________________________________________________________________________________
NEW PROVIDENCE CAPITAL
GROWTH FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
ANNUAL REPORT 1999
FOR THE YEAR ENDED MAY 31,
INVESTMENT ADVISOR
New Providence Capital Management, L.L.C.
2859 Paces Ferry Road, Suite 2125
Atlanta, Georgia 30339
NEW PROVIDENCE CAPITAL GROWTH FUND
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This Report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
[New Providence Capital Management, L.L.C. letterhead]
Dear Investors,
The New Providence Capital Growth Fund uses a disciplined approach to investing
that attempts to identify medium sized growth companies that are developing into
tomorrow's blue chip enterprises. Our goal is to build a focused portfolio of
companies that will provide consistent earnings growth above the market average
with stock valuations below the market average. Through June, our portfolio had
met these objectives: the average expected 5 year earnings growth rate of
companies held by the fund was approximately 20.4% (above the market average);
the average price/earnings ratio of these companies was 25 times 1999 earnings
(below the market average).
FISCAL YEAR RESULTS
-------------------
The stock market in 1998 was dominated by only a few of the largest companies in
the U.S., until the 4th quarter. Because the fund concentrates its investments
in reasonably priced mid-cap growth stocks, this negatively impacted our fiscal
year results (see attached graph). The fund's performance, through the 3rd
quarter of 1998, was also negatively impacted by its focus in consumer cyclical
stocks, as fears gathered that the Asian crisis might drag the U.S. into
recession.
NEAR TERM PERFORMANCE
---------------------
Beginning in October of 1998, the market began to broaden, with small and medium
sized companies finally participating in the market rally. The same consumer
cyclical stocks that led the market down during the 3rd quarter of 1998 led the
market upward during the 4th quarter. Although our fiscal year performance
lagged the S&P 400 Mid-Cap Index, we have exceeded the benchmark since this
broadening began. From the 4th quarter of 1998 until the date of this writing
(7/2/99), the Fund returned 44.3%, versus 36.7% for the S&P 400 Mid-Cap Index
(and 36.8% for the S&P 500 Index). This performance has been achieved through
not deviating from our long-term discipline of investing in only those companies
meeting our strict quantitative and fundamental requirements. Namely, we are
looking for companies with strong business philosophies that have consistently
delivered earnings growth above expectations while selling at discounts to their
competitors and the overall market.
<PAGE>
Looking forward to the rest of 1999, we hope that the participation of medium
sized companies continues. Because these stocks, as a general rule, have
under-performed the broad market since November of 1997, New Providence believes
that they currently offer the superior relative investment value.
Thank you for the opportunity to serve you.
John Donaldson
Kyle Tomlin
Shannon Coogle
New Providence Capital Management, L.L.C.
Atlanta, Georgia
<PAGE>
NEW PROVIDENCE CAPITAL GROWTH FUND
Performance Update - $10,000 Investment
For the period from September 29, 1997 (Date of Initial Public Offering)
to May 31, 1999
--------------------------------------------------------------------
New Providence
Period Capital Growth Lipper Growth S&P 400
Ended Fund Fund Index Midcap Index
--------------------------------------------------------------------
9/29/97 $10,000 $10,000 $10,000
11/30/97 9,683 9,900 9,701
2/28/98 10,440 10,910 10,703
5/31/98 10,176 11,215 10,877
8/31/98 7,775 9,717 8,564
11/30/98 9,265 11,742 10,707
2/28/99 10,137 12,815 10,929
5/31/99 10,296 13,443 12,173
This graph depicts the performance of the New Providence Capital Growth Fund
versus the Lipper Growth Fund Index and the S&P 400 Midcap Index. It is
important to note that the New Providence Capital Growth Fund is a
professionally managed mutual fund while the indexes are not available for
investment and are unmanaged. The comparison is shown for illustrative purposes
only.
Average Annual Total Returns
- ----------------------------
One Year Since IPO
- ----------------------------
1.18% 1.76%
- ----------------------------
The graph assumes an initial $10,000 investment at September 29, 1997. All
dividends and distributions are reinvested.
At May 31, 1999, the New Providence Capital Growth Fund would have grown to
$10,296 - total investment return of 2.96% since September 29, 1997.
At May 31, 1999, a similar investment in the Lipper Growth Fund Index would have
grown to $13,443 - total investment return of 34.43%; and the S&P 400 Midcap
Index would have grown to $12,173 - total investment return of 21.73%, since
September 29, 1997. The S&P 400 Midcap Index replaces the S&P 500 Total Return
Index used in the prior year's annual report graph for illustrative purposes
because the Investment Advisor feels that the S&P 400 Midcap Index is a more
accurate comparison to the New Providence Capital Growth Fund's investment
strategy than the S&P 500 Total Return Index. For the fiscal year ended May 31,
1999, the investment in the New Providence Capital Growth Fund would have
increased in value by $120; the investment in the S&P 400 Midcap Index would
have increased in value by $1,296; while the investment in the S&P 500 Total
Return Index would have increased in value by $2,431.
Past performance is not a guarantee of future results. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.
<PAGE>
<TABLE>
<S> <C> <C> <C>
NEW PROVIDENCE CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 99.80%
Aerospace & Defense - 2.76%
(a)Gulfstream Aerospace Corporation ....................................... 10,300 $ 636,025
-----------
Apparel Manufacturing - 2.77%
(a)Tommy Hilfiger Corporation ............................................. 8,500 638,031
-----------
Beverages - 2.23%
Adolph Coors Company ................................................... 10,800 513,000
-----------
Building Materials - 2.32%
(a)Jacobs Engineering Group Inc. .......................................... 14,400 535,500
-----------
Commercial Services - 2.30%
(a)Sterling Commerce, Inc. ................................................ 13,600 528,700
-----------
Computers - 4.96%
National Computer Systems, Inc. ........................................ 15,500 484,375
(a)Sun Microsystems, Inc. ................................................. 11,000 657,250
-----------
1,141,625
-----------
Computer Software & Services - 6.27%
(a)BMC Software, Inc. ..................................................... 14,500 716,844
(a)Network Associates, Inc. ............................................... 10,200 149,812
(a)Oracle Corporation ..................................................... 23,250 576,891
-----------
1,443,547
-----------
Educational Services - 2.70%
(a)ITT Educational Services, Inc. ......................................... 26,100 621,506
-----------
Electronics - 6.03%
(a)Lexmark International Group, Inc. ...................................... 10,200 1,388,475
-----------
Entertainment - 4.31%
Carnival Corporation ................................................... 24,200 992,200
-----------
Financial Services - 7.14%
Capital One Financial Corporation ...................................... 7,200 1,084,950
Freddie Mac ............................................................ 9,600 559,800
-----------
1,644,750
-----------
Hand & Machine Tools - 5.20%
Danaher Corporation .................................................... 19,800 1,196,663
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
NEW PROVIDENCE CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Medical Supplies - 4.36%
Bergen Brunswig Corporation ............................................ 20,700 $ 455,400
(a)Genzyme Corporation .................................................... 13,500 547,594
-----------
1,002,994
-----------
Medical - Biotechnology - 6.90%
(a)Amgen Inc. ............................................................. 8,500 537,625
(a)Roberts Pharmaceutical Corporation ..................................... 55,300 1,050,700
-----------
1,588,325
-----------
Medical - Hospital Management & Services - 2.58%
(a)Wellpoint Health Networks Inc. ......................................... 7,200 593,550
-----------
Restaurants & Food Service - 5.57%
(a)Outback Steakhouse, Inc. ............................................... 35,750 1,282,531
-----------
Retail - Apparel - 6.01%
(a)Just For Feet, Inc. .................................................... 32,000 244,000
Intimate Brands, Inc. .................................................. 11,800 611,387
The TJX Companies, Inc. ................................................ 17,600 528,000
-----------
1,383,387
-----------
Retail - Department Stores - 2.22%
Dayton Hudson Corporation .............................................. 8,100 510,300
-----------
Retail - Grocery - 2.02%
(a)Safeway Inc. ........................................................... 10,000 465,000
-----------
Retail - Specialty Line - 6.49%
(a)Office Depot, Inc. ..................................................... 44,250 923,719
Tiffany & Co. .......................................................... 6,900 571,838
-----------
1,495,557
-----------
Scientific & Technical Instrument - 5.44%
(a)Waters Corporation ..................................................... 12,700 1,252,537
-----------
Telecommunications - 2.07%
CenturyTel, Inc. ....................................................... 12,450 476,991
-----------
Telecommunications Equipment - 3.08%
(a)ADC Telecommunications, Inc. ........................................... 14,500 708,687
-----------
Textiles - 1.81%
(a)Shaw Industries, Inc. .................................................. 24,700 416,813
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
NEW PROVIDENCE CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Transportation - Miscellaneous - 2.26%
(a)Swift Transportation Co., Inc. ......................................... 28,500 $ 521,017
-----------
Total Common Stocks (Cost $21,146,262) ...................................... 22,977,711
-----------
INVESTMENT COMPANY - 0.19%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares
(Cost $44,229) ......................................................... 44,229 44,229
-----------
Total Value of Investments (Cost $21,190,491 (b)) .................................. 99.99% $23,021,940
Other Assets Less Liabilities ...................................................... 0.01% 1,765
------ -----------
Net Assets .................................................................. 100.00% $23,023,705
====== ===========
(a) Non-income producing investment.
(b) Aggregate cost for financial reporting and federal income tax purposes is the same. Unrealized appreciation
(depreciation) of investments for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ................................................................... $ 3,306,031
Unrealized depreciation ................................................................... (1,474,582)
-----------
Net unrealized appreciation ............................................... $ 1,831,449
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
NEW PROVIDENCE CAPITAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1999
ASSETS
Investments, at value (cost $21,190,491) ......................................................... $23,021,940
Cash ............................................................................................. 389
Income receivable ................................................................................ 7,315
Deferred organization expenses, net (note 4) ..................................................... 22,305
-----------
Total assets ................................................................................ 23,051,949
-----------
LIABILITIES
Accrued expenses ................................................................................. 28,244
-----------
NET ASSETS
(applicable to 1,972,232 shares outstanding; unlimited
shares of $0.01 par value beneficial interest authorized) ....................................... $23,023,705
===========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($23,023,705 / 1,972,232 shares) ................................................................. $11.67
===========
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $21,047,643
Undistributed net realized gain on investments ................................................... 144,613
Net unrealized appreciation on investments ....................................................... 1,831,449
-----------
$23,023,705
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
NEW PROVIDENCE CAPITAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended May 31, 1999
INVESTMENT LOSS
Income
Dividends ..................................................................................... $ 62,025
---------
Expenses
Investment advisory fees (note 2) ............................................................. 163,383
Fund administration fees (note 2) ............................................................. 27,230
Distribution fees (note 3) .................................................................... 54,461
Custody fees .................................................................................. 3,410
Registration and filing administration fees (note 2) .......................................... 4,328
Fund accounting fees (note 2) ................................................................. 27,000
Audit fees .................................................................................... 10,000
Legal fees .................................................................................... 9,749
Securities pricing fees ....................................................................... 2,424
Shareholder recordkeeping fees ................................................................ 8,894
Shareholder servicing expenses ................................................................ 2,925
Registration and filing expenses .............................................................. 13,055
Printing expenses ............................................................................. 4,000
Amortization of deferred organization expenses (note 4) ....................................... 5,417
Trustee fees and meeting expenses ............................................................. 3,500
Other operating expenses ...................................................................... 3,458
---------
Total expenses .......................................................................... 343,234
---------
Net investment loss ................................................................ (281,209)
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 144,609
Increase in unrealized appreciation on investments ................................................. 395,630
---------
Net realized and unrealized gain on investments ............................................... 540,239
---------
Net increase in net assets resulting from operations .................................... $ 259,030
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
NEW PROVIDENCE CAPITAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Period ended
May 31, May 31,
1999 1998 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN NET ASSETS
Operations
Net investment loss ........................................................... $ (281,209) $ (156,113)
Net realized gain from investment transactions ................................ 144,609 209,061
Increase in unrealized appreciation on investments ............................ 395,630 1,435,819
------------ ------------
Net increase in net assets resulting from operations ................... 259,030 1,488,767
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions ................................ (52,944) 0
------------ ------------
Capital share transactions
(Decrease) increase in net assets resulting from capital share transactions (b) (346,158) 21,675,010
------------ ------------
Total (decrease) increase in net assets ............................ (140,072) 23,163,777
NET ASSETS
Beginning of period ................................................................... 23,163,777 0
------------ ------------
End of period ......................................................................... $ 23,023,705 $ 23,163,777
============ ============
(b) A summary of capital share activity follows:
-------------------------------------------------------------------------
Year ended Period ended
May 31, 1999 May 31, 1998 (a)
Shares Value Shares Value
-------------------------------------------------------------------------
Shares sold ........................................... 9,828 $ 108,932 2,002,953 $ 21,687,588
Shares issued for reinvestment
of distributions ................................ 4,492 52,468 0 0
------------ ------------ ------------ ------------
14,320 161,400 2,002,953 $ 21,687,588
Shares redeemed ....................................... (43,923) (507,558) (1,118) (12,578)
------------ ------------ ------------ ------------
Net (decrease) increase ......................... (29,603) $ (346,158) 2,001,835 $ 21,675,010
============ ============ ============ ============
(a) For the period from July 11, 1998 (commencement of operations) to May 31, 1998.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
NEW PROVIDENCE CAPITAL GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Period ended
May 31, May 31,
1999 1998 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................................. $11.57 $11.37 (b)
Income (loss) from investment operations
Net investment loss ....................................... (0.14) (0.08)
Net realized and unrealized gain on investments ........... 0.27 0.28
----------- -----------
Total from investment operations .................... 0.13 0.20
----------- -----------
Distributions to shareholders from
Net realized gain from investment transactions ............ (0.03) 0.00
----------- -----------
Net asset value, end of period ........................................ $11.67 $11.57
=========== ===========
Total return .......................................................... 1.18 % 1.76 %
=========== ===========
Ratios/supplemental data
Net assets, end of period ...................................... $23,023,705 $23,163,777
=========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ...................... 1.58 % 1.79 % (c)
After expense reimbursements and waived fees ....................... 1.58 % 1.62 % (c)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ...................... (1.29)% (1.41)% (c)
After expense reimbursements and waived fees ....................... (1.29)% (1.24)% (c)
Portfolio turnover rate ................................................. 148.37 % 57.27 %
(a) For the period from September 29, 1997 (date of initial public offering) to May 31, 1998.
(b) Includes undistributed net investment loss of $0.02 per share and undistributed net realized and unrealized gains of $1.39
per share, both of which were earned from July 11, 1997 (commencement of operations) through September 29, 1997.
(c) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
NEW PROVIDENCE CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The New Providence Capital Growth Fund (the "Fund") is a diversified
series of shares of beneficial interest of The New Providence
Investment Trust (the "Trust"). The Trust, an open-ended investment
company, was organized on July 9, 1997 as a Massachusetts Business
Trust and is registered under the Investment Company Act of 1940, as
amended. The investment objective of the Fund is to provide
shareholders with long-term capital growth, consisting of both realized
and unrealized capital gains. Current income is of secondary
importance. The Fund will seek to achieve this objective by investing
primarily in a portfolio of equity securities traded on domestic U.S.
exchanges or on over-the-counter markets. The Fund began operations on
July 11, 1997. As of May 31, 1999, one shareholder of record owned
93.96% of the outstanding shares of the Fund. The following is a
summary of significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted on a
national market system are valued at the last sales price as of
4:00 p.m. New York time on the day of valuation. Other securities
traded in the over-the-counter market and listed securities for
which no sale was reported on that date are valued at the most
recent bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the Board
of Trustees. Short-term investments are valued at cost which
approximates value.
B. Federal Income Taxes - The Fund is considered a personal holding
company as defined under Section 542 of the Internal Revenue Code
since 50% of the value of the Fund's shares were owned directly
or indirectly by five or fewer individuals at certain times
during the last half of the year. As a personal holding company,
the Fund is subject to federal income taxes on undistributed
personal holding company income at the maximum individual income
tax rate. No provision has been made for federal income taxes
since substantially all taxable income has been distributed to
shareholders. It is the policy of the Fund to comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies and to make sufficient distributions of
taxable income to relieve it from all federal income taxes.
Net investment income (loss) and net realized gains (losses) may
differ for financial statement and income tax purposes primarily
because of losses incurred subsequent to October 31, which are
deferred for income tax purposes. The character of distributions
made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains were
recorded by the Fund.
C. Investment Transactions - Investment transactions are recorded on
the trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is recorded
on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on a
date selected by the Trust's Trustees. In addition, distributions
may be made annually in December out of net realized gains
through October 31 of that year. Distributions to shareholders
are recorded on the ex-dividend date. The Fund may make a
supplemental distribution subsequent to the end of its fiscal
year ending May 31.
(Continued)
<PAGE>
NEW PROVIDENCE CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in
the financial statements. Actual results could differ from those
estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, New Providence Capital
Management, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the portfolio,
and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities. As
compensation for its services, the Advisor receives a fee at the annual
rate of 0.75% of the Fund's average daily net assets.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's first $50 million of average daily
net assets, 0.10% of the next $50 million of average daily net assets,
and 0.075% of average daily net assets over $100 million. The
Administrator also receives a monthly fee of $2,250 for accounting and
recordkeeping services. The contract with the Administrator provides
that the aggregate fees for the aforementioned administration,
accounting and recordkeeping services shall not be less than $50,000
per year. The Administrator also charges the Fund for certain expenses
involved with the daily valuation of portfolio securities.
North Carolina Shareholder Services, LLC (the "Transfer Agent") serves
as the Fund's transfer, dividend paying, and shareholder servicing
agent. The Transfer Agent maintains the records of each shareholder's
account, answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund shares, acts as dividend and
distribution disbursing agent, and performs other shareholder servicing
functions.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company
Act of 1940 (the "Act"), adopted a distribution plan pursuant to Rule
12b-1 of the Act (the "Plan"). The Act regulates the manner in which a
regulated investment company may assume expenses of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
(Continued)
<PAGE>
NEW PROVIDENCE CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
The Plan provides that the Fund may incur certain expenses, which may
not exceed 0.25% per annum of the Fund's average daily net assets for
each year elapsed subsequent to adoption of the Plan, for payment to
the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel or other expenses reasonably
intended to result in sales of shares of the Fund or support servicing
of shareholder accounts. Expenditures incurred as service fees may not
exceed 0.25% per annum of the Fund's average daily net assets.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization
and the registration of its shares have been assumed by the Fund. The
organization expenses are being amortized over a period of sixty
months. Investors purchasing shares of the Fund bear such expenses only
as they are amortized against the Fund's investment income.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $32,084,763 and $32,078,021, respectively, for the year
ended May 31, 1999.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
For federal income tax purposes, the Fund must report distributions
from net realized gain from investment transactions that represent
short-term capital gain to its shareholders. The total amount of $.03
per share distributions for the year ended May 31, 1999, was classified
as short-term gain. Shareholders should consult a tax advisor on how to
report distributions for state and local income tax purposes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of The New Providence Investment Trust and Shareholders
of New Providence Capital Growth Fund:
We have audited the accompanying statement of assets and liabilities of New
Providence Capital Growth Fund (the "Fund"), including the schedule of
investments, as of May 31, 1999, and the related statements of operations for
the year then ended, the statements of changes in net assets, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of New
Providence Capital Growth Fund as of May 31, 1999, the results of its operations
for the year then ended, the changes in its net assets, and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
June 18, 1999
<PAGE>
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
INSTITUTIONAL SHARES
ANNUAL REPORT 1999
FOR THE PERIOD ENDED MAY 31
INVESTMENT ADVISOR
Atlanta Investment Counsel, LLC
2771 Carmon-on-Wesley, NW
Suite 100
Atlanta, Georgia 30327
WISDOM FUND
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This Report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
ATLANTA INVESTMENT COUNSEL, L.L.C.
Manager of the Wisdom Fund [letterhead]
July 1, 1999
As I write this first letter to shareholders of the Wisdom Fund, I feel that I
should once again point out the reasons why our firm decide on a mutual fund
that would attempt to invest in the securities known to be owned by Berkshire
Hathaway Holding (BHH).
1. With a market cap of over $110 billion, BHH is priced at a
substantial premium to the net asset value of the companies in its portfolio. By
acquiring Gillette by buying BHH, it is like paying 100 times earnings for
Gillette. Why? The market has given BHH a price that values it far beyond the
combined value of its individual stock prices by at least 60%.
2. Because BHH is organized as a corporation, it is subject to double
taxation-both at the corporate and shareholder level. The Wisdom Fund intends to
qualify as an investment company allowing it to avoid double taxation.
3. Through 1997, BHH accrued $27 billion in unrealized capital gains.
As an example, BHH's $11 million investment in Washington Post was worth $999
million at the end of last year-imagine the tax bite that awaits that holding.
However, Warren Buffett is the most revered and emulated investor in the nation.
He has an average gain of 25% per year for the past three decades. Over the past
12 months, BHH has fallen about 15% from its high of $84,000 in June of 1988.
The premium I referenced above could be the reason for BHH's recent
underperformance.
The Wisdom Fund will at times own companies not owned by BHH. Since General Re
and GEICO are 100% owned by BHH, we have identified and bought publicly traded
companies with similar characteristics to those companies. Those stocks are
American International Group, Allstate Insurance, and 20th Century Industries.
Recent weakness in Coca-Cola, Gillette, and Walt Disney have caused our N.A.V.
to drop slightly below our initial $10.00 offering price. These stocks will
rebound, as they have in the past. Our portfolio consists of stocks in financial
services, consumer products and media, and these sectors should grow much faster
than others over the next five years.
<PAGE>
And as Peter Lynch, former manager of Fidelity Magellan says about Warren
Buffett's style of investing "His method is as true today as it was 10 years
ago. It's a little harder to find the same opportunities, but his system hasn't
gone out of style." I agree 100%.
C. Douglas Davenport
President & Manager
<PAGE>
WISDOM FUND
INSTITUTIONAL CLASS
Performance Update - $25,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 1999
----------------------------------------
Institutional S&P 500Total
Class Shares Return Index
----------------------------------------
2/16/99 $25,000 $25,000
2/28/99 25,000 24,941
3/31/99 24,425 25,939
4/30/99 25,275 26,943
5/31/99 24,889 26,307
This graph depicts the performance of the Wisdom Fund Institutional Class versus
the S&P 500 Total Return Index. It is important to note that the Wisdom 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.
Cumulative Total Return
- -----------------------
Since Commencement
of Operations
- -----------------------
(0.45)%
- -----------------------
The graph assumes an initial $25,000 investment at February 16, 1999. All
dividends and distributions are reinvested.
At May 31, 1999, the Wisdom Fund Institutional Class would have decreased to
$24,889 - total investment return of (0.45)% since February 16, 1999.
At May 31, 1999, a similar investment in the S&P 500 Total Return Index would
have grown to $26,307 - total investment return of 5.23% since February 16,
1999.
Past performance is not a guarantee of future results. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 60.71%
Beverages - 16.49%
The Coca-Cola Company ....................................................... 1,200 $ 82,200
---------
Cosmetics & Personal Care - 4.35%
The Gillette Company ....................................................... 425 21,675
---------
Entertainment - 2.20%
The Walt Disney Company ..................................................... 375 10,969
---------
Financial - Banks, Commercial - 3.21%
Wells Fargo Company ......................................................... 400 16,000
---------
Financial - Banks, Money Center - 1.66%
Citigroup Inc. .............................................................. 125 8,281
---------
Financial Services - 11.68%
American Express Company .................................................... 300 36,356
Freddie Mac ................................................................. 375 21,867
---------
58,223
---------
Insurance - Multiline - 12.65%
The Allstate Corporation .................................................... 1,100 40,150
American International Group, Inc. .......................................... 200 22,863
---------
63,013
---------
Insurance - Property & Casualty - 7.35%
20th Century Industries ..................................................... 2,000 36,625
---------
Publishing - Newspapers - 1.12%
The Washington Post Company ................................................. 10 5,564
---------
Total Common Stocks (Cost $305,205) ............................................................ 302,550
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATION - 29.99%
United States Treasury Bill
(Cost $149,552) ............................................. $152,000 0.00% 10/07/99 149,425
---------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY - 0.91%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................... 4,518 $ 4,518
(Cost $4,518) ---------
Total Value of Investments (Cost $459,275 (a)) ........................................ 91.61% $ 456,493
Other Assets Less Liabilities ......................................................... 8.39% 41,819
------ ---------
Net Assets ....................................................................... 100.00% $ 498,312
====== =========
(a) Aggregate cost for federal income tax purposes is $461,156. Unrealized appreciation (depreciation) of investments for
federal income tax purposes is as follows:
Unrealized appreciation ....................................................................... $ 6,338
Unrealized depreciation ....................................................................... (11,001)
---------
Net unrealized depreciation .................................................... $ (4,663)
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1999
ASSETS
Investments, at value (cost $459,275) .............................................................. $ 456,493
Income receivable .................................................................................. 472
Receivable for investments sold .................................................................... 22,957
Due from advisor (note 2) .......................................................................... 31,682
---------
Total assets .................................................................................. 511,604
---------
LIABILITIES
Accrued expenses ................................................................................... 13,292
---------
NET ASSETS ................................................................................................ $ 498,312
=========
NET ASSETS CONSIST OF
Paid-in capital .................................................................................... $ 502,975
Accumulated net realized loss on investments ....................................................... (1,881)
Net unrealized depreciation on investments ......................................................... (2,782)
---------
$ 498,312
=========
INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($498,213 / 50,289 shares : unlimited shares of $0.01 par value
beneficial interest authorized) ............................................................. $ 9.91
=========
INVESTOR CLASS
Net asset value, redemption and offering price per share
($99 / 10 shares : unlimited shares of $0.01 par value
beneficial interest authorized) ............................................................. $ 9.92
=========
Maximum offering price per share (100 / 94.25% of $9.92) ........................................... $10.53
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF OPERATIONS
For the period from February 16, 1999
(commencement of operations)
to May 31, 1999
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 210
Dividends ...................................................................................... 1,565
--------
Total income ............................................................................. 1,775
--------
Expenses
Investment advisory fees (note 2) .............................................................. 700
Fund administration fees (note 2) .............................................................. 175
Custody fees ................................................................................... 1,118
Registration and filing administration fees (note 2) ........................................... 242
Fund accounting fees (note 2) .................................................................. 10,500
Audit fees ..................................................................................... 7,971
Legal fees ..................................................................................... 3,715
Securities pricing fees ........................................................................ 198
Shareholder recordkeeping fees ................................................................. 3,050
Other accounting fees (note 2) ................................................................. 1,274
Shareholder servicing expenses ................................................................. 897
Registration and filing expenses ............................................................... 892
Printing expenses .............................................................................. 1,233
Trustee fees and meeting expenses .............................................................. 580
Other operating expenses ....................................................................... 1,285
--------
Total expenses ........................................................................... 33,830
--------
Less:
Expense reimbursements (note 2) ..................................................... (31,681)
Investment advisory fees waived (note 2) ............................................ (700)
Fund administration fees waived (note 2) ............................................ (175)
Other accounting fees waived (note 2) ............................................... (1,274)
--------
Net expenses ............................................................................. 0
--------
Net investment income ............................................................... 1,775
--------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (1,881)
Increase in unrealized depreciation on investments .................................................. (2,782)
--------
Net realized and unrealized loss on investments ................................................ (4,663)
--------
Net decrease in net assets resulting from operations ..................................... $ (2,888)
========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended
May 31,
1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income .................................................................. $ 1,775
Net realized loss from investment transactions ......................................... (1,881)
Increase in unrealized depreciation on investments ..................................... (2,782)
---------
Net decrease in net assets resulting from operations .............................. (2,888)
---------
Distributions to shareholders from
Net investment income - Institutional Class ............................................ (1,775)
Net investment income - Investor Class ................................................. 0 (b)
---------
Decrease in net assets resulting from distributions ............................... (1,775)
---------
Capital share transactions
Increase in net assets resulting from capital share transactions (c) ................... 502,975
---------
Total increase in net assets ................................................. 498,312
NET ASSETS
Beginning of period ........................................................................ 0
---------
End of period .............................................................................. $ 498,312
=========
(c) A summary of capital share activity follows:
------------------------------------
Period ended
May 31, 1999 (a)
Shares Value
------------------------------------
- -------------------------------------
INSTITUTIONAL CLASS
- -------------------------------------
Shares sold ...................................................................... 50,110 $ 501,100
Shares issued for reinvestment of distributions .................................. 179 1,775
--------- ---------
50,289 502,875
Shares redeemed .................................................................. 0 0
--------- ---------
Net increase ................................................................ 50,289 $ 502,875
========= =========
- -------------------------------------
INVESTOR CLASS
- -------------------------------------
Shares sold ...................................................................... 10 $ 100
Shares issued for reinvestment of distributions .................................. 0 0
--------- ---------
10 100
Shares redeemed .................................................................. 0 0
--------- ---------
Net increase ................................................................ 10 $ 100
========= =========
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) A distribution from Investor Class income was paid in the amount of $0.22.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
--------------- ---------------
Institutional Investor
Class Class
--------------- ---------------
Period ended Period ended
May 31, May 31,
1999 (a) 1999 (a)
--------- ---------
Net asset value, beginning of period ..................................... $10.00 $10.00
Income from investment operations
Net investment income ........................................ 0.04 0.02
Net realized and unrealized loss on investments .............. (0.09) (0.08)
--------- ---------
Total from investment operations ....................... (0.05) (0.06)
--------- ---------
Distributions to shareholders from
Net investment income ........................................ (0.04) (0.02)
--------- ---------
Net asset value, end of period ........................................... $ 9.91 $ 9.92
========= =========
Total return (b) ......................................................... (0.45)% (0.58)%
========= =========
Ratios/supplemental data
Net assets, end of period ......................................... $ 498,213 $ 99
========= =========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ................ 23.94 % (c) 15.49 % (c)
After expense reimbursements and waived fees ................. 0.00 % (c) 0.00 % (c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ................ (22.69)% (c) (14.68)% (c)
After expense reimbursements and waived fees ................. 1.26 % (c) 0.81 % (c)
Portfolio turnover rate ........................................... 7.04 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Total return does not reflect payment of a sales charge.
(c) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund"), is a diversified series of shares of
beneficial interest of the New Providence Investment Trust (the
"Trust"). The Trust, an open-end investment company, was organized on
July 9, 1997 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940, as amended. The Fund began
operations on February 16, 1999. The investment objective of the fund
is to seek maximum total return consisting of any combination of
capital appreciation, realized and unrealized, and income under the
constantly varying market conditions. The Fund has an unlimited number
of authorized shares, which are divided into two classes Institutional
Shares and Investor Shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are only attributable
to the Investor Class), and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its
relative net assets. The Institutional Class shares will be sold
without a sales charge and will bear no distribution and service fees.
The Investor Class shares are subject to a maximum 5.75% sales charge
and bear distribution and service fees which may not exceed 0.25% of
the Investor Class shares' average net assets annually. Both classes
have equal voting privileges, except where otherwise required by law or
when the Board of Trustees determines that the matter to be voted on
affects only the interests of the shareholders of a particular class.
The following is a summary of significant accounting policies followed
by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., New York
time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. Federal Income Taxes - The Fund is considered a personal
holding company as defined under Section 542 of the Internal
Revenue Code since 50% of the value of the Fund's shares were
owned directly or indirectly by five or fewer individuals at
certain times during the last half of the year. As a personal
holding company, the Fund is subject to federal income taxes
on undistributed personal holding company income at the
maximum individual income tax rate. No provision has been made
for federal income taxes since substantially all taxable
income has been distributed to shareholders. It is the policy
of the Fund to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and
to make sufficient distributions of taxable income to relieve
it from all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on
a date selected by the Trust's Trustees. Distributions to
shareholders are recorded on the ex-dividend date. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year.
Distributions to shareholders are recorded on the ex-dividend
date. The Fund may make a supplemental distribution subsequent
to the end of its fiscal year ending May 31.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Atlanta Investment
Council, LLC (the "Advisor"), provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.50% of the first $500 million of the Fund's
average daily net assets and 0.40% of all assets over $500 million.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.15% of the average daily net
assets of the Fund's Institutional Class and a maximum of 1.40% of the
average daily net assets of the Fund's Investor Class. There can be no
assurance that the foregoing voluntary fee waivers or reimbursements
will continue. The Advisor has voluntarily waived a portion of its fee
amounting to $700 ($0.01 per share) and reimbursed $31,681 of the
operating expenses incurred by the Fund for the period ended May 31,
1999.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's first $50 million of average daily
net assets, 0.100% of the next $50 million, and 0.075% of average daily
net assets over $100 million as well as a monthly fee of $2,250 for
accounting and record-keeping services for the initial class of shares
and $750 per month for each additional class of shares. The contract
with the Administrator provides that the aggregate fees for the
aforementioned administration, accounting, and recordkeeping services
shall not be less than $41,000 per year. The Administrator also charges
the Fund for certain expenses involved with the daily valuation of
portfolio securities.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
North Carolina Shareholder Services, LLC (the "Transfer Agent") serves
as the Fund's transfer, dividend paying, and shareholder servicing
agent. The Transfer Agent maintains the records of each Shareholder's
account, answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent, and performs other shareholder servicing
functions.
Donaldson & Co., Inc. (the "Distributor"), an affiliate of the Advisor,
serves as the Fund's principal underwriter and distributor. The
Distributor receives any sales charges imposed on purchases of Investor
Shares and re-allocates a portion of such charges to dealers through
whom the sale was made, if any. The Distributor did not retain any
sales charges for the period ended May 31, 1999.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust as defined in the Investment Company Act of 1940
(the "Act"), adopted a distribution and service plan pursuant to Rule
12b-1 of the Act (the "Plan") applicable to the Investor Shares. The
Act regulates the manner in which a regulated investment company may
assume costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.25% per annum of the Investor Class Shares' average daily net
assets for each year elapsed subsequent to adoption of the Plan, for
payment to the Distributor and others for items such as advertising
expenses, selling expenses, commissions, travel, or other expenses
reasonably intended to result in sales of Investor Class Shares in the
Fund or support servicing of Investor Class Shares' shareholder
accounts. Such expenditures incurred as service fees may not exceed
0.25% per annum of the Investor Shares' average daily net assets. The
Fund did not incur any expenses under the Plan for the period ended May
31, 1999.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $330,044 and $22,957, respectively, for the period ended May
31, 1999.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of The 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, 1999,
and the related statement of operations for the period then ended, the statement
of changes in net assets and financial highlights for the period from February
16, 1999 (commencement of operations) to May 31, 1999. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned as of May 31, 1999 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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, 1999, the results of its operations for the period then
ended, the changes in its net assets and the financial highlights for the
respective stated period in conformity with generally accepted accounting
principles.
/S/ Deloitte & Touche LLP
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
June 18, 1999
<PAGE>
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
INVESTOR SHARES
ANNUAL REPORT 1999
FOR THE PERIOD ENDED MAY 31
INVESTMENT ADVISOR
Atlanta Investment Counsel, LLC
2771 Carmon-on-Wesley, NW
Suite 100
Atlanta, Georgia 30327
WISDOM FUND
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This Report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
ATLANTA INVESTMENT COUNSEL, L.L.C.
Manager of the Wisdom Fund [letterhead]
July 1, 1999
As I write this first letter to shareholders of the Wisdom Fund, I feel that I
should once again point out the reasons why our firm decide on a mutual fund
that would attempt to invest in the securities known to be owned by Berkshire
Hathaway Holding (BHH).
1. With a market cap of over $110 billion, BHH is priced at a
substantial premium to the net asset value of the companies in its portfolio. By
acquiring Gillette by buying BHH, it is like paying 100 times earnings for
Gillette. Why? The market has given BHH a price that values it far beyond the
combined value of its individual stock prices by at least 60%.
2. Because BHH is organized as a corporation, it is subject to double
taxation-both at the corporate and shareholder level. The Wisdom Fund intends to
qualify as an investment company allowing it to avoid double taxation.
3. Through 1997, BHH accrued $27 billion in unrealized capital gains.
As an example, BHH's $11 million investment in Washington Post was worth $999
million at the end of last year-imagine the tax bite that awaits that holding.
However, Warren Buffett is the most revered and emulated investor in the nation.
He has an average gain of 25% per year for the past three decades. Over the past
12 months, BHH has fallen about 15% from its high of $84,000 in June of 1988.
The premium I referenced above could be the reason for BHH's recent
underperformance.
The Wisdom Fund will at times own companies not owned by BHH. Since General Re
and GEICO are 100% owned by BHH, we have identified and bought publicly traded
companies with similar characteristics to those companies. Those stocks are
American International Group, Allstate Insurance, and 20th Century Industries.
Recent weakness in Coca-Cola, Gillette, and Walt Disney have caused our N.A.V.
to drop slightly below our initial $10.00 offering price. These stocks will
rebound, as they have in the past. Our portfolio consists of stocks in financial
services, consumer products and media, and these sectors should grow much faster
than others over the next five years.
<PAGE>
And as Peter Lynch, former manager of Fidelity Magellan says about Warren
Buffett's style of investing "His method is as true today as it was 10 years
ago. It's a little harder to find the same opportunities, but his system hasn't
gone out of style." I agree 100%.
C. Douglas Davenport
President & Manager
<PAGE>
WISDOM FUND
INVESTOR CLASS
Performance Update - $10,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 1999
----------------------------------------
Investor S&P 500Total
Class Shares Return Index
----------------------------------------
2/16/99 $9,425 $10,000
2/28/99 9,425 9,976
3/31/99 9,199 10,376
4/30/99 9,519 10,777
5/31/99 9,370 10,523
This graph depicts the performance of the Wisdom Fund Investor Class versus the
S&P 500 Total Return Index. It is important to note that the Wisdom 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.
Cumulative Total Return
- ---------------------------------------------------
Since Commencement
of Operations
- ---------------------------------------------------
No Sales Load (0.58)%
- ---------------------------------------------------
With 5.75% Sales Load (6.30)%
- ---------------------------------------------------
The graph assumes an initial $10,000 investment at February 16, 1999 ($9,425
after maximum sales load of 5.75%). All dividends and distributions are
reinvested.
At May 31, 1999, the Wisdom Fund Investor Class would have decreased to $9,370 -
total investment return of (6.30)% since February 16, 1999. Without the
deduction of the 5.75% maximum sales load, the Wisdom Fund Investor Class would
have decreased to $9,942 - total investment return of (0.58)% since February 16,
1999. The sales load may be reduced or eliminated for larger purchases.
At May 31, 1999, a similar investment in the S&P 500 Total Return Index would
have grown to $10,523 - total investment return of 5.23% since February 16,
1999.
Past performance is not a guarantee of future results. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 60.71%
Beverages - 16.49%
The Coca-Cola Company ....................................................... 1,200 $ 82,200
---------
Cosmetics & Personal Care - 4.35%
The Gillette Company ....................................................... 425 21,675
---------
Entertainment - 2.20%
The Walt Disney Company ..................................................... 375 10,969
---------
Financial - Banks, Commercial - 3.21%
Wells Fargo Company ......................................................... 400 16,000
---------
Financial - Banks, Money Center - 1.66%
Citigroup Inc. .............................................................. 125 8,281
---------
Financial Services - 11.68%
American Express Company .................................................... 300 36,356
Freddie Mac ................................................................. 375 21,867
---------
58,223
---------
Insurance - Multiline - 12.65%
The Allstate Corporation .................................................... 1,100 40,150
American International Group, Inc. .......................................... 200 22,863
---------
63,013
---------
Insurance - Property & Casualty - 7.35%
20th Century Industries ..................................................... 2,000 36,625
---------
Publishing - Newspapers - 1.12%
The Washington Post Company ................................................. 10 5,564
---------
Total Common Stocks (Cost $305,205) ............................................................ 302,550
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATION - 29.99%
United States Treasury Bill
(Cost $149,552) ............................................. $152,000 0.00% 10/07/99 149,425
---------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY - 0.91%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................... 4,518 $ 4,518
(Cost $4,518) ---------
Total Value of Investments (Cost $459,275 (a)) ........................................ 91.61% $ 456,493
Other Assets Less Liabilities ......................................................... 8.39% 41,819
------ ---------
Net Assets ....................................................................... 100.00% $ 498,312
====== =========
(a) Aggregate cost for federal income tax purposes is $461,156. Unrealized appreciation (depreciation) of investments for
federal income tax purposes is as follows:
Unrealized appreciation ....................................................................... $ 6,338
Unrealized depreciation ....................................................................... (11,001)
---------
Net unrealized depreciation .................................................... $ (4,663)
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1999
ASSETS
Investments, at value (cost $459,275) .............................................................. $ 456,493
Income receivable .................................................................................. 472
Receivable for investments sold .................................................................... 22,957
Due from advisor (note 2) .......................................................................... 31,682
---------
Total assets .................................................................................. 511,604
---------
LIABILITIES
Accrued expenses ................................................................................... 13,292
---------
NET ASSETS ................................................................................................ $ 498,312
=========
NET ASSETS CONSIST OF
Paid-in capital .................................................................................... $ 502,975
Accumulated net realized loss on investments ....................................................... (1,881)
Net unrealized depreciation on investments ......................................................... (2,782)
---------
$ 498,312
=========
INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($498,213 / 50,289 shares : unlimited shares of $0.01 par value
beneficial interest authorized) ............................................................. $ 9.91
=========
INVESTOR CLASS
Net asset value, redemption and offering price per share
($99 / 10 shares : unlimited shares of $0.01 par value
beneficial interest authorized) ............................................................. $ 9.92
=========
Maximum offering price per share (100 / 94.25% of $9.92) ........................................... $10.53
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF OPERATIONS
For the period from February 16, 1999
(commencement of operations)
to May 31, 1999
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 210
Dividends ...................................................................................... 1,565
--------
Total income ............................................................................. 1,775
--------
Expenses
Investment advisory fees (note 2) .............................................................. 700
Fund administration fees (note 2) .............................................................. 175
Custody fees ................................................................................... 1,118
Registration and filing administration fees (note 2) ........................................... 242
Fund accounting fees (note 2) .................................................................. 10,500
Audit fees ..................................................................................... 7,971
Legal fees ..................................................................................... 3,715
Securities pricing fees ........................................................................ 198
Shareholder recordkeeping fees ................................................................. 3,050
Other accounting fees (note 2) ................................................................. 1,274
Shareholder servicing expenses ................................................................. 897
Registration and filing expenses ............................................................... 892
Printing expenses .............................................................................. 1,233
Trustee fees and meeting expenses .............................................................. 580
Other operating expenses ....................................................................... 1,285
--------
Total expenses ........................................................................... 33,830
--------
Less:
Expense reimbursements (note 2) ..................................................... (31,681)
Investment advisory fees waived (note 2) ............................................ (700)
Fund administration fees waived (note 2) ............................................ (175)
Other accounting fees waived (note 2) ............................................... (1,274)
--------
Net expenses ............................................................................. 0
--------
Net investment income ............................................................... 1,775
--------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (1,881)
Increase in unrealized depreciation on investments .................................................. (2,782)
--------
Net realized and unrealized loss on investments ................................................ (4,663)
--------
Net decrease in net assets resulting from operations ..................................... $ (2,888)
========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended
May 31,
1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income .................................................................. $ 1,775
Net realized loss from investment transactions ......................................... (1,881)
Increase in unrealized depreciation on investments ..................................... (2,782)
---------
Net decrease in net assets resulting from operations .............................. (2,888)
---------
Distributions to shareholders from
Net investment income - Institutional Class ............................................ (1,775)
Net investment income - Investor Class ................................................. 0 (b)
---------
Decrease in net assets resulting from distributions ............................... (1,775)
---------
Capital share transactions
Increase in net assets resulting from capital share transactions (c) ................... 502,975
---------
Total increase in net assets ................................................. 498,312
NET ASSETS
Beginning of period ........................................................................ 0
---------
End of period .............................................................................. $ 498,312
=========
(c) A summary of capital share activity follows:
------------------------------------
Period ended
May 31, 1999 (a)
Shares Value
------------------------------------
- -------------------------------------
INSTITUTIONAL CLASS
- -------------------------------------
Shares sold ...................................................................... 50,110 $ 501,100
Shares issued for reinvestment of distributions .................................. 179 1,775
--------- ---------
50,289 502,875
Shares redeemed .................................................................. 0 0
--------- ---------
Net increase ................................................................ 50,289 $ 502,875
========= =========
- -------------------------------------
INVESTOR CLASS
- -------------------------------------
Shares sold ...................................................................... 10 $ 100
Shares issued for reinvestment of distributions .................................. 0 0
--------- ---------
10 100
Shares redeemed .................................................................. 0 0
--------- ---------
Net increase ................................................................ 10 $ 100
========= =========
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) A distribution from Investor Class income was paid in the amount of $0.22.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
--------------- ---------------
Institutional Investor
Class Class
--------------- ---------------
Period ended Period ended
May 31, May 31,
1999 (a) 1999 (a)
--------- ---------
Net asset value, beginning of period ..................................... $10.00 $10.00
Income from investment operations
Net investment income ........................................ 0.04 0.02
Net realized and unrealized loss on investments .............. (0.09) (0.08)
--------- ---------
Total from investment operations ....................... (0.05) (0.06)
--------- ---------
Distributions to shareholders from
Net investment income ........................................ (0.04) (0.02)
--------- ---------
Net asset value, end of period ........................................... $ 9.91 $ 9.92
========= =========
Total return (b) ......................................................... (0.45)% (0.58)%
========= =========
Ratios/supplemental data
Net assets, end of period ......................................... $ 498,213 $ 99
========= =========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ................ 23.94 % (c) 15.49 % (c)
After expense reimbursements and waived fees ................. 0.00 % (c) 0.00 % (c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ................ (22.69)% (c) (14.68)% (c)
After expense reimbursements and waived fees ................. 1.26 % (c) 0.81 % (c)
Portfolio turnover rate ........................................... 7.04 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Total return does not reflect payment of a sales charge.
(c) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund"), is a diversified series of shares of
beneficial interest of the New Providence Investment Trust (the
"Trust"). The Trust, an open-end investment company, was organized on
July 9, 1997 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940, as amended. The Fund began
operations on February 16, 1999. The investment objective of the fund
is to seek maximum total return consisting of any combination of
capital appreciation, realized and unrealized, and income under the
constantly varying market conditions. The Fund has an unlimited number
of authorized shares, which are divided into two classes Institutional
Shares and Investor Shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are only attributable
to the Investor Class), and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its
relative net assets. The Institutional Class shares will be sold
without a sales charge and will bear no distribution and service fees.
The Investor Class shares are subject to a maximum 5.75% sales charge
and bear distribution and service fees which may not exceed 0.25% of
the Investor Class shares' average net assets annually. Both classes
have equal voting privileges, except where otherwise required by law or
when the Board of Trustees determines that the matter to be voted on
affects only the interests of the shareholders of a particular class.
The following is a summary of significant accounting policies followed
by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., New York
time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. Federal Income Taxes - The Fund is considered a personal
holding company as defined under Section 542 of the Internal
Revenue Code since 50% of the value of the Fund's shares were
owned directly or indirectly by five or fewer individuals at
certain times during the last half of the year. As a personal
holding company, the Fund is subject to federal income taxes
on undistributed personal holding company income at the
maximum individual income tax rate. No provision has been made
for federal income taxes since substantially all taxable
income has been distributed to shareholders. It is the policy
of the Fund to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and
to make sufficient distributions of taxable income to relieve
it from all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on
a date selected by the Trust's Trustees. Distributions to
shareholders are recorded on the ex-dividend date. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year.
Distributions to shareholders are recorded on the ex-dividend
date. The Fund may make a supplemental distribution subsequent
to the end of its fiscal year ending May 31.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Atlanta Investment
Council, LLC (the "Advisor"), provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.50% of the first $500 million of the Fund's
average daily net assets and 0.40% of all assets over $500 million.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.15% of the average daily net
assets of the Fund's Institutional Class and a maximum of 1.40% of the
average daily net assets of the Fund's Investor Class. There can be no
assurance that the foregoing voluntary fee waivers or reimbursements
will continue. The Advisor has voluntarily waived a portion of its fee
amounting to $700 ($0.01 per share) and reimbursed $31,681 of the
operating expenses incurred by the Fund for the period ended May 31,
1999.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's first $50 million of average daily
net assets, 0.100% of the next $50 million, and 0.075% of average daily
net assets over $100 million as well as a monthly fee of $2,250 for
accounting and record-keeping services for the initial class of shares
and $750 per month for each additional class of shares. The contract
with the Administrator provides that the aggregate fees for the
aforementioned administration, accounting, and recordkeeping services
shall not be less than $41,000 per year. The Administrator also charges
the Fund for certain expenses involved with the daily valuation of
portfolio securities.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
North Carolina Shareholder Services, LLC (the "Transfer Agent") serves
as the Fund's transfer, dividend paying, and shareholder servicing
agent. The Transfer Agent maintains the records of each Shareholder's
account, answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent, and performs other shareholder servicing
functions.
Donaldson & Co., Inc. (the "Distributor"), an affiliate of the Advisor,
serves as the Fund's principal underwriter and distributor. The
Distributor receives any sales charges imposed on purchases of Investor
Shares and re-allocates a portion of such charges to dealers through
whom the sale was made, if any. The Distributor did not retain any
sales charges for the period ended May 31, 1999.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust as defined in the Investment Company Act of 1940
(the "Act"), adopted a distribution and service plan pursuant to Rule
12b-1 of the Act (the "Plan") applicable to the Investor Shares. The
Act regulates the manner in which a regulated investment company may
assume costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.25% per annum of the Investor Class Shares' average daily net
assets for each year elapsed subsequent to adoption of the Plan, for
payment to the Distributor and others for items such as advertising
expenses, selling expenses, commissions, travel, or other expenses
reasonably intended to result in sales of Investor Class Shares in the
Fund or support servicing of Investor Class Shares' shareholder
accounts. Such expenditures incurred as service fees may not exceed
0.25% per annum of the Investor Shares' average daily net assets. The
Fund did not incur any expenses under the Plan for the period ended May
31, 1999.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $330,044 and $22,957, respectively, for the period ended May
31, 1999.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of The 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, 1999,
and the related statement of operations for the period then ended, the statement
of changes in net assets and financial highlights for the period from February
16, 1999 (commencement of operations) to May 31, 1999. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned as of May 31, 1999 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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, 1999, the results of its operations for the period then
ended, the changes in its net assets and the financial highlights for the
respective stated period in conformity with generally accepted accounting
principles.
/S/ Deloitte & Touche LLP
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
June 18, 1999
