________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
INSTITUTIONAL CLASS SHARES
ANNUAL REPORT 2000
FOR THE YEAR 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 and the financial statements contained herein are
submitted for the general information of the shareholders of the
Fund. This report is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective
prospectus. Mutual fund shares are not deposits or obligations of,
or guaranteed by, any depository institution. Shares are not insured
by the FDIC, Federal Reserve Board or any other agency, and are
subject to investment risks, including possible loss of principal
amount invested. Neither the fund nor the fund's distributor is a bank.
For more information about the Wisdom Fund, including charges
and expenses, call the fund for a free prospectus. You should
read the prospectus carefully before you invest or send money.
<PAGE>
ATLANTA INVSETMENT COUNSEL, L.L.C.
Manager of the Wisdom Fund
June 1, 2000
Dear Shareholders,
"Success in investing doesn't correlate with IQ once you're above the level of
25. Once you have ordinary intelligence, what you need is the temperament to
control the urges that get other people into trouble in investing." Warren
Buffet, 1996 Shareholder Meeting. We couldn't agree more!
The past ten weeks have seen a shift in market sentiment that has so far been
very favorable to our portfolio and to value investing. We have been asked how
and why such shifts occur. We have tried to come up with several reasons that
sound logical. Many times we don't understand what's really happened until much
later. Here are some possible signs of, and reasons for, the shift:
The Dow was down dramatically by February 25, while the NASDAQ was up
substantially, underscoring the popular, but meaningless, Old Economy / New
Economy split.
The anxiety suffered by New Economy adherents as Microsoft was unable to settle
with the Justice Department.
The retirement of Tiger Fund's Julian Robertson and the replacement of Oakmark's
Robert Sanborn--sure signs of intense frustration from serious value investors.
[Letterhead]
<PAGE>
In Contrast to years past, Berkshire Hathaway's 1999 Annual Report received
barely a mention in the financial press. We read it with great interest, of
course!
When you buy a stock or mutual fund, it's important not to lose sight of the
fact that you're really buying a fractional interest in a business, and not a
lottery ticket.
For about two years now, we have been in a market where valuation hasn't
mattered one darn bit. In fact, the more that investors focused on valuation,
the worse returns have been. While the laws of economic gravity were temporarily
suspended, we do not believe they have been fundamentally altered.
Looking back over the last year, the Wisdom Fund under performed the general
market and outperformed Berkshire Hathaway Holdings, the portfolio that we
attempt to emulate. Berkshire's stock price fell in 1999 for several reasons:
1. Since last summer, Alan Greenspan has raised interest rates because he is
worried that the economy is expanding so fast that it will cause a resurgence of
inflation. In theory, the prospect of higher interest rates should hurt growth
stocks the most. But in today's market, exactly the opposite has occurred.
Fearing that higher rates would hit Old Economy stocks the hardest, investors
have been dumping those stocks and piling into tech stocks instead,
<PAGE>
2. Three of the Wisdom Fund's and Berkshire Hathaway's largest
holdings--Coca-cola, Gillette, and Freddie Mac--fell in calendar year 1999 (13%,
14% and 27%, respectively). These stocks have been great investments over a
long-term horizon,
3. The Wisdom Fund holds about 26% of its assets in low-return short-term fixed
income securities as does Berkshire Hathaway. Due to high valuations in the
markets, Berkshire Hathaway has not seen fit to put its cash to work, and
4. Since the Wisdom Fund and Berkshire Hathaway have very little exposure to
technology stocks, we feel our holdings have been dragged down by the general
devaluation of non-tech stocks.
At Berkshire Hathaway's annual meeting this spring, Warren Buffet scornfully
compared the technology sector's breathtaking runup to a "chain letter," in
which early participants reap rich rewards at the expense of those who follow.
Of course, we do not like to under perform the S&P 500 stock index. We can say
with certainty that there will always be a category or class of investments that
will post results greater than ours. For our part, we will continue to implement
our investment strategy of emulating the investment portfolio of Berkshire
Hathaway which has produced a thirty-year track record second to none.
<PAGE>
Warren Buffet said in 1996, "Your goal as an investor should be to purchase, at
a rational price, a part interest in an easily understandable business with
whose earnings are virtually certain to be materially higher five, ten, and
twenty years from now. Over time, you will find only a few companies that meet
these standards---so when you see one that qualifies, you should buy a
meaningful amount of stock. You must also resist the temptation to stray from
your guidelines: If you aren't willing to own a stock for ten years, don't even
thing about owning it for ten minutes. Put together a portfolio of companies
whose aggregate earnings march upward over the years, and so also will the
portfolio's market value."
And that is the "wisdom" of the Wisdom Fund!
/s/ C. Douglas Davenport
C. Douglas Davenport, J.D.
President, Atlanta Investment Counsel, LLC
<PAGE>
WISDOM FUND
INSTITUTIONAL CLASS SHARES
Performance Update - $25,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 2000
[LINE GRAPH HERE]:
--------------------------------------------------------------------------------
Wisdom Fund S&P 500
Institutional Class Shares Total Return Index
--------------------------------------------------------------------------------
02/16/99 $25,000 $25,000
02/28/99 25,000 24,941
03/31/99 24,425 25,939
04/30/99 25,275 26,943
05/31/99 24,889 26,307
06/30/99 24,587 27,767
07/31/99 24,713 26,900
08/31/99 24,437 26,767
09/30/99 22,630 25,742
10/31/99 25,223 27,681
11/30/99 25,340 28,243
12/31/99 24,997 29,907
01/31/00 24,314 28,404
02/29/00 22,113 27,867
03/31/00 24,491 30,593
04/30/00 24,415 29,672
05/31/00 25,295 29,063
This graph depicts the performance of the Wisdom Fund - Institutional Class
Shares 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.
Average Annual Total Returns
-------------------- -------------------------
Since Commencement
One Year of Operations
-------------------- -------------------------
1.64 % 0.92 %
-------------------- -------------------------
>> The graph assumes an initial $25,000 investment at February 16, 1999
(commencement of operations). All dividends and distributions are
reinvested.
>> At May 31, 2000, the value of the Wisdom Fund - Institutional Class Shares
would have grown to $25,295 - a cumulative total investment return of 1.18%
since February 16, 1999.
>> At May 31, 2000, the value of a similar investment in the S&P 500 Total
Return Index would have grown to $29,063 - a cumulative total investment
return of 16.25% 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 total 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>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 62.39%
Apparel Manufacturing - 1.33%
(a)Jones Apparel Group, Inc. .................................................. 1,750 $ 46,922
Liz Claiborne, Inc. ........................................................ 400 15,725
----------
62,647
----------
Beverages - 10.15%
The Coca-Cola Company ...................................................... 8,950 477,706
----------
Chemicals - 0.74%
Great Lakes Chemical Corporation ........................................... 1,250 34,844
----------
Cosmetics and Personal Care - 3.05%
The Gillette Company ....................................................... 4,300 143,512
----------
Financial Services - 16.09%
American Express Company ................................................... 6,750 362,813
AXA Financial, Inc. ........................................................ 1,825 71,061
Freddie Mac ................................................................ 2,675 119,037
Marsh & McLennan Companies, Inc. ........................................... 600 66,000
MGIC Investment Corporation ................................................ 1,150 56,997
The Dun & Bradstreet Corporation ........................................... 2,650 81,487
----------
757,395
----------
Financial - Banks, Commercial - 2.83%
Wells Fargo & Company ...................................................... 2,950 133,488
----------
Insurance - Life and Health - 2.56%
CIGNA Corporation .......................................................... 700 62,169
Torchmark Corporation ...................................................... 2,150 58,453
----------
120,622
----------
Insurance - Multiline - 17.37%
AFLAC INCORPORATED ......................................................... 1,400 72,363
Allmerica Financial Corporation ............................................ 1,150 66,341
Ambac Financial Group, Inc. ................................................ 1,200 60,600
American International Group, Inc. ......................................... 537 60,446
American National Insurance Company ........................................ 950 51,300
Cincinnati Financial Corporation ........................................... 1,950 78,274
(a)CNA Financial Corporation .................................................. 1,650 58,884
Financial Security Assurance Holdings Ltd. ................................. 1,325 99,458
Loews Corporation .......................................................... 1,000 65,875
PartnerRe Ltd. ............................................................. 2,025 75,178
The PMI Group, Inc. ........................................................ 1,250 63,359
The St. Paul Companies, Inc. ............................................... 1,750 65,625
----------
817,703
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Insurance - Property & Casualty - 2.78%
Erie Indemnity Company ..................................................... 1,950 $ 53,625
Everest Re Group, Ltd. ..................................................... 2,275 77,350
----------
130,975
----------
Publishing - Newspapers - 0.87%
The Washington Post Company ................................................ 82 41,041
----------
Real Estate Investment Trust - 1.59%
First Industrial Realty Trust, Inc. ........................................ 875 25,430
Tanger Factory Outlet Centers, Inc. ........................................ 1,150 26,594
Town & Country Trust ....................................................... 1,400 22,925
----------
74,949
----------
Transportation - Miscellaneous - 0.90%
GATX Corporation ........................................................... 1,250 42,187
----------
Utilities - Electric - 2.13%
FPL Group, Inc. ............................................................ 875 43,313
Northern States Power Company .............................................. 1,500 33,187
The Montana Power Company .................................................. 625 23,672
----------
100,172
----------
Total Common Stocks (Cost $2,817,159) ............................................................ 2,937,241
----------
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATION - 16.03%
United States Treasury Bill ..................... $760,000 0% 07/20/00 754,775
(Cost $754,479) ----------
------------------------------------------------------------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.97%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................... 211,257 211,257
Evergreen Money Market Treasury Institutional Treasury Money
Market Fund Institutional Service Shares ................................... 211,256 211,256
----------
Total Investment Companies (Cost $422,513) ....................................................... 422,513
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
(note 1)
------------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (Cost $3,994,151 (b)) ....................................... 87.39% $4,114,529
Other Assets Less Liabilities .......................................................... 12.61% 593,764
------ ----------
Net Assets ...................................................................... 100.00% $4,708,293
====== ==========
(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 .......................................................................... $ 267,843
Unrealized depreciation .......................................................................... (147,465)
----------
Net unrealized appreciation ...................................................... $ 120,378
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000
ASSETS
Investments, at value (cost $3,994,151) ............................................................. $4,114,529
Cash ................................................................................................ 563,217
Income receivable ................................................................................... 6,327
Receivable for fund shares sold ..................................................................... 29,791
Due from advisor (note 2) ........................................................................... 11,118
----------
Total assets ................................................................................... 4,724,982
----------
LIABILITIES
Accrued expenses .................................................................................... 16,689
----------
NET ASSETS ................................................................................................. $4,708,293
==========
NET ASSETS CONSIST OF
Paid-in capital ..................................................................................... $4,647,581
Undistributed net investment income ................................................................. 219
Accumulated net realized loss on investments ........................................................ (59,885)
Net unrealized appreciation on investments .......................................................... 120,378
----------
$4,708,293
==========
INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($2,710,312 / 273,814 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.90
==========
INVESTOR CLASS
Net asset value, redemption and offering price per share
($656,212 / 66,077 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.93
==========
Maximum offering price per share (100 / 95.50% of $9.93) ............................................ $10.40
==========
CLASS B
Net asset value, redemption and maximum offering price per share
($1,168,374 / 117,131 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.97
==========
CLASS C
Net asset value, redemption and maximum offering price per share
($173,395 / 17,369 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.98
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2000
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 21,539
Dividends ...................................................................................... 35,889
---------
Total income ............................................................................. 57,428
---------
Expenses
Investment advisory fees (note 2) .............................................................. 12,914
Fund administration fees (note 2) .............................................................. 3,499
Distribution and service fees - Class B (note 3) ............................................... 2,157
Distribution and service fees - Class C (note 3) ............................................... 180
Distribution and service fees - Investor Class (note 3) ........................................ 712
Custody fees ................................................................................... 3,216
Registration and filing administration fees (note 2) ........................................... 2,190
Fund accounting fees (note 2) .................................................................. 45,000
Audit fees ..................................................................................... 10,530
Legal fees ..................................................................................... 10,027
Securities pricing fees ........................................................................ 1,779
Shareholder recordkeeping fees ................................................................. 8,950
Other accounting fees (note 2) ................................................................. 1,399
Shareholder servicing expenses ................................................................. 2,634
Registration and filing expenses ............................................................... 8,143
Printing expenses .............................................................................. 7,308
Trustee fees and meeting expenses .............................................................. 3,180
Other operating expenses ....................................................................... 3,145
---------
Total expenses ........................................................................... 126,963
---------
Less:
Expense reimbursements (note 2) ..................................................... (110,174)
Investment advisory fees waived (note 2) ............................................ (12,914)
Fund administration fees waived (note 2) ............................................ (132)
Other accounting fees waived (note 2) ............................................... (694)
---------
Net expenses ............................................................................. 3,049
---------
Net investment income ............................................................... 54,379
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (58,004)
Increase in unrealized appreciation on investments .................................................. 123,160
---------
Net realized and unrealized gain on investments ................................................ 65,156
---------
Net increase in net assets resulting from operations ..................................... $ 119,535
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Period ended
May 31, May 31,
2000 1999 (a)
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income ..................................................... $ 54,379 $ 1,775
Net realized loss from investment transactions ............................ (58,004) (1,881)
Increase (decrease) in unrealized appreciation on investments ............. 123,160 (2,782)
---------- ----------
Net increase (decrease) in net assets resulting from operations ....... 119,535 (2,888)
---------- ----------
Distributions to shareholders from
Net investment income - Institutional Class ............................... (45,278) (1,775)
Net investment income - Investor Class .................................... (5,847) 0 (b)
Net investment income - Class B ........................................... (2,809) 0
Net investment income - Class C ........................................... (226) 0
---------- ----------
Decrease in net assets resulting from distributions ................... (54,160) (1,775)
---------- ----------
Capital share transactions
Increase in net assets resulting from capital share transactions (d) ...... 4,144,606 502,975
---------- ----------
Total increase in net assets .............................. 4,209,981 498,312
NET ASSETS
Beginning of period ............................................................. 498,312 0
---------- ----------
End of period ................................................................... $4,708,293 $ 498,312
========== ==========
(d) A summary of capital share activity follows:
--------------------------------------------------------------------------------
Period ended Period ended
May 31, 2000 May 31, 1999 (a)
Shares Value Shares Value
--------------------------------------------------------------------------------
--------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------------
Shares sold ...................................... 218,824 $2,185,791 50,110 $ 501,100
Shares issued for reinvestment of distributions .. 4,701 45,278 179 1,775
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 223,525 $2,231,069 50,289 $ 502,875
========== ========== ========== ==========
--------------------------------------------------
INVESTOR CLASS
--------------------------------------------------
Shares sold ...................................... 87,208 $ 839,421 10 $ 100
Shares issued for reinvestment of distributions .. 598 5,846 0 0
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 66,067 $ 644,543 10 $ 100
========== ========== ========== ==========
--------------------------------------------------
CLASS B (c)
--------------------------------------------------
Shares sold ...................................... 117,050 $1,100,100 0 $ 0
Shares issued for reinvestment of distributions .. 81 805 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 117,131 $1,100,905 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
CLASS C (c)
--------------------------------------------------
Shares sold ...................................... 17,347 $ 167,863 0 $ 0
Shares issued for reinvestment of distributions .. 22 226 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 17,369 $ 168,089 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
FUND SUMMARY
--------------------------------------------------
Shares sold ...................................... 440,429 $4,293,175 50,120 $ 501,200
Shares issued for reinvestment of distributions .. 5,402 52,155 179 1,775
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 424,092 $4,144,606 50,299 $ 502,975
========== ========== ========== ==========
(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.
(c) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
-------------------------------- -----------------------------------
Institutional Class Investor Class
-------------------------------- -----------------------------------
Year ended Period ended Year ended Period ended
May 31, May 31, May 31, May 31,
2000 1999 (a) 2000 1999 (a)
-------------------------------- -----------------------------------
Net asset value, beginning of period ....................... $ 9.91 $ 10.00 $ 9.92 $10.00
Income from investment operations
Net investment income ........................... 0.18 0.04 0.12 0.02
Net realized and unrealized (loss) gain
on investments .............................. (0.01) (0.09) 0.01 (0.08)
---------- ---------- ---------- ----------
Total from investment operations ............ 0.17 (0.05) 0.13 (0.06)
---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ........................... (0.18) (0.04) (0.12) (0.02)
---------- ---------- ---------- ----------
Net asset value, end of period ............................. $ 9.90 $ 9.91 $ 9.93 $ 9.92
========== ========== ========== ==========
Total return (b) ........................................... 1.64 % (0.45)% 1.36 % (0.58)%
========== ========== ========== ==========
Ratios/supplemental data
Net assets, end of period ........................... $2,710,312 $ 498,213 $ 656,212 $ 99
========== ========== ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ... 5.05 % 23.94 % (c) 4.29 % 15.49 %(c)
After expense reimbursements and waived fees .... 0.00 % 0.00 % (c) 0.25 % 0.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ... (2.87)% (22.69)% (c) (1.96)% (14.68)%(c)
After expense reimbursements and waived fees .... 2.18 % 1.26 % (c) 2.08 % 0.81 %(c)
Portfolio turnover rate ............................. 41.69 % 7.04 % 41.69 % 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>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
-------------------- ------------------
Class B Class C
-------------------- ------------------
Period ended Period ended
May 31, May 31,
2000 (a) 2000 (a)
-------------------- ------------------
Net asset value, beginning of period ............................................... $10.20 $10.20
Income from investment operations
Net investment income ................................................... 0.04 0.03
Net realized and unrealized (loss) gain on investments .................. (0.23) (0.22)
---------- ----------
Total from investment operations .................................... (0.19) (0.19)
---------- ----------
Distributions to shareholders from
Net investment income ................................................... (0.04) (0.03)
---------- ----------
Net asset value, end of period ..................................................... $ 9.97 $ 9.98
========== ==========
Total return (b) ................................................................... (1.85)% (1.86)%
========== ==========
Ratios/supplemental data
Net assets, end of period ................................................... $1,168,374 $ 173,395
========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........................... 4.09 %(c) 4.07 %(c)
After expense reimbursements and waived fees ............................ 1.00 %(c) 1.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ........................... (1.78)%(c) (1.77)%(c)
After expense reimbursements and waived fees ............................ 1.31 %(c) 1.30 %(c)
Portfolio turnover rate ..................................................... 41.69 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(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, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund"), an open-ended investment company, is a
diversified series of shares of beneficial interest of the New
Providence Investment Trust (the "Trust"). The Trust was organized on
July 9, 1997 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940, as amended. The Fund began
operations on February 16, 1999. The investment objective of the fund
is to seek maximum total return consisting of any combination of
capital appreciation, realized and unrealized, and income under the
constantly varying market conditions. The Board of Trustees of the
Trust approved on October 7, 1999 a plan to authorize two new classes
of shares designated as Class B Shares and Class C Shares. On November
16, 1999, the Class B Shares and Class C Shares became effective. The
Fund has an unlimited number of authorized shares, which are divided
into four classes - Institutional Class Shares, Investor Class Shares,
Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the 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, 2000
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, a maximum of 1.40% of the
average daily net assets of the Fund's Investor Class, and a maximum of
2.15% of the average daily net assets of the Fund's Class B and Class C
Shares. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Advisor has voluntarily
waived a portion of its fee amounting to $12,914 ($0.05 per share) and
reimbursed $110,174 of the operating expenses incurred by the Fund for
the year ended May 31, 2000.
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. The Administrator voluntarily waived a portion of
its fees amounting to $826 for the year ended May 31, 2000.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2000
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.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. Prior to July 14, 1999,
Donaldson & Co., Inc., an affiliate of the Advisor, served as the
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended March 31, 2000, the Distributor retained sales charges
in the amount of $6,011.
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, Class
B Shares, and Class C Shares. The Act regulates the manner in which a
regulated investment company may assume costs of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
The 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 or 1.00% per annum of the Class B Shares or Class C Shares 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, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $2,157, $180 and $712, net of
waived fees, in distribution and service fees under the Plan with
respect to Class B Shares, Class C Shares and Investor Class Shares,
respectively, for the fiscal year ended May 31, 2000.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $3,323,538 and $753,580, respectively, for the fiscal year
ended May 31, 2000.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of New Providence Investment Trust and
Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund, including the portfolio of investments, as of May 31, 2000, and the
related statement of operations for the period then ended, the statements of
changes in net assets for the periods ended May 31, 2000 and 1999, and financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
the securities owned as of May 31, 2000, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2000, the results of its operations for the year ended, and
the changes in its net assets and the financial highlights for the respective
stated periods, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Princeton, New Jersey
June 23, 2000
<PAGE>
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
INVESTOR CLASS SHARES
ANNUAL REPORT 2000
FOR THE YEAR 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 and the financial statements contained herein are
submitted for the general information of the shareholders of the
Fund. This report is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective
prospectus. Mutual fund shares are not deposits or obligations of,
or guaranteed by, any depository institution. Shares are not insured
by the FDIC, Federal Reserve Board or any other agency, and are
subject to investment risks, including possible loss of principal
amount invested. Neither the fund nor the fund's distributor is a bank.
For more information about the Wisdom Fund, including charges
and expenses, call the fund for a free prospectus. You should
read the prospectus carefully before you invest or send money.
<PAGE>
ATLANTA INVSETMENT COUNSEL, L.L.C.
Manager of the Wisdom Fund
June 1, 2000
Dear Shareholders,
"Success in investing doesn't correlate with IQ once you're above the level of
25. Once you have ordinary intelligence, what you need is the temperament to
control the urges that get other people into trouble in investing." Warren
Buffet, 1996 Shareholder Meeting. We couldn't agree more!
The past ten weeks have seen a shift in market sentiment that has so far been
very favorable to our portfolio and to value investing. We have been asked how
and why such shifts occur. We have tried to come up with several reasons that
sound logical. Many times we don't understand what's really happened until much
later. Here are some possible signs of, and reasons for, the shift:
The Dow was down dramatically by February 25, while the NASDAQ was up
substantially, underscoring the popular, but meaningless, Old Economy / New
Economy split.
The anxiety suffered by New Economy adherents as Microsoft was unable to settle
with the Justice Department.
The retirement of Tiger Fund's Julian Robertson and the replacement of Oakmark's
Robert Sanborn--sure signs of intense frustration from serious value investors.
[Letterhead]
<PAGE>
In Contrast to years past, Berkshire Hathaway's 1999 Annual Report received
barely a mention in the financial press. We read it with great interest, of
course!
When you buy a stock or mutual fund, it's important not to lose sight of the
fact that you're really buying a fractional interest in a business, and not a
lottery ticket.
For about two years now, we have been in a market where valuation hasn't
mattered one darn bit. In fact, the more that investors focused on valuation,
the worse returns have been. While the laws of economic gravity were temporarily
suspended, we do not believe they have been fundamentally altered.
Looking back over the last year, the Wisdom Fund under performed the general
market and outperformed Berkshire Hathaway Holdings, the portfolio that we
attempt to emulate. Berkshire's stock price fell in 1999 for several reasons:
1. Since last summer, Alan Greenspan has raised interest rates because he is
worried that the economy is expanding so fast that it will cause a resurgence of
inflation. In theory, the prospect of higher interest rates should hurt growth
stocks the most. But in today's market, exactly the opposite has occurred.
Fearing that higher rates would hit Old Economy stocks the hardest, investors
have been dumping those stocks and piling into tech stocks instead,
<PAGE>
2. Three of the Wisdom Fund's and Berkshire Hathaway's largest
holdings--Coca-cola, Gillette, and Freddie Mac--fell in calendar year 1999 (13%,
14% and 27%, respectively). These stocks have been great investments over a
long-term horizon,
3. The Wisdom Fund holds about 26% of its assets in low-return short-term fixed
income securities as does Berkshire Hathaway. Due to high valuations in the
markets, Berkshire Hathaway has not seen fit to put its cash to work, and
4. Since the Wisdom Fund and Berkshire Hathaway have very little exposure to
technology stocks, we feel our holdings have been dragged down by the general
devaluation of non-tech stocks.
At Berkshire Hathaway's annual meeting this spring, Warren Buffet scornfully
compared the technology sector's breathtaking runup to a "chain letter," in
which early participants reap rich rewards at the expense of those who follow.
Of course, we do not like to under perform the S&P 500 stock index. We can say
with certainty that there will always be a category or class of investments that
will post results greater than ours. For our part, we will continue to implement
our investment strategy of emulating the investment portfolio of Berkshire
Hathaway which has produced a thirty-year track record second to none.
<PAGE>
Warren Buffet said in 1996, "Your goal as an investor should be to purchase, at
a rational price, a part interest in an easily understandable business with
whose earnings are virtually certain to be materially higher five, ten, and
twenty years from now. Over time, you will find only a few companies that meet
these standards---so when you see one that qualifies, you should buy a
meaningful amount of stock. You must also resist the temptation to stray from
your guidelines: If you aren't willing to own a stock for ten years, don't even
thing about owning it for ten minutes. Put together a portfolio of companies
whose aggregate earnings march upward over the years, and so also will the
portfolio's market value."
And that is the "wisdom" of the Wisdom Fund!
/s/ C. Douglas Davenport
C. Douglas Davenport, J.D.
President, Atlanta Investment Counsel, LLC
<PAGE>
WISDOM FUND
INVESTOR CLASS SHARES
Performance Update - $10,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 2000
[LINE GRAPH HERE]:
--------------------------------------------------------------------------------
Wisdom Fund S&P 500
Investor Class Shares Total Return Index
--------------------------------------------------------------------------------
02/16/99 $9,425 $10,000
02/28/99 9,425 9,976
03/31/99 9,199 10,376
04/30/99 9,519 10,777
05/31/99 9,370 10,523
06/30/99 9,266 11,107
07/31/99 9,304 10,760
08/31/99 9,191 10,707
09/30/99 8,520 10,297
10/31/99 9,494 11,073
11/30/99 9,551 11,297
12/31/99 9,402 11,963
01/31/00 9,145 11,362
02/29/00 8,311 11,147
03/31/00 9,202 12,237
04/30/00 9,174 11,869
05/31/00 9,498 11,625
This graph depicts the performance of the Wisdom Fund - Investor Class Shares
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.
Average Annual Total Returns
------------------------------ ------------- -----------------------
Since Commencement
One Year Of Operations
------------------------------ ------------- -----------------------
No Sales Load 1.36 % 0.60 %
------------------------------ ------------- -----------------------
5.75% Maximum Sales Load (4.47)% (3.92)%
------------------------------ ------------- -----------------------
>> The graph assumes an initial $10,000 investment ($9,425 after maximum sales
load of 5.75%) at February 16, 1999 (commencement of operations). All
dividends and distributions are reinvested.
>> At May 31, 2000, the value of the Wisdom Fund - Investor Class Shares would
have decreased to $9,498 - a cumulative total investment return of (5.02)%
since February 16, 1999. Without the deduction of the 5.75% maximum sales
load, the value of the Wisdom Fund - Investor Class Shares would have grown
to $10,077 - a cumulative total investment return of 0.77 % since February
16, 1999. The sales load may be reduced or eliminated for larger purchases.
>> At May 31, 2000, the value of a similar investment in the S&P 500 Total
Return Index would have grown to $11,625 - a cumulative total investment
return of 16.25% 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 total 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>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 62.39%
Apparel Manufacturing - 1.33%
(a)Jones Apparel Group, Inc. .................................................. 1,750 $ 46,922
Liz Claiborne, Inc. ........................................................ 400 15,725
----------
62,647
----------
Beverages - 10.15%
The Coca-Cola Company ...................................................... 8,950 477,706
----------
Chemicals - 0.74%
Great Lakes Chemical Corporation ........................................... 1,250 34,844
----------
Cosmetics and Personal Care - 3.05%
The Gillette Company ....................................................... 4,300 143,512
----------
Financial Services - 16.09%
American Express Company ................................................... 6,750 362,813
AXA Financial, Inc. ........................................................ 1,825 71,061
Freddie Mac ................................................................ 2,675 119,037
Marsh & McLennan Companies, Inc. ........................................... 600 66,000
MGIC Investment Corporation ................................................ 1,150 56,997
The Dun & Bradstreet Corporation ........................................... 2,650 81,487
----------
757,395
----------
Financial - Banks, Commercial - 2.83%
Wells Fargo & Company ...................................................... 2,950 133,488
----------
Insurance - Life and Health - 2.56%
CIGNA Corporation .......................................................... 700 62,169
Torchmark Corporation ...................................................... 2,150 58,453
----------
120,622
----------
Insurance - Multiline - 17.37%
AFLAC INCORPORATED ......................................................... 1,400 72,363
Allmerica Financial Corporation ............................................ 1,150 66,341
Ambac Financial Group, Inc. ................................................ 1,200 60,600
American International Group, Inc. ......................................... 537 60,446
American National Insurance Company ........................................ 950 51,300
Cincinnati Financial Corporation ........................................... 1,950 78,274
(a)CNA Financial Corporation .................................................. 1,650 58,884
Financial Security Assurance Holdings Ltd. ................................. 1,325 99,458
Loews Corporation .......................................................... 1,000 65,875
PartnerRe Ltd. ............................................................. 2,025 75,178
The PMI Group, Inc. ........................................................ 1,250 63,359
The St. Paul Companies, Inc. ............................................... 1,750 65,625
----------
817,703
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Insurance - Property & Casualty - 2.78%
Erie Indemnity Company ..................................................... 1,950 $ 53,625
Everest Re Group, Ltd. ..................................................... 2,275 77,350
----------
130,975
----------
Publishing - Newspapers - 0.87%
The Washington Post Company ................................................ 82 41,041
----------
Real Estate Investment Trust - 1.59%
First Industrial Realty Trust, Inc. ........................................ 875 25,430
Tanger Factory Outlet Centers, Inc. ........................................ 1,150 26,594
Town & Country Trust ....................................................... 1,400 22,925
----------
74,949
----------
Transportation - Miscellaneous - 0.90%
GATX Corporation ........................................................... 1,250 42,187
----------
Utilities - Electric - 2.13%
FPL Group, Inc. ............................................................ 875 43,313
Northern States Power Company .............................................. 1,500 33,187
The Montana Power Company .................................................. 625 23,672
----------
100,172
----------
Total Common Stocks (Cost $2,817,159) ............................................................ 2,937,241
----------
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATION - 16.03%
United States Treasury Bill ..................... $760,000 0% 07/20/00 754,775
(Cost $754,479) ----------
------------------------------------------------------------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.97%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................... 211,257 211,257
Evergreen Money Market Treasury Institutional Treasury Money
Market Fund Institutional Service Shares ................................... 211,256 211,256
----------
Total Investment Companies (Cost $422,513) ....................................................... 422,513
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
(note 1)
------------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (Cost $3,994,151 (b)) ....................................... 87.39% $4,114,529
Other Assets Less Liabilities .......................................................... 12.61% 593,764
------ ----------
Net Assets ...................................................................... 100.00% $4,708,293
====== ==========
(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 .......................................................................... $ 267,843
Unrealized depreciation .......................................................................... (147,465)
----------
Net unrealized appreciation ...................................................... $ 120,378
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000
ASSETS
Investments, at value (cost $3,994,151) ............................................................. $4,114,529
Cash ................................................................................................ 563,217
Income receivable ................................................................................... 6,327
Receivable for fund shares sold ..................................................................... 29,791
Due from advisor (note 2) ........................................................................... 11,118
----------
Total assets ................................................................................... 4,724,982
----------
LIABILITIES
Accrued expenses .................................................................................... 16,689
----------
NET ASSETS ................................................................................................. $4,708,293
==========
NET ASSETS CONSIST OF
Paid-in capital ..................................................................................... $4,647,581
Undistributed net investment income ................................................................. 219
Accumulated net realized loss on investments ........................................................ (59,885)
Net unrealized appreciation on investments .......................................................... 120,378
----------
$4,708,293
==========
INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($2,710,312 / 273,814 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.90
==========
INVESTOR CLASS
Net asset value, redemption and offering price per share
($656,212 / 66,077 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.93
==========
Maximum offering price per share (100 / 95.50% of $9.93) ............................................ $10.40
==========
CLASS B
Net asset value, redemption and maximum offering price per share
($1,168,374 / 117,131 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.97
==========
CLASS C
Net asset value, redemption and maximum offering price per share
($173,395 / 17,369 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.98
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2000
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 21,539
Dividends ...................................................................................... 35,889
---------
Total income ............................................................................. 57,428
---------
Expenses
Investment advisory fees (note 2) .............................................................. 12,914
Fund administration fees (note 2) .............................................................. 3,499
Distribution and service fees - Class B (note 3) ............................................... 2,157
Distribution and service fees - Class C (note 3) ............................................... 180
Distribution and service fees - Investor Class (note 3) ........................................ 712
Custody fees ................................................................................... 3,216
Registration and filing administration fees (note 2) ........................................... 2,190
Fund accounting fees (note 2) .................................................................. 45,000
Audit fees ..................................................................................... 10,530
Legal fees ..................................................................................... 10,027
Securities pricing fees ........................................................................ 1,779
Shareholder recordkeeping fees ................................................................. 8,950
Other accounting fees (note 2) ................................................................. 1,399
Shareholder servicing expenses ................................................................. 2,634
Registration and filing expenses ............................................................... 8,143
Printing expenses .............................................................................. 7,308
Trustee fees and meeting expenses .............................................................. 3,180
Other operating expenses ....................................................................... 3,145
---------
Total expenses ........................................................................... 126,963
---------
Less:
Expense reimbursements (note 2) ..................................................... (110,174)
Investment advisory fees waived (note 2) ............................................ (12,914)
Fund administration fees waived (note 2) ............................................ (132)
Other accounting fees waived (note 2) ............................................... (694)
---------
Net expenses ............................................................................. 3,049
---------
Net investment income ............................................................... 54,379
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (58,004)
Increase in unrealized appreciation on investments .................................................. 123,160
---------
Net realized and unrealized gain on investments ................................................ 65,156
---------
Net increase in net assets resulting from operations ..................................... $ 119,535
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Period ended
May 31, May 31,
2000 1999 (a)
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income ..................................................... $ 54,379 $ 1,775
Net realized loss from investment transactions ............................ (58,004) (1,881)
Increase (decrease) in unrealized appreciation on investments ............. 123,160 (2,782)
---------- ----------
Net increase (decrease) in net assets resulting from operations ....... 119,535 (2,888)
---------- ----------
Distributions to shareholders from
Net investment income - Institutional Class ............................... (45,278) (1,775)
Net investment income - Investor Class .................................... (5,847) 0 (b)
Net investment income - Class B ........................................... (2,809) 0
Net investment income - Class C ........................................... (226) 0
---------- ----------
Decrease in net assets resulting from distributions ................... (54,160) (1,775)
---------- ----------
Capital share transactions
Increase in net assets resulting from capital share transactions (d) ...... 4,144,606 502,975
---------- ----------
Total increase in net assets .............................. 4,209,981 498,312
NET ASSETS
Beginning of period ............................................................. 498,312 0
---------- ----------
End of period ................................................................... $4,708,293 $ 498,312
========== ==========
(d) A summary of capital share activity follows:
--------------------------------------------------------------------------------
Period ended Period ended
May 31, 2000 May 31, 1999 (a)
Shares Value Shares Value
--------------------------------------------------------------------------------
--------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------------
Shares sold ...................................... 218,824 $2,185,791 50,110 $ 501,100
Shares issued for reinvestment of distributions .. 4,701 45,278 179 1,775
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 223,525 $2,231,069 50,289 $ 502,875
========== ========== ========== ==========
--------------------------------------------------
INVESTOR CLASS
--------------------------------------------------
Shares sold ...................................... 87,208 $ 839,421 10 $ 100
Shares issued for reinvestment of distributions .. 598 5,846 0 0
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 66,067 $ 644,543 10 $ 100
========== ========== ========== ==========
--------------------------------------------------
CLASS B (c)
--------------------------------------------------
Shares sold ...................................... 117,050 $1,100,100 0 $ 0
Shares issued for reinvestment of distributions .. 81 805 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 117,131 $1,100,905 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
CLASS C (c)
--------------------------------------------------
Shares sold ...................................... 17,347 $ 167,863 0 $ 0
Shares issued for reinvestment of distributions .. 22 226 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 17,369 $ 168,089 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
FUND SUMMARY
--------------------------------------------------
Shares sold ...................................... 440,429 $4,293,175 50,120 $ 501,200
Shares issued for reinvestment of distributions .. 5,402 52,155 179 1,775
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 424,092 $4,144,606 50,299 $ 502,975
========== ========== ========== ==========
(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.
(c) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
-------------------------------- -----------------------------------
Institutional Class Investor Class
-------------------------------- -----------------------------------
Year ended Period ended Year ended Period ended
May 31, May 31, May 31, May 31,
2000 1999 (a) 2000 1999 (a)
-------------------------------- -----------------------------------
Net asset value, beginning of period ....................... $ 9.91 $ 10.00 $ 9.92 $10.00
Income from investment operations
Net investment income ........................... 0.18 0.04 0.12 0.02
Net realized and unrealized (loss) gain
on investments .............................. (0.01) (0.09) 0.01 (0.08)
---------- ---------- ---------- ----------
Total from investment operations ............ 0.17 (0.05) 0.13 (0.06)
---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ........................... (0.18) (0.04) (0.12) (0.02)
---------- ---------- ---------- ----------
Net asset value, end of period ............................. $ 9.90 $ 9.91 $ 9.93 $ 9.92
========== ========== ========== ==========
Total return (b) ........................................... 1.64 % (0.45)% 1.36 % (0.58)%
========== ========== ========== ==========
Ratios/supplemental data
Net assets, end of period ........................... $2,710,312 $ 498,213 $ 656,212 $ 99
========== ========== ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ... 5.05 % 23.94 % (c) 4.29 % 15.49 %(c)
After expense reimbursements and waived fees .... 0.00 % 0.00 % (c) 0.25 % 0.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ... (2.87)% (22.69)% (c) (1.96)% (14.68)%(c)
After expense reimbursements and waived fees .... 2.18 % 1.26 % (c) 2.08 % 0.81 %(c)
Portfolio turnover rate ............................. 41.69 % 7.04 % 41.69 % 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>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
----------------- -----------------
Class B Class C
----------------- -----------------
Period ended Period ended
May 31, May 31,
2000 (a) 2000 (a)
-------------------- ------------------
Net asset value, beginning of period ............................................... $10.20 $10.20
Income from investment operations
Net investment income ................................................... 0.04 0.03
Net realized and unrealized (loss) gain on investments .................. (0.23) (0.22)
---------- ----------
Total from investment operations .................................... (0.19) (0.19)
---------- ----------
Distributions to shareholders from
Net investment income ................................................... (0.04) (0.03)
---------- ----------
Net asset value, end of period ..................................................... $ 9.97 $ 9.98
========== ==========
Total return (b) ................................................................... (1.85)% (1.86)%
========== ==========
Ratios/supplemental data
Net assets, end of period ................................................... $1,168,374 $ 173,395
========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........................... 4.09 %(c) 4.07 %(c)
After expense reimbursements and waived fees ............................ 1.00 %(c) 1.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ........................... (1.78)%(c) (1.77)%(c)
After expense reimbursements and waived fees ............................ 1.31 %(c) 1.30 %(c)
Portfolio turnover rate ..................................................... 41.69 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(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, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund"), an open-ended investment company, is a
diversified series of shares of beneficial interest of the New
Providence Investment Trust (the "Trust"). The Trust was organized on
July 9, 1997 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940, as amended. The Fund began
operations on February 16, 1999. The investment objective of the fund
is to seek maximum total return consisting of any combination of
capital appreciation, realized and unrealized, and income under the
constantly varying market conditions. The Board of Trustees of the
Trust approved on October 7, 1999 a plan to authorize two new classes
of shares designated as Class B Shares and Class C Shares. On November
16, 1999, the Class B Shares and Class C Shares became effective. The
Fund has an unlimited number of authorized shares, which are divided
into four classes - Institutional Class Shares, Investor Class Shares,
Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the 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, 2000
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, a maximum of 1.40% of the
average daily net assets of the Fund's Investor Class, and a maximum of
2.15% of the average daily net assets of the Fund's Class B and Class C
Shares. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Advisor has voluntarily
waived a portion of its fee amounting to $12,914 ($0.05 per share) and
reimbursed $110,174 of the operating expenses incurred by the Fund for
the year ended May 31, 2000.
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. The Administrator voluntarily waived a portion of
its fees amounting to $826 for the year ended May 31, 2000.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2000
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.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. Prior to July 14, 1999,
Donaldson & Co., Inc., an affiliate of the Advisor, served as the
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended March 31, 2000, the Distributor retained sales charges
in the amount of $6,011.
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, Class
B Shares, and Class C Shares. The Act regulates the manner in which a
regulated investment company may assume costs of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
The 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 or 1.00% per annum of the Class B Shares or Class C Shares 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, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $2,157, $180 and $712, net of
waived fees, in distribution and service fees under the Plan with
respect to Class B Shares, Class C Shares and Investor Class Shares,
respectively, for the fiscal year ended May 31, 2000.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $3,323,538 and $753,580, respectively, for the fiscal year
ended May 31, 2000.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of New Providence Investment Trust and
Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund, including the portfolio of investments, as of May 31, 2000, and the
related statement of operations for the period then ended, the statements of
changes in net assets for the periods ended May 31, 2000 and 1999, and financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
the securities owned as of May 31, 2000, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2000, the results of its operations for the year ended, and
the changes in its net assets and the financial highlights for the respective
stated periods, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Princeton, New Jersey
June 23, 2000
<PAGE>
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
CLASS B SHARES
ANNUAL REPORT 2000
FOR THE YEAR 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 and the financial statements contained herein are
submitted for the general information of the shareholders of the
Fund. This report is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective
prospectus. Mutual fund shares are not deposits or obligations of,
or guaranteed by, any depository institution. Shares are not insured
by the FDIC, Federal Reserve Board or any other agency, and are
subject to investment risks, including possible loss of principal
amount invested. Neither the fund nor the fund's distributor is a bank.
For more information about the Wisdom Fund, including charges
and expenses, call the fund for a free prospectus. You should
read the prospectus carefully before you invest or send money.
<PAGE>
ATLANTA INVSETMENT COUNSEL, L.L.C.
Manager of the Wisdom Fund
June 1, 2000
Dear Shareholders,
"Success in investing doesn't correlate with IQ once you're above the level of
25. Once you have ordinary intelligence, what you need is the temperament to
control the urges that get other people into trouble in investing." Warren
Buffet, 1996 Shareholder Meeting. We couldn't agree more!
The past ten weeks have seen a shift in market sentiment that has so far been
very favorable to our portfolio and to value investing. We have been asked how
and why such shifts occur. We have tried to come up with several reasons that
sound logical. Many times we don't understand what's really happened until much
later. Here are some possible signs of, and reasons for, the shift:
The Dow was down dramatically by February 25, while the NASDAQ was up
substantially, underscoring the popular, but meaningless, Old Economy / New
Economy split.
The anxiety suffered by New Economy adherents as Microsoft was unable to settle
with the Justice Department.
The retirement of Tiger Fund's Julian Robertson and the replacement of Oakmark's
Robert Sanborn--sure signs of intense frustration from serious value investors.
[Letterhead]
<PAGE>
In Contrast to years past, Berkshire Hathaway's 1999 Annual Report received
barely a mention in the financial press. We read it with great interest, of
course!
When you buy a stock or mutual fund, it's important not to lose sight of the
fact that you're really buying a fractional interest in a business, and not a
lottery ticket.
For about two years now, we have been in a market where valuation hasn't
mattered one darn bit. In fact, the more that investors focused on valuation,
the worse returns have been. While the laws of economic gravity were temporarily
suspended, we do not believe they have been fundamentally altered.
Looking back over the last year, the Wisdom Fund under performed the general
market and outperformed Berkshire Hathaway Holdings, the portfolio that we
attempt to emulate. Berkshire's stock price fell in 1999 for several reasons:
1. Since last summer, Alan Greenspan has raised interest rates because he is
worried that the economy is expanding so fast that it will cause a resurgence of
inflation. In theory, the prospect of higher interest rates should hurt growth
stocks the most. But in today's market, exactly the opposite has occurred.
Fearing that higher rates would hit Old Economy stocks the hardest, investors
have been dumping those stocks and piling into tech stocks instead,
<PAGE>
2. Three of the Wisdom Fund's and Berkshire Hathaway's largest
holdings--Coca-cola, Gillette, and Freddie Mac--fell in calendar year 1999 (13%,
14% and 27%, respectively). These stocks have been great investments over a
long-term horizon,
3. The Wisdom Fund holds about 26% of its assets in low-return short-term fixed
income securities as does Berkshire Hathaway. Due to high valuations in the
markets, Berkshire Hathaway has not seen fit to put its cash to work, and
4. Since the Wisdom Fund and Berkshire Hathaway have very little exposure to
technology stocks, we feel our holdings have been dragged down by the general
devaluation of non-tech stocks.
At Berkshire Hathaway's annual meeting this spring, Warren Buffet scornfully
compared the technology sector's breathtaking runup to a "chain letter," in
which early participants reap rich rewards at the expense of those who follow.
Of course, we do not like to under perform the S&P 500 stock index. We can say
with certainty that there will always be a category or class of investments that
will post results greater than ours. For our part, we will continue to implement
our investment strategy of emulating the investment portfolio of Berkshire
Hathaway which has produced a thirty-year track record second to none.
<PAGE>
Warren Buffet said in 1996, "Your goal as an investor should be to purchase, at
a rational price, a part interest in an easily understandable business with
whose earnings are virtually certain to be materially higher five, ten, and
twenty years from now. Over time, you will find only a few companies that meet
these standards---so when you see one that qualifies, you should buy a
meaningful amount of stock. You must also resist the temptation to stray from
your guidelines: If you aren't willing to own a stock for ten years, don't even
thing about owning it for ten minutes. Put together a portfolio of companies
whose aggregate earnings march upward over the years, and so also will the
portfolio's market value."
And that is the "wisdom" of the Wisdom Fund!
/s/ C. Douglas Davenport
C. Douglas Davenport, J.D.
President, Atlanta Investment Counsel, LLC
<PAGE>
WISDOM FUND
CLASS B SHARES
Performance Update - $10,000 Investment
For the period from November 16, 1999 (Commencement of Operations)
to May 31, 2000
[LINE GRAPH HERE]:
--------------------------------------------------------------------------------
Wisdom Fund S&P 500
Class B Shares Total Return Index
--------------------------------------------------------------------------------
11/16/99 $10,000 $10,000
11/30/99 9,902 9,785
12/31/99 9,742 10,362
01/31/00 9,467 9,841
02/29/00 8,613 9,655
03/31/00 9,526 10,599
04/30/00 9,487 10,281
05/31/00 9,422 10,070
This graph depicts the performance of the Wisdom Fund - Class B Shares 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 Charges (1.85)%
------------------------------ -----------------------
4% Maximum Sales Charge (5.78)%
------------------------------ -----------------------
>> The graph assumes an initial $10,000 investment at November 16, 1999
(commencement of operations) and reflects the deduction of the maximum
contingent deferred sales charge ("CDSC"), taken on the last day of the
most recently completed fiscal year. The CDSC for the Class B Shares
declines from 4% to 0% over seven years; and the Class B Shares are
converted to Investor Class Shares of the Wisdom Fund after eight years,
without the imposition of any sales charges. All dividends and
distributions are reinvested.
>> At May 31, 2000, the value of the Wisdom Fund - Class B Shares would have
decreased to $9,422 - a cumulative total investment return of (5.78)% since
November 16, 1999. Without the deduction of the 4% maximum CDSC, the value
of the Wisdom Fund - Class B Shares would have decreased to $9,815 - a
cumulative total investment return of (1.85)% since November 16, 1999. The
CDSC may be waived or reduced under certain circumstances.
>> At May 31, 2000, a similar investment in the S&P 500 Total Return Index
would have grown to $10,070 - a cumulative total investment return of 0.70%
since November 16, 1999.
>> Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and the
principal value of shares, when redeemed, may be worth more or less than
the original cost. Average annual total returns are historical in nature
and measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 62.39%
Apparel Manufacturing - 1.33%
(a)Jones Apparel Group, Inc. .................................................. 1,750 $ 46,922
Liz Claiborne, Inc. ........................................................ 400 15,725
----------
62,647
----------
Beverages - 10.15%
The Coca-Cola Company ...................................................... 8,950 477,706
----------
Chemicals - 0.74%
Great Lakes Chemical Corporation ........................................... 1,250 34,844
----------
Cosmetics and Personal Care - 3.05%
The Gillette Company ....................................................... 4,300 143,512
----------
Financial Services - 16.09%
American Express Company ................................................... 6,750 362,813
AXA Financial, Inc. ........................................................ 1,825 71,061
Freddie Mac ................................................................ 2,675 119,037
Marsh & McLennan Companies, Inc. ........................................... 600 66,000
MGIC Investment Corporation ................................................ 1,150 56,997
The Dun & Bradstreet Corporation ........................................... 2,650 81,487
----------
757,395
----------
Financial - Banks, Commercial - 2.83%
Wells Fargo & Company ...................................................... 2,950 133,488
----------
Insurance - Life and Health - 2.56%
CIGNA Corporation .......................................................... 700 62,169
Torchmark Corporation ...................................................... 2,150 58,453
----------
120,622
----------
Insurance - Multiline - 17.37%
AFLAC INCORPORATED ......................................................... 1,400 72,363
Allmerica Financial Corporation ............................................ 1,150 66,341
Ambac Financial Group, Inc. ................................................ 1,200 60,600
American International Group, Inc. ......................................... 537 60,446
American National Insurance Company ........................................ 950 51,300
Cincinnati Financial Corporation ........................................... 1,950 78,274
(a)CNA Financial Corporation .................................................. 1,650 58,884
Financial Security Assurance Holdings Ltd. ................................. 1,325 99,458
Loews Corporation .......................................................... 1,000 65,875
PartnerRe Ltd. ............................................................. 2,025 75,178
The PMI Group, Inc. ........................................................ 1,250 63,359
The St. Paul Companies, Inc. ............................................... 1,750 65,625
----------
817,703
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Insurance - Property & Casualty - 2.78%
Erie Indemnity Company ..................................................... 1,950 $ 53,625
Everest Re Group, Ltd. ..................................................... 2,275 77,350
----------
130,975
----------
Publishing - Newspapers - 0.87%
The Washington Post Company ................................................ 82 41,041
----------
Real Estate Investment Trust - 1.59%
First Industrial Realty Trust, Inc. ........................................ 875 25,430
Tanger Factory Outlet Centers, Inc. ........................................ 1,150 26,594
Town & Country Trust ....................................................... 1,400 22,925
----------
74,949
----------
Transportation - Miscellaneous - 0.90%
GATX Corporation ........................................................... 1,250 42,187
----------
Utilities - Electric - 2.13%
FPL Group, Inc. ............................................................ 875 43,313
Northern States Power Company .............................................. 1,500 33,187
The Montana Power Company .................................................. 625 23,672
----------
100,172
----------
Total Common Stocks (Cost $2,817,159) ............................................................ 2,937,241
----------
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATION - 16.03%
United States Treasury Bill ..................... $760,000 0% 07/20/00 754,775
(Cost $754,479) ----------
------------------------------------------------------------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.97%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................... 211,257 211,257
Evergreen Money Market Treasury Institutional Treasury Money
Market Fund Institutional Service Shares ................................... 211,256 211,256
----------
Total Investment Companies (Cost $422,513) ....................................................... 422,513
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
(note 1)
------------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (Cost $3,994,151 (b)) ....................................... 87.39% $4,114,529
Other Assets Less Liabilities .......................................................... 12.61% 593,764
------ ----------
Net Assets ...................................................................... 100.00% $4,708,293
====== ==========
(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 .......................................................................... $ 267,843
Unrealized depreciation .......................................................................... (147,465)
----------
Net unrealized appreciation ...................................................... $ 120,378
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000
ASSETS
Investments, at value (cost $3,994,151) ............................................................. $4,114,529
Cash ................................................................................................ 563,217
Income receivable ................................................................................... 6,327
Receivable for fund shares sold ..................................................................... 29,791
Due from advisor (note 2) ........................................................................... 11,118
----------
Total assets ................................................................................... 4,724,982
----------
LIABILITIES
Accrued expenses .................................................................................... 16,689
----------
NET ASSETS ................................................................................................. $4,708,293
==========
NET ASSETS CONSIST OF
Paid-in capital ..................................................................................... $4,647,581
Undistributed net investment income ................................................................. 219
Accumulated net realized loss on investments ........................................................ (59,885)
Net unrealized appreciation on investments .......................................................... 120,378
----------
$4,708,293
==========
INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($2,710,312 / 273,814 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.90
==========
INVESTOR CLASS
Net asset value, redemption and offering price per share
($656,212 / 66,077 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.93
==========
Maximum offering price per share (100 / 95.50% of $9.93) ............................................ $10.40
==========
CLASS B
Net asset value, redemption and maximum offering price per share
($1,168,374 / 117,131 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.97
==========
CLASS C
Net asset value, redemption and maximum offering price per share
($173,395 / 17,369 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.98
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2000
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 21,539
Dividends ...................................................................................... 35,889
---------
Total income ............................................................................. 57,428
---------
Expenses
Investment advisory fees (note 2) .............................................................. 12,914
Fund administration fees (note 2) .............................................................. 3,499
Distribution and service fees - Class B (note 3) ............................................... 2,157
Distribution and service fees - Class C (note 3) ............................................... 180
Distribution and service fees - Investor Class (note 3) ........................................ 712
Custody fees ................................................................................... 3,216
Registration and filing administration fees (note 2) ........................................... 2,190
Fund accounting fees (note 2) .................................................................. 45,000
Audit fees ..................................................................................... 10,530
Legal fees ..................................................................................... 10,027
Securities pricing fees ........................................................................ 1,779
Shareholder recordkeeping fees ................................................................. 8,950
Other accounting fees (note 2) ................................................................. 1,399
Shareholder servicing expenses ................................................................. 2,634
Registration and filing expenses ............................................................... 8,143
Printing expenses .............................................................................. 7,308
Trustee fees and meeting expenses .............................................................. 3,180
Other operating expenses ....................................................................... 3,145
---------
Total expenses ........................................................................... 126,963
---------
Less:
Expense reimbursements (note 2) ..................................................... (110,174)
Investment advisory fees waived (note 2) ............................................ (12,914)
Fund administration fees waived (note 2) ............................................ (132)
Other accounting fees waived (note 2) ............................................... (694)
---------
Net expenses ............................................................................. 3,049
---------
Net investment income ............................................................... 54,379
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (58,004)
Increase in unrealized appreciation on investments .................................................. 123,160
---------
Net realized and unrealized gain on investments ................................................ 65,156
---------
Net increase in net assets resulting from operations ..................................... $ 119,535
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Period ended
May 31, May 31,
2000 1999 (a)
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income ..................................................... $ 54,379 $ 1,775
Net realized loss from investment transactions ............................ (58,004) (1,881)
Increase (decrease) in unrealized appreciation on investments ............. 123,160 (2,782)
---------- ----------
Net increase (decrease) in net assets resulting from operations ....... 119,535 (2,888)
---------- ----------
Distributions to shareholders from
Net investment income - Institutional Class ............................... (45,278) (1,775)
Net investment income - Investor Class .................................... (5,847) 0 (b)
Net investment income - Class B ........................................... (2,809) 0
Net investment income - Class C ........................................... (226) 0
---------- ----------
Decrease in net assets resulting from distributions ................... (54,160) (1,775)
---------- ----------
Capital share transactions
Increase in net assets resulting from capital share transactions (d) ...... 4,144,606 502,975
---------- ----------
Total increase in net assets .............................. 4,209,981 498,312
NET ASSETS
Beginning of period ............................................................. 498,312 0
---------- ----------
End of period ................................................................... $4,708,293 $ 498,312
========== ==========
(d) A summary of capital share activity follows:
--------------------------------------------------------------------------------
Period ended Period ended
May 31, 2000 May 31, 1999 (a)
Shares Value Shares Value
--------------------------------------------------------------------------------
--------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------------
Shares sold ...................................... 218,824 $2,185,791 50,110 $ 501,100
Shares issued for reinvestment of distributions .. 4,701 45,278 179 1,775
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 223,525 $2,231,069 50,289 $ 502,875
========== ========== ========== ==========
--------------------------------------------------
INVESTOR CLASS
--------------------------------------------------
Shares sold ...................................... 87,208 $ 839,421 10 $ 100
Shares issued for reinvestment of distributions .. 598 5,846 0 0
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 66,067 $ 644,543 10 $ 100
========== ========== ========== ==========
--------------------------------------------------
CLASS B (c)
--------------------------------------------------
Shares sold ...................................... 117,050 $1,100,100 0 $ 0
Shares issued for reinvestment of distributions .. 81 805 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 117,131 $1,100,905 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
CLASS C (c)
--------------------------------------------------
Shares sold ...................................... 17,347 $ 167,863 0 $ 0
Shares issued for reinvestment of distributions .. 22 226 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 17,369 $ 168,089 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
FUND SUMMARY
--------------------------------------------------
Shares sold ...................................... 440,429 $4,293,175 50,120 $ 501,200
Shares issued for reinvestment of distributions .. 5,402 52,155 179 1,775
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 424,092 $4,144,606 50,299 $ 502,975
========== ========== ========== ==========
(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.
(c) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
-------------------------------- -----------------------------------
Institutional Class Investor Class
-------------------------------- -----------------------------------
Year ended Period ended Year ended Period ended
May 31, May 31, May 31, May 31,
2000 1999 (a) 2000 1999 (a)
-------------------------------- -----------------------------------
Net asset value, beginning of period ....................... $ 9.91 $ 10.00 $ 9.92 $10.00
Income from investment operations
Net investment income ........................... 0.18 0.04 0.12 0.02
Net realized and unrealized (loss) gain
on investments .............................. (0.01) (0.09) 0.01 (0.08)
---------- ---------- ---------- ----------
Total from investment operations ............ 0.17 (0.05) 0.13 (0.06)
---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ........................... (0.18) (0.04) (0.12) (0.02)
---------- ---------- ---------- ----------
Net asset value, end of period ............................. $ 9.90 $ 9.91 $ 9.93 $ 9.92
========== ========== ========== ==========
Total return (b) ........................................... 1.64 % (0.45)% 1.36 % (0.58)%
========== ========== ========== ==========
Ratios/supplemental data
Net assets, end of period ........................... $2,710,312 $ 498,213 $ 656,212 $ 99
========== ========== ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ... 5.05 % 23.94 % (c) 4.29 % 15.49 %(c)
After expense reimbursements and waived fees .... 0.00 % 0.00 % (c) 0.25 % 0.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ... (2.87)% (22.69)% (c) (1.96)% (14.68)%(c)
After expense reimbursements and waived fees .... 2.18 % 1.26 % (c) 2.08 % 0.81 %(c)
Portfolio turnover rate ............................. 41.69 % 7.04 % 41.69 % 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>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
----------------- -----------------
Class B Class C
----------------- -----------------
Period ended Period ended
May 31, May 31,
2000 (a) 2000 (a)
-------------------- ------------------
Net asset value, beginning of period ............................................... $10.20 $10.20
Income from investment operations
Net investment income ................................................... 0.04 0.03
Net realized and unrealized (loss) gain on investments .................. (0.23) (0.22)
---------- ----------
Total from investment operations .................................... (0.19) (0.19)
---------- ----------
Distributions to shareholders from
Net investment income ................................................... (0.04) (0.03)
---------- ----------
Net asset value, end of period ..................................................... $ 9.97 $ 9.98
========== ==========
Total return (b) ................................................................... (1.85)% (1.86)%
========== ==========
Ratios/supplemental data
Net assets, end of period ................................................... $1,168,374 $ 173,395
========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........................... 4.09 %(c) 4.07 %(c)
After expense reimbursements and waived fees ............................ 1.00 %(c) 1.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ........................... (1.78)%(c) (1.77)%(c)
After expense reimbursements and waived fees ............................ 1.31 %(c) 1.30 %(c)
Portfolio turnover rate ..................................................... 41.69 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(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, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund"), an open-ended investment company, is a
diversified series of shares of beneficial interest of the New
Providence Investment Trust (the "Trust"). The Trust was organized on
July 9, 1997 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940, as amended. The Fund began
operations on February 16, 1999. The investment objective of the fund
is to seek maximum total return consisting of any combination of
capital appreciation, realized and unrealized, and income under the
constantly varying market conditions. The Board of Trustees of the
Trust approved on October 7, 1999 a plan to authorize two new classes
of shares designated as Class B Shares and Class C Shares. On November
16, 1999, the Class B Shares and Class C Shares became effective. The
Fund has an unlimited number of authorized shares, which are divided
into four classes - Institutional Class Shares, Investor Class Shares,
Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the 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, 2000
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, a maximum of 1.40% of the
average daily net assets of the Fund's Investor Class, and a maximum of
2.15% of the average daily net assets of the Fund's Class B and Class C
Shares. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Advisor has voluntarily
waived a portion of its fee amounting to $12,914 ($0.05 per share) and
reimbursed $110,174 of the operating expenses incurred by the Fund for
the year ended May 31, 2000.
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. The Administrator voluntarily waived a portion of
its fees amounting to $826 for the year ended May 31, 2000.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2000
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.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. Prior to July 14, 1999,
Donaldson & Co., Inc., an affiliate of the Advisor, served as the
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended March 31, 2000, the Distributor retained sales charges
in the amount of $6,011.
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, Class
B Shares, and Class C Shares. The Act regulates the manner in which a
regulated investment company may assume costs of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
The 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 or 1.00% per annum of the Class B Shares or Class C Shares 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, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $2,157, $180 and $712, net of
waived fees, in distribution and service fees under the Plan with
respect to Class B Shares, Class C Shares and Investor Class Shares,
respectively, for the fiscal year ended May 31, 2000.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $3,323,538 and $753,580, respectively, for the fiscal year
ended May 31, 2000.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of New Providence Investment Trust and
Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund, including the portfolio of investments, as of May 31, 2000, and the
related statement of operations for the period then ended, the statements of
changes in net assets for the periods ended May 31, 2000 and 1999, and financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
the securities owned as of May 31, 2000, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2000, the results of its operations for the year ended, and
the changes in its net assets and the financial highlights for the respective
stated periods, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Princeton, New Jersey
June 23, 2000
<PAGE>
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
CLASS C SHARES
ANNUAL REPORT 2000
FOR THE YEAR 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 and the financial statements contained herein are
submitted for the general information of the shareholders of the
Fund. This report is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an effective
prospectus. Mutual fund shares are not deposits or obligations of,
or guaranteed by, any depository institution. Shares are not insured
by the FDIC, Federal Reserve Board or any other agency, and are
subject to investment risks, including possible loss of principal
amount invested. Neither the fund nor the fund's distributor is a bank.
For more information about the Wisdom Fund, including charges
and expenses, call the fund for a free prospectus. You should
read the prospectus carefully before you invest or send money.
<PAGE>
ATLANTA INVSETMENT COUNSEL, L.L.C.
Manager of the Wisdom Fund
June 1, 2000
Dear Shareholders,
"Success in investing doesn't correlate with IQ once you're above the level of
25. Once you have ordinary intelligence, what you need is the temperament to
control the urges that get other people into trouble in investing." Warren
Buffet, 1996 Shareholder Meeting. We couldn't agree more!
The past ten weeks have seen a shift in market sentiment that has so far been
very favorable to our portfolio and to value investing. We have been asked how
and why such shifts occur. We have tried to come up with several reasons that
sound logical. Many times we don't understand what's really happened until much
later. Here are some possible signs of, and reasons for, the shift:
The Dow was down dramatically by February 25, while the NASDAQ was up
substantially, underscoring the popular, but meaningless, Old Economy / New
Economy split.
The anxiety suffered by New Economy adherents as Microsoft was unable to settle
with the Justice Department.
The retirement of Tiger Fund's Julian Robertson and the replacement of Oakmark's
Robert Sanborn--sure signs of intense frustration from serious value investors.
[Letterhead]
<PAGE>
In Contrast to years past, Berkshire Hathaway's 1999 Annual Report received
barely a mention in the financial press. We read it with great interest, of
course!
When you buy a stock or mutual fund, it's important not to lose sight of the
fact that you're really buying a fractional interest in a business, and not a
lottery ticket.
For about two years now, we have been in a market where valuation hasn't
mattered one darn bit. In fact, the more that investors focused on valuation,
the worse returns have been. While the laws of economic gravity were temporarily
suspended, we do not believe they have been fundamentally altered.
Looking back over the last year, the Wisdom Fund under performed the general
market and outperformed Berkshire Hathaway Holdings, the portfolio that we
attempt to emulate. Berkshire's stock price fell in 1999 for several reasons:
1. Since last summer, Alan Greenspan has raised interest rates because he is
worried that the economy is expanding so fast that it will cause a resurgence of
inflation. In theory, the prospect of higher interest rates should hurt growth
stocks the most. But in today's market, exactly the opposite has occurred.
Fearing that higher rates would hit Old Economy stocks the hardest, investors
have been dumping those stocks and piling into tech stocks instead,
<PAGE>
2. Three of the Wisdom Fund's and Berkshire Hathaway's largest
holdings--Coca-cola, Gillette, and Freddie Mac--fell in calendar year 1999 (13%,
14% and 27%, respectively). These stocks have been great investments over a
long-term horizon,
3. The Wisdom Fund holds about 26% of its assets in low-return short-term fixed
income securities as does Berkshire Hathaway. Due to high valuations in the
markets, Berkshire Hathaway has not seen fit to put its cash to work, and
4. Since the Wisdom Fund and Berkshire Hathaway have very little exposure to
technology stocks, we feel our holdings have been dragged down by the general
devaluation of non-tech stocks.
At Berkshire Hathaway's annual meeting this spring, Warren Buffet scornfully
compared the technology sector's breathtaking runup to a "chain letter," in
which early participants reap rich rewards at the expense of those who follow.
Of course, we do not like to under perform the S&P 500 stock index. We can say
with certainty that there will always be a category or class of investments that
will post results greater than ours. For our part, we will continue to implement
our investment strategy of emulating the investment portfolio of Berkshire
Hathaway which has produced a thirty-year track record second to none.
<PAGE>
Warren Buffet said in 1996, "Your goal as an investor should be to purchase, at
a rational price, a part interest in an easily understandable business with
whose earnings are virtually certain to be materially higher five, ten, and
twenty years from now. Over time, you will find only a few companies that meet
these standards---so when you see one that qualifies, you should buy a
meaningful amount of stock. You must also resist the temptation to stray from
your guidelines: If you aren't willing to own a stock for ten years, don't even
thing about owning it for ten minutes. Put together a portfolio of companies
whose aggregate earnings march upward over the years, and so also will the
portfolio's market value."
And that is the "wisdom" of the Wisdom Fund!
/s/ C. Douglas Davenport
C. Douglas Davenport, J.D.
President, Atlanta Investment Counsel, LLC
<PAGE>
WISDOM FUND
CLASS C SHARES
Performance Update - $10,000 Investment
For the period from November 16, 1999 (Commencement of Operations)
to May 31, 2000
[LINE GRAPH HERE]:
--------------------------------------------------------------------------------
Wisdom Fund S&P 500
Class C Shares Total Return Index
--------------------------------------------------------------------------------
11/16/99 $10,000 $10,000
11/30/99 9,902 9,785
12/31/99 9,742 10,362
01/31/00 9,467 9,841
02/29/00 8,613 9,655
03/31/00 9,526 10,599
04/30/00 9,487 10,281
05/31/00 9,716 10,070
This graph depicts the performance of the Wisdom Fund - Class C Shares 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 Charges (1.86)%
------------------------------ -----------------------
1% Maximum Sales Charge (2.84)%
------------------------------ -----------------------
>> The graph assumes an initial $10,000 investment at November 16, 1999
(commencement of operations) and reflects the deduction of the maximum
contingent deferred sales charge ("CDSC"), taken on the last day of the
most recently completed fiscal year. The CDSC for the Class C Shares
declines from 1% to 0% over two years. All dividends and distributions are
reinvested.
>> At May 31, 2000, the value of the Wisdom Fund - Class C Shares would have
decreased to $9,716 - a cumulative total investment return of (2.84)% since
November 16, 1999. Without the deduction of the 1% maximum CDSC, the value
of the Wisdom Fund - Class C Shares would have decreased to $9,814 - a
cumulative total investment return of (1.86)% since November 16, 1999. The
CDSC may be waived or reduced under certain circumstances.
>> At May 31, 2000, a similar investment in the S&P 500 Total Return Index
would have grown to $10,070 - a cumulative total investment return of 0.70%
since November 16, 1999.
>> Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and the
principal value of shares, when redeemed, may be worth more or less than
the original cost. Average annual total returns are historical in nature
and measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 62.39%
Apparel Manufacturing - 1.33%
(a)Jones Apparel Group, Inc. .................................................. 1,750 $ 46,922
Liz Claiborne, Inc. ........................................................ 400 15,725
----------
62,647
----------
Beverages - 10.15%
The Coca-Cola Company ...................................................... 8,950 477,706
----------
Chemicals - 0.74%
Great Lakes Chemical Corporation ........................................... 1,250 34,844
----------
Cosmetics and Personal Care - 3.05%
The Gillette Company ....................................................... 4,300 143,512
----------
Financial Services - 16.09%
American Express Company ................................................... 6,750 362,813
AXA Financial, Inc. ........................................................ 1,825 71,061
Freddie Mac ................................................................ 2,675 119,037
Marsh & McLennan Companies, Inc. ........................................... 600 66,000
MGIC Investment Corporation ................................................ 1,150 56,997
The Dun & Bradstreet Corporation ........................................... 2,650 81,487
----------
757,395
----------
Financial - Banks, Commercial - 2.83%
Wells Fargo & Company ...................................................... 2,950 133,488
----------
Insurance - Life and Health - 2.56%
CIGNA Corporation .......................................................... 700 62,169
Torchmark Corporation ...................................................... 2,150 58,453
----------
120,622
----------
Insurance - Multiline - 17.37%
AFLAC INCORPORATED ......................................................... 1,400 72,363
Allmerica Financial Corporation ............................................ 1,150 66,341
Ambac Financial Group, Inc. ................................................ 1,200 60,600
American International Group, Inc. ......................................... 537 60,446
American National Insurance Company ........................................ 950 51,300
Cincinnati Financial Corporation ........................................... 1,950 78,274
(a)CNA Financial Corporation .................................................. 1,650 58,884
Financial Security Assurance Holdings Ltd. ................................. 1,325 99,458
Loews Corporation .......................................................... 1,000 65,875
PartnerRe Ltd. ............................................................. 2,025 75,178
The PMI Group, Inc. ........................................................ 1,250 63,359
The St. Paul Companies, Inc. ............................................... 1,750 65,625
----------
817,703
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Insurance - Property & Casualty - 2.78%
Erie Indemnity Company ..................................................... 1,950 $ 53,625
Everest Re Group, Ltd. ..................................................... 2,275 77,350
----------
130,975
----------
Publishing - Newspapers - 0.87%
The Washington Post Company ................................................ 82 41,041
----------
Real Estate Investment Trust - 1.59%
First Industrial Realty Trust, Inc. ........................................ 875 25,430
Tanger Factory Outlet Centers, Inc. ........................................ 1,150 26,594
Town & Country Trust ....................................................... 1,400 22,925
----------
74,949
----------
Transportation - Miscellaneous - 0.90%
GATX Corporation ........................................................... 1,250 42,187
----------
Utilities - Electric - 2.13%
FPL Group, Inc. ............................................................ 875 43,313
Northern States Power Company .............................................. 1,500 33,187
The Montana Power Company .................................................. 625 23,672
----------
100,172
----------
Total Common Stocks (Cost $2,817,159) ............................................................ 2,937,241
----------
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATION - 16.03%
United States Treasury Bill ..................... $760,000 0% 07/20/00 754,775
(Cost $754,479) ----------
------------------------------------------------------------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.97%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................... 211,257 211,257
Evergreen Money Market Treasury Institutional Treasury Money
Market Fund Institutional Service Shares ................................... 211,256 211,256
----------
Total Investment Companies (Cost $422,513) ....................................................... 422,513
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
(note 1)
------------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (Cost $3,994,151 (b)) ....................................... 87.39% $4,114,529
Other Assets Less Liabilities .......................................................... 12.61% 593,764
------ ----------
Net Assets ...................................................................... 100.00% $4,708,293
====== ==========
(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 .......................................................................... $ 267,843
Unrealized depreciation .......................................................................... (147,465)
----------
Net unrealized appreciation ...................................................... $ 120,378
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000
ASSETS
Investments, at value (cost $3,994,151) ............................................................. $4,114,529
Cash ................................................................................................ 563,217
Income receivable ................................................................................... 6,327
Receivable for fund shares sold ..................................................................... 29,791
Due from advisor (note 2) ........................................................................... 11,118
----------
Total assets ................................................................................... 4,724,982
----------
LIABILITIES
Accrued expenses .................................................................................... 16,689
----------
NET ASSETS ................................................................................................. $4,708,293
==========
NET ASSETS CONSIST OF
Paid-in capital ..................................................................................... $4,647,581
Undistributed net investment income ................................................................. 219
Accumulated net realized loss on investments ........................................................ (59,885)
Net unrealized appreciation on investments .......................................................... 120,378
----------
$4,708,293
==========
INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($2,710,312 / 273,814 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.90
==========
INVESTOR CLASS
Net asset value, redemption and offering price per share
($656,212 / 66,077 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.93
==========
Maximum offering price per share (100 / 95.50% of $9.93) ............................................ $10.40
==========
CLASS B
Net asset value, redemption and maximum offering price per share
($1,168,374 / 117,131 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.97
==========
CLASS C
Net asset value, redemption and maximum offering price per share
($173,395 / 17,369 shares : unlimited shares of $0.01 par value
beneficial interest authorized) .................................................................. $ 9.98
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2000
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 21,539
Dividends ...................................................................................... 35,889
---------
Total income ............................................................................. 57,428
---------
Expenses
Investment advisory fees (note 2) .............................................................. 12,914
Fund administration fees (note 2) .............................................................. 3,499
Distribution and service fees - Class B (note 3) ............................................... 2,157
Distribution and service fees - Class C (note 3) ............................................... 180
Distribution and service fees - Investor Class (note 3) ........................................ 712
Custody fees ................................................................................... 3,216
Registration and filing administration fees (note 2) ........................................... 2,190
Fund accounting fees (note 2) .................................................................. 45,000
Audit fees ..................................................................................... 10,530
Legal fees ..................................................................................... 10,027
Securities pricing fees ........................................................................ 1,779
Shareholder recordkeeping fees ................................................................. 8,950
Other accounting fees (note 2) ................................................................. 1,399
Shareholder servicing expenses ................................................................. 2,634
Registration and filing expenses ............................................................... 8,143
Printing expenses .............................................................................. 7,308
Trustee fees and meeting expenses .............................................................. 3,180
Other operating expenses ....................................................................... 3,145
---------
Total expenses ........................................................................... 126,963
---------
Less:
Expense reimbursements (note 2) ..................................................... (110,174)
Investment advisory fees waived (note 2) ............................................ (12,914)
Fund administration fees waived (note 2) ............................................ (132)
Other accounting fees waived (note 2) ............................................... (694)
---------
Net expenses ............................................................................. 3,049
---------
Net investment income ............................................................... 54,379
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (58,004)
Increase in unrealized appreciation on investments .................................................. 123,160
---------
Net realized and unrealized gain on investments ................................................ 65,156
---------
Net increase in net assets resulting from operations ..................................... $ 119,535
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Period ended
May 31, May 31,
2000 1999 (a)
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income ..................................................... $ 54,379 $ 1,775
Net realized loss from investment transactions ............................ (58,004) (1,881)
Increase (decrease) in unrealized appreciation on investments ............. 123,160 (2,782)
---------- ----------
Net increase (decrease) in net assets resulting from operations ....... 119,535 (2,888)
---------- ----------
Distributions to shareholders from
Net investment income - Institutional Class ............................... (45,278) (1,775)
Net investment income - Investor Class .................................... (5,847) 0 (b)
Net investment income - Class B ........................................... (2,809) 0
Net investment income - Class C ........................................... (226) 0
---------- ----------
Decrease in net assets resulting from distributions ................... (54,160) (1,775)
---------- ----------
Capital share transactions
Increase in net assets resulting from capital share transactions (d) ...... 4,144,606 502,975
---------- ----------
Total increase in net assets .............................. 4,209,981 498,312
NET ASSETS
Beginning of period ............................................................. 498,312 0
---------- ----------
End of period ................................................................... $4,708,293 $ 498,312
========== ==========
(d) A summary of capital share activity follows:
--------------------------------------------------------------------------------
Period ended Period ended
May 31, 2000 May 31, 1999 (a)
Shares Value Shares Value
--------------------------------------------------------------------------------
--------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------------
Shares sold ...................................... 218,824 $2,185,791 50,110 $ 501,100
Shares issued for reinvestment of distributions .. 4,701 45,278 179 1,775
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 223,525 $2,231,069 50,289 $ 502,875
========== ========== ========== ==========
--------------------------------------------------
INVESTOR CLASS
--------------------------------------------------
Shares sold ...................................... 87,208 $ 839,421 10 $ 100
Shares issued for reinvestment of distributions .. 598 5,846 0 0
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 66,067 $ 644,543 10 $ 100
========== ========== ========== ==========
--------------------------------------------------
CLASS B (c)
--------------------------------------------------
Shares sold ...................................... 117,050 $1,100,100 0 $ 0
Shares issued for reinvestment of distributions .. 81 805 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 117,131 $1,100,905 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
CLASS C (c)
--------------------------------------------------
Shares sold ...................................... 17,347 $ 167,863 0 $ 0
Shares issued for reinvestment of distributions .. 22 226 0 0
Shares redeemed .................................. 0 0 0 0
---------- ---------- ---------- ----------
Net increase ............................ 17,369 $ 168,089 0 $ 0
========== ========== ========== ==========
--------------------------------------------------
FUND SUMMARY
--------------------------------------------------
Shares sold ...................................... 440,429 $4,293,175 50,120 $ 501,200
Shares issued for reinvestment of distributions .. 5,402 52,155 179 1,775
Shares redeemed .................................. (21,739) (200,724) 0 0
---------- ---------- ---------- ----------
Net increase ............................ 424,092 $4,144,606 50,299 $ 502,975
========== ========== ========== ==========
(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.
(c) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
-------------------------------- -----------------------------------
Institutional Class Investor Class
-------------------------------- -----------------------------------
Year ended Period ended Year ended Period ended
May 31, May 31, May 31, May 31,
2000 1999 (a) 2000 1999 (a)
-------------------------------- -----------------------------------
Net asset value, beginning of period ....................... $ 9.91 $ 10.00 $ 9.92 $10.00
Income from investment operations
Net investment income ........................... 0.18 0.04 0.12 0.02
Net realized and unrealized (loss) gain
on investments .............................. (0.01) (0.09) 0.01 (0.08)
---------- ---------- ---------- ----------
Total from investment operations ............ 0.17 (0.05) 0.13 (0.06)
---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ........................... (0.18) (0.04) (0.12) (0.02)
---------- ---------- ---------- ----------
Net asset value, end of period ............................. $ 9.90 $ 9.91 $ 9.93 $ 9.92
========== ========== ========== ==========
Total return (b) ........................................... 1.64 % (0.45)% 1.36 % (0.58)%
========== ========== ========== ==========
Ratios/supplemental data
Net assets, end of period ........................... $2,710,312 $ 498,213 $ 656,212 $ 99
========== ========== ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ... 5.05 % 23.94 % (c) 4.29 % 15.49 %(c)
After expense reimbursements and waived fees .... 0.00 % 0.00 % (c) 0.25 % 0.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ... (2.87)% (22.69)% (c) (1.96)% (14.68)%(c)
After expense reimbursements and waived fees .... 2.18 % 1.26 % (c) 2.08 % 0.81 %(c)
Portfolio turnover rate ............................. 41.69 % 7.04 % 41.69 % 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>
<TABLE>
<S> <C> <C> <C> <C> <C>
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
----------------- -----------------
Class B Class C
----------------- -----------------
Period ended Period ended
May 31, May 31,
2000 (a) 2000 (a)
-------------------- ------------------
Net asset value, beginning of period ............................................... $10.20 $10.20
Income from investment operations
Net investment income ................................................... 0.04 0.03
Net realized and unrealized (loss) gain on investments .................. (0.23) (0.22)
---------- ----------
Total from investment operations .................................... (0.19) (0.19)
---------- ----------
Distributions to shareholders from
Net investment income ................................................... (0.04) (0.03)
---------- ----------
Net asset value, end of period ..................................................... $ 9.97 $ 9.98
========== ==========
Total return (b) ................................................................... (1.85)% (1.86)%
========== ==========
Ratios/supplemental data
Net assets, end of period ................................................... $1,168,374 $ 173,395
========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........................... 4.09 %(c) 4.07 %(c)
After expense reimbursements and waived fees ............................ 1.00 %(c) 1.00 %(c)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees ........................... (1.78)%(c) (1.77)%(c)
After expense reimbursements and waived fees ............................ 1.31 %(c) 1.30 %(c)
Portfolio turnover rate ..................................................... 41.69 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(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, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund"), an open-ended investment company, is a
diversified series of shares of beneficial interest of the New
Providence Investment Trust (the "Trust"). The Trust was organized on
July 9, 1997 as a Massachusetts Business Trust and is registered under
the Investment Company Act of 1940, as amended. The Fund began
operations on February 16, 1999. The investment objective of the fund
is to seek maximum total return consisting of any combination of
capital appreciation, realized and unrealized, and income under the
constantly varying market conditions. The Board of Trustees of the
Trust approved on October 7, 1999 a plan to authorize two new classes
of shares designated as Class B Shares and Class C Shares. On November
16, 1999, the Class B Shares and Class C Shares became effective. The
Fund has an unlimited number of authorized shares, which are divided
into four classes - Institutional Class Shares, Investor Class Shares,
Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the 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, 2000
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, a maximum of 1.40% of the
average daily net assets of the Fund's Investor Class, and a maximum of
2.15% of the average daily net assets of the Fund's Class B and Class C
Shares. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Advisor has voluntarily
waived a portion of its fee amounting to $12,914 ($0.05 per share) and
reimbursed $110,174 of the operating expenses incurred by the Fund for
the year ended May 31, 2000.
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. The Administrator voluntarily waived a portion of
its fees amounting to $826 for the year ended May 31, 2000.
(Continued)
<PAGE>
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2000
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.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. Prior to July 14, 1999,
Donaldson & Co., Inc., an affiliate of the Advisor, served as the
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended March 31, 2000, the Distributor retained sales charges
in the amount of $6,011.
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, Class
B Shares, and Class C Shares. The Act regulates the manner in which a
regulated investment company may assume costs of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
The 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 or 1.00% per annum of the Class B Shares or Class C Shares 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, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $2,157, $180 and $712, net of
waived fees, in distribution and service fees under the Plan with
respect to Class B Shares, Class C Shares and Investor Class Shares,
respectively, for the fiscal year ended May 31, 2000.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $3,323,538 and $753,580, respectively, for the fiscal year
ended May 31, 2000.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of New Providence Investment Trust and
Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund, including the portfolio of investments, as of May 31, 2000, and the
related statement of operations for the period then ended, the statements of
changes in net assets for the periods ended May 31, 2000 and 1999, and financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
the securities owned as of May 31, 2000, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2000, the results of its operations for the year ended, and
the changes in its net assets and the financial highlights for the respective
stated periods, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Princeton, New Jersey
June 23, 2000
