THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1996
(Unaudited)
Value
Shares (note 1)
---------- ----------
COMMON STOCKS - 91.73%
Biopharmaceuticals - 1.88 %
(a) Amgen, Inc. 800 $50,500
----------
Chemicals - 1.69%
Hanna (M.A.) Company 1,975 45,177
----------
Commercial Services - 3.51%
Equifax, Inc. 3,550 94,074
----------
Computers - 5.82%
(a) Bay Networks 2,200 59,950
EMC Corporation 2,950 66,744
Hewlett-Packard Company 600 29,171
----------
155,865
----------
Computer Software & Services - 9.81 %
(a) Cisco Systems, Inc. 1,400 86,800
(a) Microsoft Corporation 300 39,563
(a) Oracle Corporation 1,325 56,395
(a) Sterling Software, Inc. 1,050 80,194
----------
262,952
----------
Electrical Equipment - 2.09%
(a) Vishay Intertechnology, Inc. 2,403 55,869
----------
Electronics - 5.62%
Belden, Inc. 300 8,700
Motorola, Inc. 900 46,463
(a) Solectron Corporation 1,950 95,550
----------
150,713
----------
Entertainment - 3.13%
Carnival Corporation 2,710 84,009
----------
Financial - Banks, Money Center - 2.90%
Chase Manhattan Corporation 970 77,599
----------
Financial - Savings/Loans/Thrift - 2.45%
(a) Glendale Federal Bank FSB 3,700 65,674
----------
Financial Services - 6.35%
Green Tree Financial Corporation 2,350 92,238
T. Rowe Price Associates 2,400 78,000
----------
170,238
----------
Household Products & Housewares - 2.51%
Newell Company 2,250 67,219
----------
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1996
(Unaudited)
Value
Shares (note 1)
------- -----------
COMMON STOCKS - (Continued)
Insurance - Life & Health - 2.92%
AFLAC, Inc. 2,162 $78,373
-----------
Medical - Hospital Management & Service - 3.11%
(a) Health Care and Retirement Corporation 2,050 48,688
Manor Care, Inc. 900 34,538
-----------
83,226
-----------
Mining - 1.26%
Minerals Technologies, Inc. 900 33,638
-----------
Miscellaneous - Manufacturing - 2.48%
Pall Corporation 2,350 66,388
-----------
Pharmaceuticals - 5.24%
Cardinal Health, Inc. 1,050 86,756
(a) R.P. Scherer Corporation 1,100 53,625
-----------
140,381
-----------
Real Estate - 1.75%
The Rouse Company 1,800 46,800
-----------
Real Estate Investment Trust - 4.42%
General Growth Properties 2,250 56,250
Post Properties, Inc. 1,700 62,263
-----------
118,513
-----------
Restaurants & Food Service - 6.06%
(a) Cheesecake Factory (The) 3,200 73,600
Cracker Barrel Old Country Store, Inc. 3,900 88,725
-----------
162,325
-----------
Retail - Apparel - 1.70%
Nordstrom, Inc. 1,200 45,600
-----------
Retail - Department Stores - 2.85%
Dollar General Corporation 2,437 76,461
-----------
Retail - Drug Stores - 2.30%
(a) Revco D.S., Inc. 2,100 61,688
-----------
Retail - Specialty Line - 5.80%
(a) AutoZone, Inc. 3,200 93,200
Home Depot, Inc. 1,100 62,563
-----------
155,763
-----------
Telecommunications Equipment - 1.50%
(a) DSC Communications Corporation 1,600 40,300
-----------
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1996
(Unaudited)
Value
Shares (note 1)
---------- -----------
COMMON STOCKS - (Continued)
Utilities - Gas - 2.58%
MCN Corporation 2,550 $69,169
-----------
Total Common Stocks (Cost $1,973,683) 2,458,514
-----------
Principal
Amount
----------
REPURCHASE AGREEMENT (b) - 8.42%
Wachovia Bank $225,540 225,540
-----------
5.75%, due October 1, 1996
(Cost $225,540)
Total Value of Investments (Cost $2,199,223 (c)) 100.15% 2,684,054
Liabilities In Excess of Other Assets (0.15)% (4,123)
------- -----------
Net Assets 100.00% $2,679,931
======= ===========
(a) Non-income producing investment.
(b) The repurchase agreement is fully collateralized by U. S.
government and/or agency obligations based on market prices at
the date of the portfolio. The investment in the repurchase
agreement is through participation in a joint account with other
funds administered by The Nottingham Company.
(c) 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 $512,406
Unrealized depreciation (27,575)
-------------
Net unrealized appreciation $484,831
=============
See accompanying notes to financial statements
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $2,199,223) $2,684,054
Cash 14,921
Interest receivable 1,117
Dividends receivable 1,309
Receivable for investments sold 6,301
Reserve premium 1,487
Prepaid expenses 8,686
Due from advisor (note 2) 3,496
----------
Total assets 2,721,371
----------
LIABILITIES
Accrued expenses 358
Payable for investment purchases 37,906
Distributions payable 3,176
----------
Total liabilities 41,440
----------
NET ASSETS
(applicable to 159,001 Institutional Class shares outstanding;
unlimited shares of no par value beneficial interest authorized) $2,679,931
==========
NET ASSET VALUE AND REPURCHASE PRICE PER INSTITUTIONAL CLASS SHARE
($2,679,931 net assets (divided by) 159,001 shares) $16.85
==========
NET ASSETS CONSIST OF
Paid-in capital $2,054,223
Undistributed net investment income 187
Undistributed net realized gain on investments 140,690
Net unrealized appreciation on investments 484,831
----------
$2,679,931
==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF OPERATIONS
Period ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income
Dividends $10,429
Interest 6,868
---------
Total income 17,297
---------
Expenses
Fund accounting fees (note 2) 10,528
Investment advisory fees (note 2) 7,596
Professional fees 5,404
Fund administration fees (note 2) 2,922
Custody fees 2,624
Registration and filing administration fees 2,190
Other fees 2,072
Securities pricing fees 1,647
Shareholder recordkeeping fees 289
Trustee fees and meeting expenses 2,816
Registration and filing expenses 2,708
Other operating expenses 2,057
Shareholder servicing expenses 1,706
Printing expenses 458
---------
Total expenses 45,017
---------
Less:
Expense reimbursements (note 2) (23,405)
Investment advisory fees waived (note 2) (7,596)
---------
Net expenses 14,016
---------
Net investment income 3,281
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 13,977
Increase in unrealized appreciation on investments 145,440
---------
Net realized and unrealized gain on investments 159,417
---------
Net increase in net assets resulting from operations $162,698
=========
</TABLE>
See accompanying notes to financial statements
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
Period ended Year ended
September 30, March 31,
1996 1996
------------- -----------
<S> <C>
INCREASE IN NET ASSETS
Operations
Net investment income $ 3,281 $ 82
Net realized gain from investment transactions 13,977 162,208
Increase in unrealized appreciation on investments 145,440 224,377
------------ -----------
Net increase in net assets resulting from operations 162,698 386,667
------------ -----------
Distributions to shareholders from
Net investment income (3,176) (3,170)
Net realized gain from investment transactions 0 (29,243)
------------ -----------
Decrease in net assets resulting from distributions (3,176) (29,243)
------------ -----------
Capital share transactions
Increase in net assets resulting from
capital share transactions (a) 554,547 478,418
------------ -----------
Total increase in net assets 714,069 835,842
NET ASSETS
Beginning of period 1,965,862 1,130,020
----------- -----------
End of period (including undistributed net
investment income of $187 as of September
30, 1996 and $82 as of March 31, 1996) $2,679,931 $1,965,862
=========== ===========
</TABLE>
(a) A summary of capital share activity follows:
Period ended Year ended
September 30, 1996 March 31, 1996
Shares Value Shares Value
------ ----- ------ -----
Shares sold 41,770 $672,430 35,834 $522,232
Shares issued for reinvestment
of distributions 187 3,157 1,789 26,306
------ -------- ------ --------
41,957 675,587 37,623 548,538
Shares redeemed (7,320) (120,040) (4,695) (70,120)
------ -------- ------ --------
Net increase 34,637 $554,547 32,928 $478,418
====== ======== ====== ========
See accompanying notes to financial statements
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
<TABLE>
<CAPTION>
For the
period from
August 4, 1992
(commencement
Period ended Year ended Year ended Year ended of operations)
September 30, March 31, March 31, March 31, to March 31,
1996 1996 1995 1994 1993
----------- ------------ ------------ ----------- ------------
<S> <C>
Net asset value, beginning of period $15.81 $12.36 $11.48 $11.05 $10.00
Income from investment operations
Net investment income (loss) 0.02 0.00 0.00 (0.02) (0.02)
Net realized and unrealized gain on investments 1.04 3.72 1.01 0.52 1.07
----------- ------------ ------------ ---------- ----------
Total from investment operations 1.06 3.72 1.01 0.50 1.05
----------- ------------ ------------ ---------- ----------
Distributions to shareholders from
Net investment income (0.02) 0.00 0.00 0.00 0.00
Net realized gain from investment transactions 0.00 (0.27) (0.13) (0.07) 0.00
----------- ------------ ------------ ---------- ----------
Total distributions (0.02) (0.27) (0.13) (0.07) 0.00
----------- ------------ ------------ ---------- ----------
Net asset value, end of period $16.85 $15.81 $12.36 $11.48 $11.05
=========== ============ ============ ========== ==========
Total return 6.70% 30.25% 8.90% 4.51% 10.51%
=========== ============ ============ ========== ==========
Ratios/supplemental data
Net assets, end of period $2,679,931 $1,965,862 $1,130,020 $717,896 $263,814
=========== ============ ============ ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 3.85%(a) 5.58% 8.32% 11.86% 17.97%(a)
After expense reimbursements and waived fees 1.20%(a) 1.56% 2.00% 2.00% 1.91%(a)
Ratio of net investment income (loss) to average
net assets
Before expense reimbursements and waived fees (2.37)%(a) (4.02)% (6.41)% (10.19)% (16.47)%(a)
After expense reimbursements and waived fees 0.28%(a) 0.01% (0.11)% (0.36)% (0.51)%(a)
Portfolio turnover rate 12.57% 48.06% 7.29% 48.05% 3.26%
</TABLE>
(a) Annualized.
See accompanying notes to financial statements
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Brown Capital Management Equity Fund (the "Fund") is a
diversified series of shares of beneficial interest of The
Nottingham Investment Trust II (the "Trust"). The Trust, an
open-end investment company, was organized on October 18, 1990 as
a Massachusetts Business Trust and is registered under the
Investment Company Act of 1940, as amended. The Fund began
operations on August 4, 1992.
Pursuant to a plan approved by the Board of Trustees of the Trust,
the existing single class of shares of the Fund was redesignated
as the Institutional Class shares of the Fund on June 15, 1995,
and an additional class of shares, the Investor Class shares, was
authorized. To date, only Institutional Class shares have been
issued by the Fund. The Institutional Class shares are sold
without a sales charge and bear no distribution and service fees.
The Investor Class shares will be sold subject to a maximum sales
charge of 3.50% and will bear distribution and service fees which
may not exceed 0.50% of the Investor Class shares' average net
assets annually. 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 on the day of valuation. Other securities
traded in the over-the-counter market and listed securities
for which no sale was reported on that date are valued at
the most recent bid price. Securities for which market
quotations are not readily available, if any, are valued by
using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. Federal Income Taxes - No provision has been made for
federal income taxes since 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.
C. Investment Transactions - Investment transactions are
recorded on the trade date. Realized gains and losses are
determined using the specific identification cost method.
Interest income is recorded daily on an accrual basis.
Dividend income and distributions to shareholders are
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund generally declares
dividends quarterly, payable in March, June, September and
December, on a date selected by the Trust's Trustees. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year. The
Fund may make a supplemental distribution subsequent to the
end of its fiscal year ending March 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 estimated.
F. Repurchase Agreements - The Fund may acquire U. S.
Government Securities or corporate debt securities subject
to repurchase agreements. A repurchase agreement
transaction occurs
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
when the Fund acquires a security and simultaneously resells it to
the vendor (normally a member bank of the Federal Reserve or a
registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price
by an amount which reflects an agreed upon market interest rate
earned by the Fund effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the
resale typically will occur within one to five days of the
purchase. The Fund will not enter into a repurchase agreement
which will cause more than 10% of its net assets to be invested in
repurchase agreements which extend beyond seven days. In the event
of bankruptcy of the other party to a repurchase agreement, the
Fund could experience delays in recovering its cash or the
securities lent. To the extent that in the interim the value of
the securities purchased may have declined, the Fund could
experience a loss. In all cases, the creditworthiness of the other
party to a transaction is reviewed and found satisfactory by the
Advisor. Repurchase agreements are, in effect, loans of Fund
assets. The Fund will not engage in reverse repurchase
transactions, which are considered to be borrowings under the
Investment Company Act of 1940, as amended.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Brown Capital
Management, Inc. (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 0.65%
of the Fund's first $25 million of average daily net assets and
0.50% of average daily net assets over $25 million.
Currently, the Fund does not offer its shares for sale in states
which require limitations to be placed on its expenses. The
Advisor intends to voluntarily waive all or a portion of its fee
and reimburse expenses of the Fund to limit total Fund operating
expenses to 1.20% of the average daily net assets of the Fund in
future years. 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 $7,596
($0.05 per share) and has voluntarily agreed to reimburse $23,405
of the Fund's operating expenses for the period ended September
30, 1996.
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
0.25% of the Fund's first $10 million of average daily net assets,
0.20% of the next $40 million of average daily net assets, 0.175%
of the next $50 million of average daily net assets, and 0.15% of
average daily net assets over $100 million. The Administrator also
receives a monthly fee of $1,750 for accounting and recordkeeping
services. Additionally, the Administrator charges the Fund for
servicing of shareholder accounts and registration of the Fund's
shares. The contract with the Administrator provides that the
aggregate fees for the aforementioned administration, accounting
and recordkeeping services shall not be less than $3,000 per
month. The Administrator also charges the Fund for certain
expenses involved with the daily valuation of portfolio
securities.
Certain Trustees and officers of the Trust are also officers of
the Advisor, the Distributor or the Administrator.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
At September 30, 1996, officers of the Advisor held 10,777 shares
or 6.78% of the Fund shares outstanding.
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $868,974 and $258,827, respectively, for
the period ended September 30, 1996.
