NOAH FUND
1-800-794-6624
1-800-794-NOAH
www.noahfund.com
Annual Report
October 31, 2000
<PAGE>
December 6, 2000
Dear Fellow Shareholder:
Once again, I thank you for your confidence and investment in the NOAH FUND. The
last few months of the market have been excruciating. As of the end of our
fiscal year, October 31, 2000, our total net assets were $18.5 million from
$10.1 million a year ago.
According to our investment advisor, Geewax, Terker & Company, the downturn has
been mainly due to two economic factors: the high price of oil and the increase
in technology inventories; and one political factor, which obviously affects the
economy: the raising of interest rates six times in the last year and a half,
slowing economic growth therefore, slowing consumer spending therefore, slowing
earnings to corporations, so as to decrease the rate of earnings growth, and
ultimately affecting the price of our portfolio. Mr. Greenspan has now indicated
the economy needs a loosening of credit, which caused a one-day rally.
Geewax, Terker & Company generally follows a philosophy of investing in Large
Cap Growth Stocks for the Long Term, while remaining fully invested. NOAH FUND
is managed with the same philosophy. We are fortunate indeed to have John Geewax
actively involved with the investment management of our NOAH FUND portfolio.
Your management company, Polestar Management Company, is committed to donating
10% of its 1% management fee as a tithe to "missions, discipleship and needs of
the poor." This past year, World Vision, Inc., Urban Family Council, Salvation
Army, Campus Crusade for Christ International, Inc., Modesto Pregnancy Center,
and Chuck Colson's Prison Fellowship International, were our tithe recipients.
Naturally, this tithe comes from the management company and NOT from the Fund,
so it has no effect on the monetary value of your investment.
We are grateful to be able to serve you, and in this way serve our Lord. We
believe our Large Cap Low Risk Growth Stock strategy will continue to bring
above average results over the long term with a modicum of risk. NOAH FUND
believes that long-term investing is the best plan of action.
We are pleased to announce that you may now directly access the status of your
own NOAH FUND account online. From the home page of Noah's web site,
www.noahfund.com, click on the "Accounts" button. You can also access NOAH's
daily Net Asset Value on the Internet by looking up the NOAH FUND symbol "NOAHX"
on most financial web sites. Or, if you like, you may call your broker or the
distributor of NOAH FUND, AmeriMutual Fund Distributors, Inc., at 1-800-794-NOAH
(6624).
With the market down, this may be a time to get involved, particularly on a
dollar cost averaging basis, one of the most useful tools available to the
individual investor. If you would like to know further, please feel free to call
me at (610) 651-0460.
In Jesus' Name,
/s/ William L. Van Alen, Jr
William L. Van Alen, Jr.
President
NOAH FUND
<PAGE>
THE NOAH FUND: TOTAL RETURN VS.
THE S&P 500 TOTAL RETURN AND NASDAQ COMPOSITE INDEX
--------------------------------------------------------------------------------
[graph deleted here]
For the period ended October 31, 2000
Annualized Since
Commencement of Operations
--------------------------
Noah Fund .................... 22.72%
S&P 500 ...................... 20.38%
NASDAQ Composite ............. 25.13%
The Standard & Poor's 500 Total Return Index (S&P 500 Total Return) 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.
3
<PAGE>
<TABLE>
<CAPTION>
THE NOAH FUND
SCHEDULE OF INVESTMENTS (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
------ --------------
COMMON STOCKS - 91.52%
ADVERTISING - 0.97%
<S> <C> <C>
Catalina Marketing Corp. .............................. 240 $ 9,420
Interpublic Group of Companies, Inc. .................. 1,500 64,406
Omnicom Group, Inc. ................................... 1,000 92,250
TMP Worldwide, Inc.* .................................. 200 13,922
-------
179,998
-------
AUTOMOTIVE & RELATED - 0.30%
Harley-Davidson, Inc. ................................. 1,150 55,416
-------
BANKING - 0.43%
Investors Financial Services Corp. .................... 1,100 78,856
-------
COMMERCIAL SERVICES - 0.31%
Concord EFS, Inc.* .................................... 1,200 49,575
Convergys Corp.* ...................................... 200 8,713
-------
58,288
-------
COMMUNICATION SERVICES - 0.23%
AT&T Wireless Group* .................................. 70 1,746
Kana Communications, Inc.* ............................ 30 705
Palm, Inc.* ........................................... 741 39,689
-------
42,140
-------
COMPONENTS - 3.18%
JDS Uniphase Corp.* ................................... 4,050 329,569
Metromedia Fiber Network, Inc.* ....................... 1,300 24,700
Microchip Technology, Inc.* ........................... 600 18,975
Millipore Corp. ....................................... 780 40,950
PE Biosystems Group ................................... 1,500 175,500
-------
589,694
-------
COMPUTER HARDWARE - 8.19%
Dell Computer Corp. ................................... 5,130 151,335
EMC Corp.* ............................................ 3,980 354,469
Hewlett-Packard Co. ................................... 2,760 128,168
Linear Technology Corp.* .............................. 1,500 96,844
Sun Microsystems, Inc.* ............................... 4,020 445,718
Symbol Technologies, Inc. ............................. 1,300 59,069
Veritas Software Corp.* ............................... 2,000 282,030
---------
1,517,633
---------
See notes to financial statements.
4
<PAGE>
THE NOAH FUND
SCHEDULE OF INVESTMENTS (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
------ --------------
COMPUTER SERVICES - 4.43%
Akamai Technologies, Inc.* ............................ 170 $ 8,670
Art Technology Group, Inc.* ........................... 470 29,492
Bea Systems, Inc.* .................................... 2,100 150,675
CMGI, Inc.* ........................................... 1,050 17,719
Cadence Design Systems, Inc. .......................... 40 1,027
Comverse Technology, Inc.* ............................ 890 99,458
E.piphany, Inc.* ...................................... 60 5,407
InfoSpace.com, Inc.* .................................. 4,390 88,349
Mercury Interactive Corp.* ............................ 2,000 222,000
Phone.com, Inc.* ...................................... 320 29,620
Quest Software, Inc.* ................................. 80 3,495
Safeguard Scientifics, Inc.* .......................... 300 4,612
Silicon Storage Tech .................................. 240 5,460
Tibco Software, Inc.* ................................. 70 4,410
VeriSign, Inc.* ....................................... 470 62,040
Vitria Technology, Inc.* .............................. 200 5,375
Yahoo!, Inc.* ......................................... 1,400 82,075
---------
819,884
---------
COMPUTER SOFTWARE - 13.64%
Adobe Systems, Inc. ................................... 800 60,850
Advent Software, Inc.* ................................ 800 47,850
Agile Software Corp.* ................................. 130 9,799
America Online, Inc.* ................................. 13,760 693,917
BroadVision, Inc.* .................................... 4,300 127,925
Exodus Communications, Inc.* .......................... 1,800 60,413
I2 Technologies, Inc.* ................................ 500 85,000
Inktomi Corp.* ........................................ 500 31,719
Interwoven, Inc.* ..................................... 700 70,525
Intuit, Inc.* ......................................... 700 43,006
Macrovision Corp.* .................................... 500 36,438
Micromuse, Inc.* ...................................... 650 110,297
Microsoft Corp.* ...................................... 3,570 245,884
Oracle Corp.* ......................................... 22,900 755,700
Rational Software Corp.* .............................. 2,200 131,313
Symantec Corp.* ....................................... 420 16,406
---------
2,527,042
---------
COMPUTER SYSTEMS - 1.81%
Brocade Communication Systems, Inc.* .................. 200 45,475
International Business Machines Corp. ................. 2,670 262,995
Redback Networks, Inc.* ............................... 200 21,288
VerticalNet, Inc.* .................................... 180 5,020
---------
334,778
---------
See notes to financial statements.
5
<PAGE>
THE NOAH FUND
SCHEDULE OF INVESTMENTS (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
------ --------------
DATA PROCESSING - 0.04%
Acxiom Corp.* ......................................... 170 $ 6,842
---------
DISTRIBUTION/WHOLESALE - 0.02%
Fastenal Co. .......................................... 50 2,872
---------
DIVERSIFIED CONGLOMERATES - 1.49%
Corning, Inc. ......................................... 3,600 275,400
---------
EDUCATION/SCHOOLS - 0.01%
Apollo Group, Inc. - Cl A* ........................... 50 1,956
---------
ELECTRONIC EQUIPMENT - 1.51%
Amphenol Corp.-Cl A* .................................. 800 51,400
Maxim Integrated Products, Inc.* ...................... 1,400 92,838
Solectron Corp.* ...................................... 440 19,360
Technitrol, Inc. ...................................... 400 44,350
Vitesse Semiconductor Corp.* .......................... 1,020 71,336
---------
279,284
---------
ELECTRONIC-SEMICONDUCTORS - 17.31%
Analog Devices, Inc.* ................................. 2,200 143,000
Applied Materials, Inc.* .............................. 5,010 266,156
Applied Micro Circuits Corp.* ......................... 5,000 381,875
Atmel Corp.* .......................................... 1,800 26,887
Broadcom Corp. - Cl A* ................................ 780 173,453
Fairchild Semiconductor International, Inc.* .......... 50 1,053
Intel Corp. ........................................... 21,820 981,900
International Rectifier Corp.* ........................ 500 22,313
KLA-Tencor Corp.* ..................................... 700 23,669
Lattice Semiconductor Corp.* .......................... 620 18,096
Micron Technology, Inc.* .............................. 300 10,425
Novellus Systems, Inc.* ............................... 900 36,844
PMC-Sierra, Inc.* ..................................... 2,250 381,375
QLogic Corp.* ......................................... 1,800 174,150
SDL, Inc.* ............................................ 900 233,325
Texas Instruments, Inc. ............................... 2,470 121,184
Xilinx, Inc.* ......................................... 2,900 210,069
---------
3,205,774
---------
ENTERTAINMENT & LEISURE - 0.34%
AT&T Corp. - Liberty Media Cl A* ...................... 3,500 63,000
---------
FIBER OPTICS .......................................... - 0.43
Avanex Corp.* ......................................... 40 4,062
Finisar Corp.* ........................................ 1,570 45,236
Sycamore Networks, Inc.* .............................. 490 30,993
---------
80,291
---------
See notes to financial statements.
6
<PAGE>
THE NOAH FUND
SCHEDULE OF INVESTMENTS (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
------ --------------
FINANCIAL SERVICES - 2.83%
AmeriCredit Corp.* .................................... 2,100 $ 56,437
American Express Co. .................................. 2,100 126,000
Citigroup, Inc. ....................................... 2,682 141,140
Knight Trading Group, Inc.* ........................... 60 1,796
MBNA Corp. ............................................ 1,910 71,744
Paychex, Inc. ......................................... 770 43,649
Providian Financial Corp. ............................. 185 19,240
SEI Investments Co. ................................... 700 63,525
---------
523,531
---------
FOOD & BEVERAGE - 1.45%
Keebler Foods Co. ..................................... 200 8,100
Pepsico, Inc. ......................................... 3,780 183,094
Quaker Oats Co. ....................................... 110 8,972
SYSCO Corp. ........................................... 1,300 67,844
---------
268,010
---------
HEALTHCARE SERVICES - 0.30%
Cybear Group* ......................................... 29 20
First Health Group Corp.* ............................. 1,040 40,560
Medarex, Inc.* ........................................ 260 15,893
---------
56,473
---------
INSTRUMENTS-SCIENTIFIC - 0.26%
Waters Corp.* ......................................... 670 48,617
---------
MANUFACTURING - 0.07%
Polycom, Inc.* ........................................ 90 5,850
Power-One, Inc.* ...................................... 110 7,803
---------
13,653
---------
MEDICAL - DRUGS - 6.04%
AmeriSource Health Corp. - Cl A* ...................... 1,400 60,812
Celgene Corp.* ........................................ 100 6,437
IVAX Corp.* ........................................... 450 19,575
King Pharmaceuticals, Inc.* ........................... 110 4,929
Lilly (Eli) & Co. ..................................... 410 36,644
Merck & Co., Inc. ..................................... 11,020 991,111
---------
1,119,508
---------
MEDICAL PRODUCTS - 2.50%
Allergan, Inc. ........................................ 1,200 100,875
Amgen, Inc.* .......................................... 2,400 139,050
Biomet, Inc. .......................................... 1,050 37,997
Celera Genomics Group* ................................ 600 40,500
Human Genome Sciences, Inc.* .......................... 800 70,713
Medtronic, Inc. ....................................... 1,025 55,670
See notes to financial statements.
7
<PAGE>
THE NOAH FUND
SCHEDULE OF INVESTMENTS (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
------ --------------
MEDICAL PRODUCTS - (continued)
Quest Diagnostics, Inc.* .............................. 150 $ 14,438
Sybron International Corp.* ........................... 160 3,960
---------
463,203
---------
MULTI-LINE INSURANCE - 0.13%
American International Group .......................... 240 23,520
---------
NETWORKING PRODUCTS - 9.30%
3Com Corp.* ........................................... 500 8,875
Cisco Systems, Inc.* .................................. 22,848 1,230,936
Extreme Networks, Inc.* ............................... 600 49,762
Foundry Networks, Inc.* ............................... 150 9,966
Juniper Networks, Inc.* ............................... 1,160 226,200
Network Appliance, Inc.* .............................. 1,550 184,450
Network Associates, Inc.* ............................. 450 8,663
Turnstone Systems, Inc.* .............................. 200 4,250
---------
1,723,102
---------
OIL, ENERGY & NATURAL GAS - 0.44%
BJ Services Co.* ...................................... 100 5,244
Devon Energy Corp. .................................... 760 38,304
EOG Resources, Inc. ................................... 340 13,387
Smith International, Inc.* ............................ 350 24,675
---------
81,610
---------
PHARMACEUTICALS - 0.36%
Andrx Corp.* .......................................... 200 14,400
Forest Laboratories, Inc.* ............................ 400 53,000
---------
67,400
---------
PIPELINES - 0.69%
Dynegy, Inc.- Cl A .................................... 1,158 53,630
Enron Corp ............................................ 900 73,856
---------
127,486
---------
PRINTING - 0.12%
Valassis Communications, Inc.* ........................ 800 22,200
---------
PUBLISHING - 0.01%
Reader's Digest Association, Inc. - Cl A .............. 50 1,834
---------
RETAIL STORES - 7.32%
BJ's Wholesale Club, Inc.* ............................ 1,000 32,937
Bed Bath & Beyond, Inc.* .............................. 2,000 51,625
CVS Corp. ............................................. 2,050 108,522
See notes to financial statements.
8
<PAGE>
THE NOAH FUND
SCHEDULE OF INVESTMENTS (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
------ --------------
RETAIL STORES - (continued)
Costco Wholesale Corp.* ............................... 530 $ 19,411
Dollar Tree Stores, Inc.* ............................. 700 27,387
Family Dollar Stores, Inc. ............................ 400 7,775
Home Depot, Inc. ...................................... 8,950 384,850
Kohl's Corp.* ......................................... 900 48,769
Radioshack Corp. ...................................... 1,400 83,475
Staples, Inc.* ........................................ 1,175 16,744
Tiffany & Co. ......................................... 200 8,538
Wal-Mart Stores, Inc. ................................. 12,480 566,280
---------
1,356,313
---------
TECHNOLOGY- 0.28%
Plexus Corp. .......................................... 800 50,450
---------
TELECOMMUNICATIONS - 4.69%
ADC Telecommunications, Inc.* ......................... 4,000 85,500
Advanced Fibre Communications, Inc.* .................. 280 9,117
Aether Systems, Inc.* ................................. 20 1,612
Allegiance Telecom, Inc.* ............................. 700 22,006
Digital Lightwave, Inc.* .............................. 40 2,028
Ditech Communications Corp.* .......................... 80 2,755
Internap Network Services* ............................ 130 2,080
Level 3 Communications, Inc.* ......................... 1,350 64,378
MRV Communications, Inc.* ............................. 800 31,600
Newport Corp. ......................................... 400 45,681
Nextel Communications, Inc. - Cl A* ................... 900 34,594
Nortel Networks Corp. ................................. 3,500 159,250
Powerwave Tech, Inc.* ................................. 290 13,956
Qwest Communications International, Inc. - Cl A* ...... 2,440 118,645
SBC Communications, Inc. .............................. 1,260 72,686
VoiceStream Wireless Corp.* ........................... 400 52,600
WorldCom, Inc. ........................................ 6,340 150,575
---------
869,063
---------
TRANSPORTATION AND EQUIPMENT - 0.05%
Expeditors International of Washington, Inc. .......... 180 9,338
---------
UTILITIES - 0.04%
Calpine Corp.* ........................................ 90 7,104
---------
See notes to financial statements.
9
<PAGE>
THE NOAH FUND
SCHEDULE OF INVESTMENTS (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
------ --------------
TOTAL COMMON STOCKS (Cost $15,229,529) .............. $ 16,951,563
--------------
MISCELLANEOUS ASSETS - 8.45%
Evergreen Money Market Trust Cl Y (Cost $1,565,687).. 1,565,687 1,565,687
--------------
TOTAL INVESTMENTS (Cost $16,795,216) ......... 99.97% 18,517,250
Other Assets less Liabilities . .............. 0.03% 5,071
------ -------------
NET ASSETS ...................................100.00% $ 18,522,321
====== =============
<FN>
* Non-income producing security.
</FN>
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
THE NOAH FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
--------------------------------------------------------------------------------
Assets:
<S> <C>
Investments, at market (identified cost $16,795,216) ......... $ 18,517,250
Receivables:
Investment securities sold ................................... 1,340
Dividends and interest ....................................... 6,565
Funds shares sold ............................................ 143,454
Deferred organization costs .................................. 960
Prepaid expenses ............................................. 12,912
------------
Total assets ................................................. 18,682,481
------------
Liabilities:
Payables:
Due to advisor ............................................... 15,615
Distribution fees ............................................ 3,893
Investment securities purchased .............................. 121,188
Fund shares repurchased ...................................... 4,663
Accrued expenses ............................................. 14,801
------------
Total liabilities ............................................ 160,160
------------
Net Assets ........................................................... $ 18,522,321
============
Net Assets Consist of:
Common Stock ................................................. 824
Additional capital paid-in ................................... 17,573,424
Accumulated realized loss on investments ..................... (773,961)
Net unrealized appreciation on investments ................... 1,722,034
------------
Total Net Assets ............................................. $ 18,522,321
============
Shares outstanding (500,000,000 shares of $0.001 par value authorized) 823,669
============
Net Asset Value, offering and redemption price per share ............. $ 22.49
============
</TABLE>
See notes to financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
THE NOAH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
Investment Income:
<S> <C>
Interest ........................................... $ 52,713
Dividends .......................................... 36,304
------
Total investment income ............................ 89,017
------
Expenses:
Management fees .................................... 172,679
Administration fees ................................ 35,133
Distribution fees .................................. 43,170
Accounting fees .................................... 15,231
Custodian fees ..................................... 8,544
Amortization of organizational expenses ............ 1,753
Professional fees .................................. 14,217
Registration fees .................................. 19,999
Transfer agency fees ............................... 25,089
Reports to shareholders ............................ 17,655
Other .............................................. 26,452
--------
Total expenses ..................................... 379,922
--------
Net investment loss ................................ (290,905)
--------
Realized & unrealized loss on investments:
Net realized loss on investments ................... (772,288)
Net change in unrealized appreciation on investments 570,385
--------
Net realized & unrealized loss on investments ...... (201,903)
--------
Net decrease in net assets resulting from operations ....... $(492,808)
=========
</TABLE>
See notes to financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
THE NOAH FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the For the
year ended ended year
October 31, 2000 October 31, 1999
---------------- ----------------
Operations:
<S> <C> <C>
Net investment loss ........................ $ (290,905) $ (100,678)
Net realized gain (loss) on investments .... (772,288) 739,622
Net change in unrealized appreciation
on investments ..................... 570,385 695,503
------------ ------------
Net increase (decrease) in net assets
resulting from operations .......... (492,808) 1,334,447
------------ ------------
Distributions to shareholders from:
Net realized gains ......................... (697,670) (68,298)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold .................. 10,855,291 6,727,306
Proceeds from shares issued to
holders in reinvestment of dividends 672,006 66,275
Cost of shares redeemed .................... (1,912,332) (552,301)
------------ ------------
Net increase in net assets from fund
share transactions ................. 9,614,965 6,241,280
------------ ------------
Increase in net assets ..................... 8,424,487 7,507,429
Net Assets:
Beginning of period ........................ 10,097,834 2,590,405
------------ ------------
End of period .............................. $ 18,522,321 $ 10,097,834
============ ============
</TABLE>
See notes to financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
THE NOAH FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.
May 17, 1996(1)
Year Ended Year Ended Year Ended Year Ended through
October 31, 2000 October 31, 1999 October 31, 1998 October 31, 1997 October 31,1996
---------------- ---------------- --------------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 23.17 $ 17.31 $ 13.23 $ 10.59 $ 10.00
---------- --------- --------- ------- -------
Investment Operations:
Net investment income (loss) ........... (0.46)(2) (0.13)(2) (0.10)(2) (0.01)(2) 0.04
Net realized and unrealized
gain on investments ............ 1.37 6.43 4.27 2.69 0.55
---------- --------- --------- ------- -------
Total from investment operations 0.91 6.30 4.17 2.68 0.59
---------- --------- --------- ------- -------
Distributions:
From net investment income ............. 0.00 0.00 0.00 (0.04) 0.00
From net realized capital gains ........ (1.59) (0.44) (0.09) 0.00 0.00
---------- --------- --------- ------- -------
Total distributions ............ (1.59) (0.44) (0.09) (0.04) 0.00
---------- --------- --------- ------- -------
Net asset value, end of period ......... $ 22.49 $ 23.17 $ 17.31 $ 13.23 $ 10.59
========== ========= ========= ======= =======
Total Return ........................... 3.98% 37.06% 31.65% 25.41% 5.90%(3)
Ratios/supplemental data:
Net assets, end of period (in 000's) ... $ 18,522 $ 6,472 $ 2,590 $ 961 $ 466
Ratio of expenses
to average net assets .......... 2.20% 2.72% 4.73% 16.08% 49.81%
Ratio of expenses to average net
assets, net of reimbursement ... 2.20% 2.15% 1.75% 1.75% 1.42%
Ratio of net investment income (loss) to
average net assets ............. (1.68)% (2.13)% (3.85)% (14.51)% (47.52)%
Ratio of net investment income (loss)
to average net assets, net of
reimbursement .................. (1.68)% (1.56)% (0.86)% (0.18)% 0.86%
Portfolio turnover rate ................ 49.76% 81.53% 66.49% 27.07% 21.61%(3)
<FN>
(1) Commencement of operations.
(2) Net investment loss per share is calculated using ending balances prior to
the consideration of adjustments for permanent book and tax differences
(3) Not annualized
</FN>
</TABLE>
See notes to financial statements.
14
<PAGE>
THE NOAH FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Noah Fund (the "Fund") was organized as a series of The Noah Investment
Group, Inc. (the "Company") incorporated under the laws of the state of Maryland
on December 16, 1992. The Company is registered as a no-load, open-end
diversified management investment company 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 Securities and Exchange Commission (the
"SEC") on May 10, 1996 and commenced operations on May 17, 1996.
The following is a summary of significant accounting policies consistently
followed by the Fund.
a) Investment Valuation - Equity 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 net 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 from 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
additional capital paid-in.
15
<PAGE>
THE NOAH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
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 utilizing an identified cost basis. 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.
f) RECLASSIFICATIONS - In accordance with SOP 93-2, the Fund has recorded a
reclassification in the capital accounts. As of October 31, 2000, the
Fund recorded permanent book/tax differences of $290,905 from net
investment loss to Paid-in capital. This reclassification has no impact
on the net asset value of the Fund and is designed generally to present
undistributed income and net realized gains on a tax basis which is
considered to be more informative to shareholders.
2. ADVISORY FEE AND OTHER RELATED TRANSACTIONS
The Fund has entered into a Management Agreement with Polestar Management
Company (the "Manager"). Pursuant to the Management Agreement, the Manager is
responsible for the day-to-day business affairs, including the review and
supervision of the Fund investment program and for administrative services. For
its services to the Fund, the Manager receives an annual fee, payable monthly,
calculated at an annual rate of 1.00% of the Fund's average daily net assets.
The Manager voluntarily agreed to reimburse its management fee and other
expenses to the extent that the total operating expenses of the Fund (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 2.20% of the average net assets of the Fund. This
voluntary reimbursement may be terminated upon approval of the Board of
Directors.
The Manager has entered into a Sub-Advisory Agreement with Geewax, Terker &
Company (the "Sub-Advisor"). The Sub-Advisor is responsible for the day-to-day
recommendations regarding the investment and reinvestment of the Fund's net
assets. Under the term of the Sub-Advisory Agreement, the Manager compensates
the Sub-Advisor a fee of $1.00 per annum until the average net assets of the
Fund exceed $20,000,000. Upon reaching that level, the Sub-Advisor will receive
a monthly fee at the annual rate of 0.75% of the average daily net assets in
excess of $20 million to $50 million; 0.50% of such net assets in excess of $50
million to $100 million; and 0.35% of such net assets in excess of $100 million.
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
16
<PAGE>
THE NOAH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
Fund's shares, including but not limited to, advertising, printing of
prospectuses and financial reports for other than existing shareholders,
preparation and distribution of advertising materials and sales literature, and
payments to dealers and shareholder servicing agents. For the year ended October
31, 2000, the Fund incurred $43,170 in distribution fees pursuant to the
Distribution Plan.
Martin V. Miller, Esq., an Officer of the Fund, furnishes legal services to the
Fund. For the year ended October 31, 2000, there were no such fees incurred by
the Fund.
Certain directors and officers of the Fund are directors and officers of the
Manager.
3. CARRYOVERS
At October 31, 2000, the Fund had net capital loss carryforwards of
approximately $766,000 expiring in 2008.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
Year Ended October 31,
2000 1999
---- ----
Shares sold 434,148 307,489
Shares issued to holders in
reinvestment of dividends 30,148 3,596
Shares redeemed (76,386) (24,987)
------- -------
Net increase 387,910 286,098
======= =======
5. INVESTMENT TRANSACTIONS
During the year ended October 31, 2000, purchases and sales of investment
securities, excluding short-term investments, were as follows:
Purchases $ 16,213,603
Sales $ 8,007,342
At October 31, 2000, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation $4,006,892
Depreciation (2,284,858)
----------
Net appreciation
on investments $1,722,034
==========
At October 31, 2000, the cost of investments for federal income tax purposes was
$16,801,035.
17
<PAGE>
THE NOAH FUND
INDEPENDENT AUDITOR'S REPORT OCTOBER 31, 2000
--------------------------------------------------------------------------------
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 series of The Noah Investment Group, Inc., including the
schedule of investments, as of October 31, 2000, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the three years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the year
ended October 31, 1997 and the period from May 17, 1996 (commencement of
operations) through October 31, 1996 were audited by other auditors whose
report, dated November 19, 1997 expressed an unqualified opinion on this
information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Noah Fund as of October 31, 2000, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended, in conformity with generally accepted accounting
principles.
Abington, Pennsylvania Sanville & Company
December 5, 2000 Certified Public Accountants
18
<PAGE>
Investment and Management Services
Polestar Management Company
Geewax Terker & Company
Custodian
First Union National Bank
Transfer, Dividend Disbursing
And Accounting Services Agent
American Data Services, Inc.
Auditors
Sanville & Company
