reference Room in Washington, The Fund may declare and distribute D.C. You may also obtain copies after dividends from net investment income paying a duplicating fee by writing (if any) quarterly. Distributions from the SEC's Public Reference Section, capital gains (if any) are generally Washington, D.C. 20549-0102 or by declared and distributed annually. The electronic request to Fund may also make a supplemental publicinfo@sec.gov, or is available, distribution subsequent to the end of without charge, upon request, by its fiscal year. calling the fund at 1-800-773-3863. Information on the operation of the Estimates Public Reference Room may be obtained The preparation of financial by calling the SEC at 202-942-8090. statements in conformity with accounting principles generally 2. Agreements accepted in the United States of America requires management to make Advisor estimates and assumptions that affect The Fund pays a monthly advisory fee the amount of assets, liabilities, to Atlanta Investment Counsel, LLC expenses and revenues reported in the (the "Advisor") based upon the annual financial statements. Actual results rate of 0.50% of the first $500 could differ from those estimates. million of the Fund's average daily net assets and 0.40% of all assets Federal Income Taxes over $500 million. No provision for income taxes is included in the accompanying financial The Advisor currently intends to statements, as the Fund intends to voluntarily waive all or a portion of distribute to shareholders all taxable its fee and to reimburse expenses of investment income and realized gains the Fund to limit total Fund operating and otherwise comply with Subchapter M expenses to a maximum of 1.75% of the of the Internal Revenue Code average daily net assets of the Fund's applicable to regulated investment Institutional Class Shares, Investor companies. Class Shares, Class B Shares and Class C Shares. There can be no assurances Indemnifications that the foregoing voluntary fee Under the Fund's organizational waivers or reimbursements will documents, its officers and Trustees continue. The Fund may, at a later are indemnified against certain date, reimburse the Advisor for the liabilities arising out of the management fees waived or limited, performance of their duties to the and/or other expenses assumed and paid Fund. In addition, in the normal by the Advisor pursuant to the Expense course of business, the Fund enters Limitation Agreement during any of the into contracts with their vendors and previous five fiscal years (Continued) WISDOM FUND Notes to Financial Statements ________________________________________________________________________________ provided that the Fund has reached a Compliance Services sufficient asset size to permit such The Nottingham Compliance Services, reimbursement to be made without LLC, a fully owned affiliate of the causing the total annual expense ratio Nottingham Company, provides services of the Fund to exceed 1.75%, as stated which assists the Trust's Chief above. Compliance Officer in monitoring and testing the policies and procedures of Administrator the Trust in relation to requirements The Fund pays a monthly administration under Rule 38a-1 of the Securities and fee to The Nottingham Company (the Exchange Commission. It receives "Administrator") based upon the compensation for this service at an average daily net assets of the annual rate of $7,750. respective share class and calculated at the annual rates as shown in the Transfer Agent schedule provided below. The North Carolina Shareholder Services, Administrator also receives a fee to LLC ("Transfer Agent") serves as procure and pay the custodian for the transfer, dividend paying, and funds, additional compensation for shareholder servicing agent for the fund accounting and recordkeeping Fund. It receives compensation for its service and additional compensation services based upon a $15 per for certain costs involved with the shareholder per year, subject to a daily valuation of securities and as minimum fee of $1,500 per month, plus reimbursement for out-of-pocket $500 per month for each additional expenses (which are immaterial in class of shares. amount). A breakdown of these is provided below. - ---------------------------- ----------------------------- ---------------- ------------------------- ------------------- Fund Accounting Administration Fees (a) Custody Fees Fund Asset Based Fees Accounting Blue Sky Average Net Annual Average Net Annual Fees Average Net Annual Administration Assets Rate Assets Rate (monthly) Assets Rate Fees (annual) - ----------------- ---------- ------------------- --------- ---------------- -------------- ---------- ------------------- First $50 Million 0.125% First $100 Million 0.02% $4,500 All Assets 0.01% $150 per state Next $50 Million 0.100% Over $100 Million 0.009% Over $100 Million 0.075% - ----------------- ---------- ------------------- --------- ---------------- -------------- ---------- -------------------
(a) Subject to a minimum fee of $2,000 per month. Distributor incur certain costs, which may not Capital Investment Group, Inc. (the exceed 0.25% per annum of the average "Distributor") serves as the Fund's daily net assets of the Investor Class principal underwriter and distributor. Shares or 1.00% per annum of the The Distributor receives any sales average daily net assets of the Class charges imposed on purchases of shares B or Class C Shares for each year and re-allocates a portion of such elapsed subsequent to adoption of the charges to dealers through whom the Plans, for payment to the Distributor sale was made, if any. For the year and others for items such as ended May 31, 2005, the Distributor advertising expenses, selling retained sales charges in the amount expenses, commissions, travel, or of $6,111. other expenses reasonably intended to result in sales of Investor Class Certain Trustees and officers of the Shares, Class B Shares and Class C Trust are also officers of the Shares in the Fund or support Advisor, the Distributor or the servicing of those classes' Administrator. shareholder accounts. The fund incurred $51,562, $150,596, and 3. Distribution and Service Fees $92,121, in distribution and service fees under the Plans with respect to The Trustees, including a majority of Investor Class Shares, Class B Shares, the Trustees who are not "interested and Class C Shares, respectively, for persons" of the Trust as defined in the fiscal year ended May 31, 2005. the Act, adopted distribution and service plans pursuant to Rule 12b-1 4. Purchases and Sales of Investment of the Act (the "Plans") applicable to Securities the Investor Class Shares, Class B Shares and Class C Shares. The Act For the year ended May 31, 2005, the regulates the manner in which a aggregate cost of purchases and regulated investment company may proceeds from sales of investment assume costs of distributing and securities (excluding short-term promoting the sales of its shares and securities) are shown in the table on servicing of its shareholder accounts. the following page: The Plan provides that the Fund may (Continued) WISDOM FUND Notes to Financial Statements ________________________________________________________________________________ - ----------------- ----------------- losses or deductions the Fund may be Purchases Proceeds from able to offset against income and of Sales of gains realized in future years, and Securities Securities (3) unrealized appreciation or - ----------------- ----------------- depreciation of investments for $18,469,159 $16,739,874 federal income tax purposes. - ----------------- ----------------- Accumulated capital losses represent There were no purchases or sales of net capital loss carryovers as of May long-term U.S. Government Obligations 31, 2005 that may be available to during the period ended May 31, 2005. offset future realized capital gains and thereby reduce future taxable gain 5. Federal Income Tax distributions. For the year ended May 31, 2005, there are no accumulated The tax components of capital shown in capital losses. the table on the following page represent: (1) distribution Other book tax differences in the requirements the Fund must satisfy current year primarily consist of post under the income tax regulations, (2) October loss deferrals. - ------------------------------- ----------------------- --------------------- ----------------------- ------------------------------ Undistributed Ordinary Undistributed Accumulated Capital Other Book to Tax Income Long-Term Gains Losses Differences Net Tax Appreciation - ------------------------------- ----------------------- --------------------- ----------------------- ------------------------------ $0 $1,866,461 $0 $8,175 $7,150,396 - ------------------------------- ----------------------- --------------------- ----------------------- ------------------------------
The aggregate cost of investments and are noted below. The primary the composition of unrealized difference between book and tax appreciation and depreciation of appreciation or depreciation of investment securities for federal investments is wash sale loss income tax purposes as of May 31, 2005 deferrals. - ------------------------------- ----------------------------------------------- ---------------------------------------------------- Federal Tax Cost Aggregate Gross Unrealized Appreciation Aggregate Gross Unrealized Depreciation - ------------------------------- ----------------------------------------------- ---------------------------------------------------- $41,345,220 $7,696,757 $(546,361) - ------------------------------- ----------------------------------------------- ----------------------------------------------------
The amount of dividends and short-term gains, deferral of wash distributions from net investment sale losses, foreign currency income and net realized capital gains transactions, net investment losses are determined in accordance with and capital loss carry-forwards. federal income tax regulations which Certain permanent differences such as may differ from generally accepted tax returns of capital and net accounting principles. These investment losses, if any, would be differences are due to differing classified against capital. treatments for items such as net ____________________________________________________________________________________________________________________________________ Distributions from Long-Term Capital Tax Return of Net Investment For the fiscal year ended Ordinary Income Gains Capital Loss - ----------------------------------- ----------------------- ----------------------- ----------------------- ------------------------ May 31, 2005 $0 $682,121 $0 $0 - ----------------------------------- ----------------------- ----------------------- ----------------------- ------------------------ May 31, 2004 $0 $0 $0 $0 - ----------------------------------- ----------------------- ----------------------- ----------------------- ------------------------
6. Capital Share Transactions ____________________________________________________________________________________________________________________________________ For the Years ended May 31, Institutional Class Investor Class 2005 2004 2005 2004 - ---------------------------------------------- -------------------- --------------------- -------------------- --------------------- Transactions in Fund Shares Shares sold 18,062 50,016 289,599 599,999 Reinvested distributions 5,065 0 20,312 0 Shares repurchased (17,562) (49,270) (417,343) (271,446) Net Increase (Decrease) in Capital Share Transactions 5,565 746 (107,432) 328,553 Shares Outstanding, Beginning of Year 381,177 380,431 1,574,345 1,245,792 Shares Outstanding, End of Year 386,742 381,177 1,466,913 1,574,345 - ---------------------------------------------- -------------------- --------------------- -------------------- ---------------------
(Continued) WISDOM FUND Notes to Financial Statements ________________________________________________________________________________ 6. Capital Share Transactions -(Continued) ____________________________________________________________________________________________________________________________________ For the Years ended May 31, Class B Class C 2005 2004 2005 2004 - ---------------------------------------------- -------------------- --------------------- -------------------- --------------------- Transactions in Fund Shares Shares sold 88,251 222,576 145,631 227,578 Reinvested distributions 16,025 0 9,479 0 Shares repurchased (158,165) (183,265) (98,651) (38,040) Net (Decrease) Increase in Capital Share Transactions (53,889) 39,311 56,459 189,538 Shares Outstanding, Beginning of Year 1,206,269 1,166,958 701,203 511,666 Shares Outstanding, End of Year 1,152,380 1,206,269 757,662 701,203 - ---------------------------------------------- -------------------- --------------------- -------------------- ---------------------
(Continued) WISDOM FUND Additional Information (Unaudited) ________________________________________________________________________________ 7. Information about Trustees and Statement of Additional Information of Officers the Fund includes additional information about the Trustee and The business and affairs of the Fund officers and is available, without and the Trust are managed under the charge, upon request by calling the direction of the Trustees. Information Fund toll-free at 1-800-773-3863. The concerning the Trustee and officers of address of each Trustee and officer, the Trust and Fund is set forth below. unless otherwise indicated below, is Generally, each Trustee and officer 116 South Franklin Street, Rocky serves an indefinite term or until Mount, North Carolina 27804. The certain circumstances such as their Trustee received aggregate resignation, death, or otherwise as compensation of $3,250 during the specified in the Trust's fiscal year ended May 31, 2005 from organizational documents. Any Trustee the Fund for his services to the Fund may be removed at a meeting of and Trust. The officers did not shareholders by a vote meeting the receive compensation from the Fund for requirements of the Trust's their services to the Fund and Trust. organizational documents. The - ------------------------------------------------------------------------------------------------------------------------------------ Number of Portfolios in Fund Position(s) Length Complex Name, Address, held with of Time Principal Occupation(s) Overseen Other Directorships Held by And Age Fund/Trust Served During Past 5 Years by Trustee Trustee - ---------------------- ------------ --------- -------------------------------------- ------------- --------------------------------- Independent Trustee - ---------------------- ------------ --------- -------------------------------------- ------------- --------------------------------- Jack E. Brinson, 73 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; The Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II dealership) for the six series of that trust; Hillman Capital Management Investment Trust for the two series of that trust; MurphyMorris Investment Trust and its one series; de Leon Funds Trust for the one series of that trust; Tilson Investment Trust for the two series of that trust; and The Piedmont Investment Trust for the one series of that trust (all registered investment companies) - ---------------------- ------------ --------- -------------------------------------- ------------- --------------------------------- Officers - ---------------------- ------------ --------- -------------------------------------- ------------- --------------------------------- C. Douglas Davenport, President, Since President (since 1998) of Atlanta n/a n/a 54 Treasurer, 2003 Investment Counsel, LLC (Adviser of Atlanta Investment Principal the Fund); previously, stockbroker Counsel,LLC Executive at Lehman Brothers 3717 Haddon Hall Road, Officer, NW, Suite 200 and Atlanta, GA 30327 Principal Financial Officer - ---------------------- ------------ --------- -------------------------------------- ------------- --------------------------------- Julian G. Winters, 36 Secretary Since Vice President-Compliance n/a n/a and 2004 Administration (since 1998) of The Assistant Nottingham Company Treasurer - ---------------------- ------------ --------- -------------------------------------- ------------- --------------------------------- Tracey L. Hendricks, Assistant Since Vice President of Financial n/a n/a 37 Secretary 2004 Reporting, Tax, Internal Audit, and Compliance of The Nottingham Company (Administrator to the Fund) since 2004; previously, Vice President of Special Projects of The Nottingham Company from 2000 to 2004 - ---------------------- ------------ --------- -------------------------------------- ------------- ---------------------------------
(This page was intentionally left blank.) Deloitte Deloitte & Touche LLP Two World Financial Center New York, NY 10281-1414 USA Tel: +1 212 436 2000 Fax: +1 212 436 5000 www.deloitte.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of New Providence Investment Trust and Shareholders of Wisdom Fund: We have audited the accompanying statement of assets and liabilities of Wisdom Fund (the "Fund"), including the portfolio of investments, as of May 31, 2005, 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 year then ended, and the financial highlights for each of the five years in the year 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. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of May 31, 2005, by correspondence with the custodian and brokers. 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, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the year then ended, and the financial highlights for each of the five years in the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP July 8, 2005 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 12(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 collective experience provided by the members of the audit committee together offer 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 to the registrant for the last two fiscal years are described in the table below. These amounts represent aggregate fees billed by the registrant's 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 statutory and regulatory filings. ----------------------------------- -------------- ------------- Fund 2004 2005 ----------------------------------- -------------- ------------- Wisdom Fund $ 10,500 $ 14,000 ----------------------------------- -------------- ------------- (b) Audit-Related Fees - There were no additional fees billed in the fiscal years ended May 31, 2004 or 2005 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 last two fiscal years for professional services rendered by the Accountant for tax compliance, tax advice, and tax planning are described in the table below. These services were for the completion of the fund's federal, state, and excise tax returns. ----------------------------------- -------------- ------------- Fund 2004 2005 ----------------------------------- -------------- ------------- Wisdom Fund $ 4,875 $ 4,900 ----------------------------------- -------------- ------------- (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 audit committee meetings of the board of trustees called for such purpose and will pre-approve the Accountant for each fiscal year thereafter at audit committee meetings 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. A copy of the schedule of investments of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this Form N-CSR. Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. Item 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. Item 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. Item 10.SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS. None. Item 11.CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures are effective based on their evaluation of these 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 quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12.EXHIBITS. (a)(1) Code of Ethics required by Item 2 of Form N-CSR is filed herewith as Exhibit 12.(a)(1). (a)(2) Certifications required by Item 12.(a)(2) of Form N-CSR are filed herewith as Exhibit 12.(a)(2). (a)(3) Not applicable. (b) Certifications required by Item 12.(b) of Form N-CSR are filed herewith as Exhibit 12.(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: July 20, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: (Signature and Title) /s/ C. Douglas Davenport ________________________________ C. Douglas Davenport President, Treasurer, Principal Executive Officer and Principal Financial Officer New Providence Investment Trust Date: July 20, 2005 EX-99.CODE ETHICS 2 coe.txt CODE OF ETHICS FOR PRINCIPAL OFFICERS Exhibit 12.(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; 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 2 such companies, unless such entertainment is business-related, 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; 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, Principal Executive Officer and Principal Financial Officer 6 EX-99.CERT 3 cert302.txt SECTION 302 OFFICER CERTIFICATIONS EXHIBIT 12.(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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this 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: July 20, 2005 /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 CERTIFICATIONS EXHIBIT 12.(b) -------------- NEW PROVIDENCE INVESTMENT TRUST CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL 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, 2005, 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: July 20, 2005 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-----