(THE NOAH FUND LOGO)
1-800-794-6624
1-800-794-NOAH
ANNUAL REPORT
OCTOBER 31, 1996
(THE NOAH FUND LOGO)
THE NOAH FUND
A PORTFOLIO OF THE NOAH INVESTMENT GROUP, INC.
December 12, 1996
Dear Shareholder:
Thank you for your confidence in and, therefore, investment in the NOAH FUND.
We are proud to announce the results of the first five months of operations.
The NOAH FUND, since its inception on May 17, 1996, has obtained a 5.9%
return from the Fund's commencement of operations through October 31, 1996,
compared to the Standard & Poor's 500 which was 6.5% and the NASDAQ Composite
Index of minus (1.5%) for the same period.
The NOAH FUND's sub-advisor, Rittenhouse Financial Services, Inc. generally
follows, for its clients, a philosophy of Large Cap Growth with low risk. NOAH
FUND is managed with this same philosophy. Rittenhouse has been ranked by PIPER
(Pension Investment Performance Evaluation Report) as the NUMBER ONE Large Cap
Growth stock investment advisor out of 88 such advisors, when taking risk into
consideration for the period of 16.5 years ending with the second quarter of
1995. PIPER is a joint venture formed by Rogers, Casey and Associates, Inc. of
Darien Connecticut and Crain Communications, Inc. publisher of Pensions and
Investments Magazine to track investment managers. We are fortunate indeed to
have Rittenhouse actively involved with the management of the Noah Fund
portfolio.
Past performance is, of course, no guarantee of future results. An investor's
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be more or less than their original cost.
Your management company charges a 1% fee and is proud of its commitment to
donating 10% of its gross 1% management fee to missions as a charitable
contribution. This year World Vision, Inc. and Campus Crusade for Christ
International, Inc. were the recipients. As we grow, naturally, we will be able
to give more and more away to more and more missions as well as to the needs of
the poor. Naturally, this is from the management company and not from the FUND
so it has no effect on the monetary value of your investment.
We are hopeful to be able to serve you and believe our strategy will continue
to bring you excellent results with very low risk. We are happy to have you as
an investor and hope to retain your confidence by producing excellent results
over the long term with a minimum of risk. We want you to know that you can
check the NOAH FUND net asset value each evening after 8 P.M. Eastern Time by
calling 1-800-794-NOAH.
Very truly yours,
/s/ William L. Van Alen, Jr.
William L. Van Alen, Jr.
President
NOAH FUND
THE NOAH FUND: TOTAL RETURNS VS.
THE S&P 500 AND NASDAQ COMPOSITE INDEX
DATE THE NOAH FUND S&P 500 NASDAQ COMPOSITE INDEX
5/17/96<F6> $10,000 $10,000 $10,000
5/31/96 $9,940 $10,011 $10,013
6/30/96 $10,240 $10,049 $9,546
7/31/96 $9,871 $9,605 $8,707
8/31/96 $9,980 $9,807 $9,200
9/30/96 $10,370 $10,359 $9,892
10/31/96 $10,590 $10,645 $9,851
<F6> Inception date
Past performance is not predictive of future performance.
FOR THE PERIOD ENDED OCTOBER 31, 1996
CUMULATIVE SINCE
COMMENCEMENT OF OPERATIONS
---------------------------------------
Noah Fund........................ 5.9%
S&P 500.......................... 6.5%
NASDAQ Composite................. (1.5%)
The Standard & Poor's 500 Index (S&P 500) is a capital-weighted index,
representing the aggregate market value of the common equity of 500 stocks
primarily traded on the New York Stock Exchange. The NASDAQ Composite Index is a
broad-based capitalization-weighted index of all NASDAQ stocks. This chart
assumes an initial gross investment of $10,000 made on May 17, 1996
(commencement of operations). Returns shown include the reinvestment of all
dividends. Past performance is not predictive of future performance. Investment
return and principal value will fluctuate, so that your shares, when redeemed,
may be worth more or less than the original cost.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
ASSETS:
Investments, at value (cost $451,162) $466,478
Deferred organization charges (net of amortization) 16,166
Receivable from Manager 12,941
Dividends receivable 564
Interest receivable 147
Other assets 8,775
---------
Total Assets 505,071
---------
LIABILITIES:
Accrued expenses and other liabilities 39,192
---------
NET ASSETS $465,879
=========
NET ASSETS CONSIST OF:
Capital stock $448,700
Accumulated undistributed net investment income 1,712
Accumulated undistributed net realized gain on investments 151
Net unrealized appreciation on investments 15,316
---------
Total Net Assets $465,879
=========
Shares outstanding (500,000,000 shares of
$0.001 par value authorized) 44,000
Net Asset Value, Redemption Price and Offering Price Per Share $10.59
=========
See notes to the financial statements.
STATEMENT OF OPERATIONS
MAY 17, 1996<F1> THROUGH OCTOBER 31, 1996
INVESTMENT INCOME:
Dividend income (net of foreign withholding taxes of $16) $1,552
Interest income 712
--------
Total investment income 2,264
--------
EXPENSES:
Management fee 988
Administration fee 10,417
Shareholder servicing and accounting costs 18,569
Custody fees 1,697
Federal and state registration 7,032
Professional fees 6,738
Amortization of deferred organization charges 1,631
Reports to shareholders 918
Distribution expense 247
Other 1,104
--------
Total expenses before reimbursement 49,341
Less: Reimbursement from Manager (47,931)
--------
Net Expenses 1,410
--------
NET INVESTMENT INCOME 854
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 151
Change in unrealized appreciation on investments 15,316
--------
Net realized and unrealized gain on investments 15,467
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $16,321
========
<F1>Commencement of operations.
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
MAY 17, 1996<F2> THROUGH OCTOBER 31, 1996
OPERATIONS:
Net investment income $854
Net realized gain on investments 151
Change in unrealized appreciation on investments 15,316
---------
Net increase in net assets from operations 16,321
---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 449,558
---------
Net increase in net assets from capital share transactions 449,558
---------
TOTAL INCREASE IN NET ASSETS 465,879
---------
NET ASSETS:
Beginning of period 0
---------
End of period (including undistributed net
investment income of $1,712) $465,879
=========
<F2>Commencement of operations.
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
MAY 17, 1996<F3>
THROUGH
OCTOBER 31, 1996
----------------
PER SHARE DATA:
Net asset value, beginning of period $10.00
Income from investment operation:
Net investment income 0.04
Net realized and unrealized gain on investments 0.55
-------
Total from investment operations 0.59
-------
Net asset value, end of period $10.59
=======
Total Return <F4> 5.90%
Supplemental data and ratios:
Net assets, end of period $465,879
Ratio of expenses to average net assets <F5> 1.42%
Ratio of net investment income to average net assets <F5> 0.86%
Portfolio turnover rate 21.61%
Average commission rate paid $0.2173
<F3>Commencement of operations.
<F4>Not annualized for the period May 17, 1996 through October 31, 1996.
<F5>Annualized for the period May 17, 1996 through October 31, 1996. Without
expense waivers of $47,931 for the period May 17, 1996 through October 31, 1996,
the ratio of expenses to average net assets would have been 49.81% and the ratio
of net investment (loss) to average net assets would have been (47.52)%.
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
NUMBER
OF SHARES MARKET VALUE
- --------- ------------
MUTUAL FUNDS -- 1.1%
5,187 Portico Institutional Money Market Fund (Cost $5,187) $5,187
--------
COMMON STOCKS -- 96.8%
BANKING -- 6.8%
150 J.P. Morgan & Company, Inc. 12,956
200 NationsBank Corporation 18,850
--------
31,806
--------
BUSINESS SERVICES -- 7.9%
500 Automatic Data Processing, Inc. 20,812
200 First Data Corporation 15,950
--------
36,762
--------
COSMETICS & SOAP -- 13.0%
200 Colgate-Palmolive Company 18,400
300 Gillette Company 22,425
200 Procter & Gamble Company 19,800
--------
60,625
--------
DRUGS -- 14.9%
500 Abbott Laboratories 25,312
200 Merck & Company, Inc. 14,825
200 Pfizer, Inc. 16,550
200 Schering-Plough 12,800
--------
69,487
--------
ELECTRICAL EQUIPMENT -- 9.6%
200 AMP, Inc. 6,775
100 Emerson Electric Company 8,900
300 General Electric Company 29,025
--------
44,700
--------
ELECTRONICS -- 5.8%
400 Hewlett-Packard Company 17,650
200 Motorola, Inc. 9,200
--------
26,850
--------
ENTERTAINMENT & LEISURE -- 2.9%
300 McDonald's Corporation 13,313
--------
FINANCIAL SERVICES -- 5.0%
600 Federal National Mortgage Association 23,475
--------
FOOD, BEVERAGES & TOBACCO -- 9.8%
300 Coca-Cola Company 15,150
200 CPC International, Inc. 15,775
500 PepsiCo, Inc. 14,813
--------
45,738
--------
INSURANCE -- 7.8%
200 American International Group, Inc. 21,725
100 General Re Corporation 14,725
--------
36,450
--------
OIL-INTERNATIONAL -- 6.1%
100 Mobil Corporation 11,675
100 Royal Dutch Petroleum Company ADR 16,537
--------
28,212
--------
RETAIL -- 2.3%
200 Home Depot, Inc. 10,950
--------
SAVINGS & LOAN -- 2.2%
100 Federal Home Loan Mortgage Corporation 10,100
--------
TELECOMMUNICATIONS -- 2.7%
300 GTE Corporation 12,638
--------
Total Common Stocks (Cost $435,790) 451,106
--------
PRINCIPAL
AMOUNT
- --------
SHORT-TERM INVESTMENTS -- 2.2%
VARIABLE RATE DEMAND NOTES -- 2.2%
$10,185 Wisconsin Electric Power Co. 10,185
--------
Total Short-Term Investments (Cost $10,185) 10,185
--------
Total Investments -- 100.1% (Cost $451,162) 466,478
--------
Liabilities, less Other Assets -- (0.1%) (599)
--------
TOTAL NET ASSETS -- 100.0% $465,879
========
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Noah Investment Group, Inc. (the "Company") was incorporated under the
laws of the state of Maryland on December 16, 1992, and consists solely of The
Noah Fund (the "Fund"). The Company is registered as a no-load, open-end
diversified management investment company of the series type under the
Investment Company Act of 1940 (the "1940 Act"). The principle investment
objective of the Fund is to seek capital appreciation consistent with the
preservation of capital, as adjusted for inflation, and current income. The Fund
will not invest in and may not acquire the securities of businesses that are
engaged, directly or through subsidiaries, in the alcoholic beverage, tobacco,
pornographic and gambling industries or companies in the business of aborting
life before birth. The Fund became effective with the SEC on May 10, 1996 and
commenced operations on May 17, 1996.
The costs incurred in connection with the organization, initial registration
and public offering of shares, aggregating $17,797, have been paid by the
Manager and will be reimbursed by the Fund. These costs are being amortized over
the period of benefit, but not to exceed sixty months from the Fund's
commencement of operations. The proceeds of any redemption of the initial shares
(seed money) by the original stockholder or any transferee will be reduced by a
pro-rata portion of any then unamortized organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of such redemption.
The following is a summary of significant accounting policies consistently
followed by the Fund.
a) Investment Valuation -- Common stocks and other equity-type securities listed
on a securities exchange are valued at the last quoted sales price on the day of
the valuation. Price information on listed stocks is taken from the exchange
where the security is primarily traded. Securities that are listed on an
exchange but which are not traded on the valuation date are valued at the most
recent bid prices. Unlisted securities for which market quotations are readily
available are valued at the latest quoted bid price. Other assets and securities
for which no quotations are readily available are valued at fair value as
determined in good faith by the Investment Manager under the supervision of the
Board of Directors. Short-term instruments (those with remaining maturities of
60 days or less) are valued at amortized cost, which approximates market.
b) Federal Income Taxes -- No provision for federal income taxes has been made
since the Fund has complied to date with the provisions of the Internal Revenue
Code applicable to regulated investment companies and intends to so comply in
the future and to distribute substantially all of its net investment income and
realized capital gains in order to relieve the Fund from all federal income
taxes.
c) Distributions to Shareholders -- Dividends from net investment income and
distributions of net realized capital gains, if any, will be declared and paid
at least annually. Income and capital gain distributions are determined in
accordance with income tax regulations that may differ from generally accepted
accounting principles. The Fund's primary financial reporting and tax difference
relates to the differing treatment for the amortization of deferred
organization expenses. Permanent financial reporting and tax differences are
reclassified to capital stock.
d) 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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
e) Other -- Investment and shareholder transactions are recorded no later than
the first business day after the trade date. The Fund determines the gain or
loss realized from the investment transactions by comparing the original cost of
the security lot sold with the net sales proceeds. Dividend income is recognized
on the ex-dividend date or as soon as information is available to the Fund, and
interest income is recognized on an accrual basis.
2. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the period May 17, 1996 through
October 31, 1996 were as follows:
Shares sold........................... 44,000
Shares redeemed....................... 0
------
Net increase.......................... 44,000
======
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the period May 17, 1996 through October 31, 1996,
were $475,023 and $39,383, respectively.
At October 31, 1996, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation.......................... $25,108
(Depreciation)........................ (9,792)
-------
Net appreciation on investments....... $15,316
=======
At October 31, 1996, the cost of investments for federal income tax purposes
was $451,162.
4. AGREEMENTS
The Fund has entered into a Management Agreement with Polestar Management
Company ("Polestar Management"). Pursuant to its Management Agreement with the
Fund, the Manager is entitled to receive a fee, calculated daily and payable
monthly, at the annual rate of 1.00% as applied to the Fund's daily net assets.
The Manager voluntarily agrees to reimburse its management fee and other
expenses to the extent that total operating expenses (exclusive of interest,
taxes, brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities, and extraordinary items) exceed the
annual rate of 1.75% of the net assets of the Fund, computed on a daily basis.
This voluntary reimbursement shall be in effect for a period of one year from
the Fund's commencement of operations and may be terminated thereafter under the
approval of the Board of Directors.
Rittenhouse Financial Services, Inc. ("Rittenhouse") has been retained by
Polestar Management to serve as the Fund's sub-investment adviser. In
recognition of the religious and moral practices of the Fund, Rittenhouse will
not charge a sub-investment adviser fee until such time as the net assets of the
Fund reach $100 million. Thereafter, an annual fee of 0.25% of the Fund's
average daily net assets will be charged by Rittenhouse on assets in excess of
$100 million. The Fund will have no responsibility to pay any such fees to
Rittenhouse.
The Fund has adopted a distribution plan (the "Distribution Plan"), pursuant
to which the Fund may incur distribution expenses of up to 0.25% per annum of
the Fund's average daily net assets. The Distribution Plan provides that the
Fund may finance activities which are primarily intended to result in the sale
of the Fund's shares, including but not limited to, advertising, printing of
prospectuses and reports for other than existing shareholders, preparation and
distribution of advertising materials and sales literature, and payments to
dealers and shareholder servicing agents. The Fund incurred $247 pursuant to the
Distribution Plan for the year ended October 31, 1996.
Firstar Trust Company, a subsidiary of Firstar Corporation, a publicly held
bank holding company, serves as custodian, transfer agent, administrator and
accounting services agent for the Fund.
5. RELATED PARTY TRANSACTIONS
Martin V. Miller, Esq., an Officer of the Fund, furnishes legal services to
the Fund. For the period ended October 31, 1996, the Fund incurred $16,377 for
such services, of which $13,639 has been deferred as organizational charges.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
The Noah Fund:
We have audited the accompanying statement of assets and liabilities of The Noah
Fund (a portfolio of The Noah Investment Group, Inc., a Maryland corporation),
including the schedule of investments, as of October 31, 1996, and the related
statements of operations and changes in net assets for the period from May 17,
1996 (commencement of operations) through October 31, 1996, and the financial
highlights for the period from May 17, 1996 (commencement of operations) through
October 31, 1996. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1996, by
correspondence with the custodians 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Noah Fund as of October 31, 1996, and the results of its operations and changes
in its net assets for the period from May 17, 1996 (commencement of operations)
through October 31, 1996 and its financial highlights for the period from May
17, 1996 (commencement of operations) through October 31, 1996, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
November 15, 1996.
Investment and Management Services
POLESTAR MANAGEMENT COMPANY
RITTENHOUSE FINANCIAL SERVICES, INC.
Custodian
FIRSTAR TRUST COMPANY
Transfer, Dividend Disbursing
And Accounting Services Agent
FIRSTAR TRUST COMPANY
