(NOAH FUND LOGO)
1-800-794-6624
1-800-794-NOAH
ANNUAL REPORT
OCTOBER 31, 1997
THE NOAH FUND
A PORTFOLIO OF THE NOAH INVESTMENT GROUP, INC.
(NOAH FUND LOGO)
December 9, 1997
Dear Shareholder:
Thank you for your continued confidence in and, therefore, investment in the
NOAH FUND. We are proud to announce the results of operations for the year
ending October 31, 1997.
The NOAH FUND started investing on May 17, 1996, and has obtained a
cumulative 32.81% return from the Fund's commencement of operation through
October 31, 1997. This year from January 1st to October 31st, the NOAH FUND was
up 23.41%, the NASDAQ Composite Index was up 23.85% and the S&P 500 was up
25.31%. Since then, the figures have improved. Since inception on May 17, 1996
to December 9, 1997, NOAH FUND is up cumulatively 43.2%. From January 1, 1997 to
December 9, 1997, NOAHFUND is up 33.0%. If you had invested $10,000 on May 17,
1996, it would be worth $14,315 as of December 9, 1997 and $10,000 invested on
January 1, 1997 would be worth $13,022. 1<F1> We are happy to have you aboard
and to be able to have gotten such results in the past, however, past
performance is just that. It is our long term philosophy and socially
responsible investing that we hope you will continue to agree with. There is no
time like the present to get involved in dollar cost averaging.2<F2>
After an arduous search, we have obtained as our Sub-Investment Advisor,
Geewax, Terker and Company, who generally follow for their clients a philosophy
of being fully invested in Large Cap Long Term Growth with low risk. NOAH FUND
has been managed with the same philosophy, since its inception. John Geewax had
his BS, MBA, and Ph.D.(ABD) from the University of Pennsylvania by the time he
was 22 years of age. While teaching at the Wharton School, he developed the
investment strategy with Bruce Terker. Together, Geewax, Terker and Company
manage over $2.5 Billion. THEIR MINIMUM INVESTMENT FOR AN INDIVIDUAL IS NORMALLY
$5,000,000; HOWEVER, IN THE NOAH FUND THEIR ADVICE CAN BE OBTAINED FOR A $1,000
INVESTMENT. We are indeed blessed to have Geewax, Terker and Company actively
involved with the Management of the NOAH FUND portfolio. NOAH FUND does not
invest in alcohol, tobacco, gambling, pornography or abortion.
Your management company charges a 1% management fee and is proud of its
commitment of donating 10% of its 1% management fee to missions as a charitable
contribution. Again this year, World Vision, Inc. and Campus Crusade for Christ
International, Inc. will be the recipients. Naturally, this comes from the
management company and NOT from the FUND, so it has no effect on the monetary
value of your investments.
We are grateful to be able to serve you and believe our Large Cap Low Risk
Growth Stock strategy will continue to bring excellent results with very low
risk. We are happy to have you as an investor and hope to retain your confidence
by producing such 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 5:30
P.M. Eastern Time by calling 1-800-794-NOAH then pressing 2 when the voice comes
on. For the NOAH FUND website, which is under construction, you will be able to
get it on the Internet at "http://www.NOAHFUND.com."
If you need to know about anything further, please call me at (610) 651-0460.
Very truly yours,
/s/ William L. Van Alen, Jr.
William L. Van Alen, Jr.
President, NOAH FUND
1<F1>Past performance is, of coarse, 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.
2<F2>Dollar cost averaging is putting money in over a period of time in equal
monthly installments. By always investing the same amount, you will be
purchasing more shares when the price is low and fewer shares when the price is
high.
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*<F3> $10,000 $10,000 $10,000
7/31/96 $9,871 $9,605 $8,707
10/31/96 $10,590 $10,645 $9,851
1/31/97 $11,454 $11,924 $11,133
4/30/97 $12,097 $12,212 $10,182
7/31/97 $14,215 $14,613 $12,890
10/31/97 $13,281 $14,064 $12,899
*<F3>inception date
Past performance is not predictive of future performance.
FOR THE PERIOD ENDED OCTOBER 31, 1997
ANNUALIZED SINCE
COMMENCEMENT OF OPERATIONS
--------------------------
Noah Fund 21.4%
S&P 500 26.3%
NASDAQ Composite 19.0%
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, 1997
ASSETS:
Investments, at value (cost $820,384) $962,282
Deferred organization charges (net of amortization) 6,246
Receivable from Manager 39,629
Dividends and interest receivable 1,112
Other assets 4,074
----------
Total Assets 1,013,343
----------
LIABILITIES:
Accrued expenses and other liabilities 51,627
----------
NET ASSETS $961,716
=========
NET ASSETS CONSIST OF:
Capital stock $814,615
Accumulated undistributed net realized gain on investments 5,203
Net unrealized appreciation on investments 141,898
----------
Total Net Assets $961,716
=========
Shares outstanding (500,000,000 shares of $0.001 par
value authorized) 72,696
Net Asset Value, Redemption Price and Offering Price Per Share $13.23
======
See notes to the financial statements.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
INVESTMENT INCOME:
Dividend income (Net of foreign withholding taxes of $88) $9,061
Interest income 1,259
--------
Total investment income 10,320
--------
EXPENSES:
Management fee 6,566
Administration fee 21,458
Shareholder servicing and accounting costs 34,913
Custody fees 3,172
Federal and state registration 13,835
Professional fees 19,551
Amortization of deferred organization charges 2,042
Reports to shareholders 2,984
Distribution expense 402
Other 945
--------
Total expenses before reimbursement 105,868
Less: Reimbursement from Manager (94,353)
--------
Net Expenses 11,515
--------
NET INVESTMENT LOSS (1,195)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 5,357
Change in unrealized appreciation on investments 126,582
--------
Net realized and unrealized gain on investments 131,939
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $130,744
========
See notes to the financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
MAY 17, 1996(1)
YEAR ENDED THROUGH<F4>
OCTOBER 31, 1997 OCTOBER 31, 1996
----------------- ---------------
OPERATIONS:
Net investment income (loss) $(1,195) $854
Net realized gain on investments 5,357 151
Change in unrealized appreciation on investments 126,582 15,316
--------- ---------
Net increase in net assets from operations 130,744 16,321
--------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 438,766 449,558
Proceeds from shares issued to holders in reinvestment
of dividends 1,662 --
Cost of shares redeemed (73,472) --
--------- ---------
Net increase in net assets from capital
share transactions 366,956 449,558
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,712) --
Net realized gains (151) --
--------- ---------
Total distributions (1,863) --
--------- ---------
TOTAL INCREASE IN NET ASSETS 495,837 465,879
--------- ---------
NET ASSETS:
Beginning of period 465,879 0
--------- ---------
End of period (including undistributed net investment
income of $1,712 for the period ended
October 31, 1996) $961,716 $465,879
========= =========
(1)<F4>Commencement of operations.
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
MAY 17, 1996(1)
YEAR ENDED THROUGH<F5>
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
Per Share Data:
Net asset value, beginning of period $10.59 $10.00
Income from investment operations:
Net investment income (loss) (0.01)(2)<F6> 0.04
Net realized and unrealized gain on investments 2.69 0.55
--------- ---------
Total from investment operations 2.68 0.59
--------- ---------
Less distributions from:
Net investment income (0.04) --
Net realized gains 0.00 --
--------- ---------
Total distributions (0.04) --
--------- ---------
Net asset value, end of period $13.23 $10.59
======== ========
Total Return (3)<F7> 25.41% 5.90%
Supplemental data and ratios:
Net assets, end of period $961,716 $465,879
Ratio of expenses to average net assets (4)<F8>(5)<F9> 1.75% 1.42%
Ratio of net investment income (loss) to average
net assets (4)<F8>(5)<F9> (0.18%) 0.86%
Portfolio turnover rate 27.07% 21.61%
Average commission rate paid $0.2385 $0.2173
(1)<F5>Commencement of operations.
(2)<F6>Net investment loss per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
(3)<F7>Not annualized for the period May 17, 1996 through October 31, 1996.
(4)<F8>Annualized for the period May 17, 1996 through October 31, 1996.
(5)<F9>Without expense waivers of $94,353 and $47,931 for the periods ending
October 31, 1997 and October 31, 1996, respectively, the ratio of expenses to
average net assets would have been 16.08% and 49.81% and the ratio of net
investment (loss) to average net assets would have been (14.51)% and (47.52)%.
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
NUMBER
OF SHARES MARKET VALUE
--------- ------------
COMMON STOCKS -- 94.8%
BANKING -- 4.4%
700 NationsBank Corporation $41,912
--------
BUSINESS SERVICES -- 6.9%
900 Automatic Data Processing, Inc. 46,013
700 First Data Corporation 20,344
--------
66,357
--------
COSMETICS & SOAP -- 13.3%
600 Colgate-Palmolive Company 38,850
500 Gillette Company 44,531
650 The Procter & Gamble Company 44,200
--------
127,581
--------
CHEMICALS -- 1.8%
300 du Pont (E.I.) de Nemours & Company 17,063
--------
DRUGS -- 21.6%
700 Abbott Laboratories 42,919
700 Medtronic, Inc. 30,450
500 Merck & Co., Inc. 44,625
800 Pfizer, Inc. 56,600
600 Schering-Plough Corporation 33,637
--------
208,231
--------
ELECTRICAL EQUIPMENT -- 4.6%
850 Emerson Electric Company 44,572
--------
ELECTRONICS -- 4.5%
700 Hewlett-Packard Company 43,181
--------
ENTERTAINMENT & LEISURE -- 3.3%
700 McDonald's Corporation 31,369
--------
FINANCIAL SERVICES -- 4.5%
900 Fannie Mae 43,594
--------
FOOD & BEVERAGES -- 11.8%
700 The Coca-Cola Company 39,550
300 CPC International, Inc. 29,700
1,200 PepsiCo, Inc. 44,175
--------
113,425
--------
INSURANCE -- 6.8%
450 American International Group, Inc. 45,928
100 General Re Corporation 19,719
--------
65,647
--------
MISCELLANEOUS -- 2.8%
300 Minnesota Mining & Manufacturing Company 27,450
--------
OIL-INTERNATIONAL -- 2.2%
400 Royal Dutch Petroleum Company - NYS 21,050
--------
RETAIL -- 3.5%
600 Home Depot, Inc. 33,375
--------
SAVINGS & LOAN -- 2.8%
700 Federal Home Loan Mortgage Corporation 26,512
--------
Total Common Stocks (Cost $769,421) 911,319
--------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENTS -- 5.3%
VARIABLE RATE DEMAND NOTES*<F10> -- 5.3%
$26,749 Johnson Controls, Inc., 5.185% 26,749
24,214 Wisconsin Electric Power Co., 5.2054% 24,214
--------
Total Short-Term Investments (Cost $50,963) 50,963
--------
Total Investments -- 100.1% (Cost $820,384) 962,282
--------
Other Assets and Liabilities -- (0.1%) (566)
--------
TOTAL NET ASSETS -- 100.0% $961,716
========
NYS - New York Shares
* -<F10>Variable rate demand notes are considered short-term obligations and
are payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of October 31, 1997.
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 1997
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 primary 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. On December 12, 1996,
one of the original stockholders redeemed his shares which consisted of 50
percent of the seed money. This stockholder's proceeds were reduced by 50
percent of the unamortized deferred organization asset ($15,756 at that time).
The unamortized deferred organization asset was reduced to $7,878 after the
adjustment. The adjusted balance will be amortized over the remaining
amortization period, not to exceed sixty months from the Fund's commencement of
operations.
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 on 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 were as follows:
MAY 17, 1996
YEAR ENDED THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
--------------- ----------------
Shares sold 35,309 44,000
Shares issued to holders in reinvestment
of dividends 152 --
Shares redeemed (6,765) --
------- -------
Net increase 28,696 44,000
======= =======
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the year ended October 31, 1997, were as follows:
Purchases:
U.S. Government $26,744
Other 475,057
Sales:
U.S. Government 3,682
Other 169,876
At October 31, 1997, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation $163,434
(Depreciation) (23,064)
-------
Net appreciation on investments $140,370
=======
At October 31, 1997, the cost of investments for federal income tax purposes
was $821,912.
For the year ended October 31, 1997, 81.1% of the ordinary distributions paid
qualifies for the dividend received deduction available to corporate
stockholders.
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 may be terminated upon 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. See note 6
below.
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 Distribution Plan expired on March
1, 1997 as it was not renewed by the Board of Directors of the Fund. At October
31, 1997, the amount accrued but unpaid pursuant to the Distribution Plan
amounted to $402.
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 year ended October 31, 1997, the Fund incurred $11,550 for
such services.
6. SUBSEQUENT EVENTS
The sub-advisory agreement between Polestar Management and Rittenhouse will
be terminated. Polestar Management plans to replace Rittenhouse with Geewax,
Terker and Company in January 1998.
Effective January 1, 1998, Declaration Service Company will replace Firstar
Trust Company as transfer agent, administrator and accounting services agent for
the Fund. Declaration Distributors, Inc. will act as underwriter/distributor of
the Fund. CoreStates Bank will replace Firstar Trust Company as custodian for
the Fund.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of The Noah Investment Group, Inc.:
We have audited the accompanying statement of assets and liabilities of The Noah
Fund (the "Fund"), a portfolio of The Noah Investment Group, Inc., (a Maryland
Corporation), including the schedule of investments, as of October 31, 1997, the
related statement of operations for the year then ended, and the statements of
changes in net assets for the year ended October 31, 1997 and the period from
May 17, 1996 (commencement of operations) through October 31, 1996 and the
financial highlights for each of the periods presented. These financial
statements are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 The
Noah Fund as of October 31, 1997, the results of its operations for the year
then ended, the changes in its net assets for the year ended October 31, 1997
and the period from May 17, 1996 (commencement of operations) through October
31, 1996, and its financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
November 19, 1997.
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
