________________________________________________________________________________
The CarolinasFund
________________________________________________________________________________
a series of the Nottingham Investment Trust II
Semi-Annual Report 1999
FOR THE PERIOD ENDED AUGUST 31
INVESTMENT ADVISOR
Morehead Capital Advisors LLC
1712 East Boulevard
Charlotte, North Carolina 28203
The CarolinasFund
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-773-3863
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The CarolinasFund
PORTFOLIO OF INVESTMENTS
August 31, 1999
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 95.42%
Aerospace & Defense - 2.65%
The B.F. Goodrich Company ................................................ 2,184 $ 80,672
----------
Basic Materials - 5.57%
Bowater Incorporated ..................................................... 1,500 80,437
Sonoco Products Company .................................................. 3,728 89,472
----------
169,909
----------
Consumer, Cyclical - 10.38%
Family Dollar Stores, Inc. ............................................... 4,450 87,609
Lowe's Companies, Inc. ................................................... 1,900 85,975
Oakwood Homes Corporation ................................................ 5,200 31,525
(a)Ryan's Family Steak Houses, Inc. ......................................... 5,000 48,437
(a)Speedway Motorsports, Inc. ............................................... 1,680 62,685
----------
316,231
----------
Consumer, Non-Cyclical - 7.22%
Coca-Cola Bottling Co. ................................................... 600 34,575
Food Lion, Inc. - Class A ................................................ 9,200 72,738
Lance, Inc. .............................................................. 3,100 40,300
Ruddick Corporation ...................................................... 3,900 72,394
----------
220,007
----------
Electronics - Semiconductor - 1.89%
(a)Cree Research, Inc. ...................................................... 1,700 57,481
----------
Financial Services - 25.62%
BankAmerica Corporation .................................................. 1,500 90,750
BB&T Corporation ......................................................... 2,744 91,924
Carolina First Corporation ............................................... 1,800 39,375
CCB Financial Corporation ................................................ 1,440 68,040
Centura Banks, Inc. ...................................................... 1,315 60,901
First Charter Corporation ................................................ 2,100 45,675
First Citizen's BancShares, Inc. ......................................... 675 52,819
First Union Corporation .................................................. 2,000 83,125
Jefferson-Pilot Corporation .............................................. 1,425 95,119
Resource Bancshares Mortgage Group, Inc. ................................. 2,745 16,470
Triangle Bancorp, Inc. ................................................... 2,100 42,656
Wachovia Corporation ..................................................... 1,200 94,050
----------
780,904
----------
Holding Companies - Diversified - 2.08%
The Liberty Corporation .................................................. 1,320 63,443
----------
(Continued)
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The CarolinasFund
PORTFOLIO OF INVESTMENTS
August 31, 1999
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Industrial - 16.92%
AVX Corporation .......................................................... 2,725 $ 81,580
(a)Burlington Industries, Inc. .............................................. 5,000 28,438
Collins & Aikman ......................................................... 4,000 21,250
Martin Marietta Materials, Inc. .......................................... 1,600 73,000
Nucor Corporation ........................................................ 1,850 86,141
(a)Quintiles Transnational Corporation ...................................... 2,450 87,741
Springs Industries, Inc. - Class A ....................................... 900 33,806
(a)Unifi, Inc. .............................................................. 3,350 45,225
United Dominion Industries ............................................... 2,500 58,437
----------
515,618
----------
Medical Supplies - 0.47%
(a)Closure Medical Corporation .............................................. 1,000 14,250
----------
Real Estate - 3.86%
Highwoods Properties, Inc. ............................................... 2,900 71,956
Summit Properties, Inc. .................................................. 2,300 45,713
----------
117,669
----------
Technology - 5.04%
(a)Kemet Corporation ........................................................ 2,200 56,787
(a)Pharmaceutical Product Development, Inc. ................................. 2,100 42,525
(a)Policy Management Systems Corporation .................................... 1,775 54,248
---------
153,560
---------
Telecommunications - 1.84%
(a)RF Micro Devices, Inc. ................................................... 1,280 56,240
---------
Utilities - 11.88%
Carolina Power & Light Company ........................................... 2,000 72,750
Duke Energy Corporation .................................................. 1,550 89,125
Piedmont Natural Gas Company, Inc. ....................................... 2,150 72,159
Public Service Company of North Carolina ................................. 1,900 57,950
SCANA Corporation ........................................................ 2,800 70,000
---------
361,984
---------
Total Common Stocks (Cost $2,561,116) .................... 2,907,968
---------
(Continued)
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The CarolinasFund
PORTFOLIO OF INVESTMENTS
August 31, 1999
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 4.97
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................. 138,473 $ 138,473
Evergreen Money Market Treasury Institutional Treasury
Money Market Fund Institutional Service Shares ........................... 12,991 12,991
----------
Total Investment Companies (Cost $151,464) .................................................... 151,464
----------
Total Value of Investments (Cost $2,712,580 (b)) .......................................................... 100.39 % $3,059,432
Liabilities in Excess of Other Assets ..................................................................... (0.39)% (11,859)
------ ----------
Net Assets ......................................................................................... 100.00 % $3,047,573
====== ==========
(a) Non-income producing investment.
(b) Aggregate cost for financial reporting and federal income tax purposes is the same. Unrealized
appreciation (depreciation) of investments for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ....................................................................... $ 596,721
Unrealized depreciation ....................................................................... (249,869)
----------
Net unrealized appreciation ................................................... $ 346,852
==========
See accompanying notes to financial statements
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The CarolinasFund
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
(Unaudited)
ASSETS
Investments, at value (cost $2,712,580) .................................................................. $3,059,432
Income receivable ........................................................................................ 4,620
Deferred organizational expenses (net) ................................................................... 3,075
Other assets ............................................................................................. 908
----------
Total assets ........................................................................................ 3,068,035
----------
LIABILITIES
Accrued expenses ......................................................................................... 20,462
----------
NET ASSETS ...................................................................................................... $3,047,573
==========
NET ASSETS CONSIST OF
Paid-in capital .......................................................................................... $2,539,943
Undistributed net realized gain on investments ........................................................... 160,778
Net unrealized appreciation on investments ............................................................... 346,852
----------
$3,047,573
==========
INSTITUTIONAL CLASS
Net asset value, offering and redemption price per share ($1,064,325 / 77,935 shares) .................... $13.66
==========
INVESTOR CLASS
Net asset value, offering and redemption price per share ($1,983,248 / 149,252 shares) ................... $13.29
==========
Maximum offering price per share (100 / 96.5% of $13.29) ................................................. $13.77
==========
See accompanying notes to financial statements
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The CarolinasFund
STATEMENT OF OPERATIONS
Period ended August 31, 1999
(Unaudited)
INVESTMENT INCOME
Income
Dividends .......................................................................................... $ 40,704
--------
Expenses
Investment advisory fees (note 2) .................................................................. 17,500
Fund administration fees (note 2) .................................................................. 3,063
Distribution and service fees - Investor Class (note 3) ............................................ 5,922
Custody fees ....................................................................................... 1,512
Registration and filing administration fees (note 2) ............................................... 1,855
Fund accounting fees (note 2) ...................................................................... 16,500
Audit fees ......................................................................................... 5,500
Legal fees ......................................................................................... 4,000
Securities pricing fees ............................................................................ 1,792
Shareholder recordkeeping fees ..................................................................... 3,000
Other accounting fees (note 2) ..................................................................... 3,497
Shareholder servicing expenses ..................................................................... 2,236
Registration and filing expenses ................................................................... 2,755
Printing expenses .................................................................................. 1,512
Amortization of deferred organization expenses (note 5) ............................................ 4,694
Trustee fees and meeting expenses .................................................................. 2,359
Other operating expenses ........................................................................... 1,357
--------
Total expenses ............................................................................... 79,054
--------
Less:
Expense reimbursements (note 2) ......................................................... (17,338)
Investment advisory fees waived (note 2) ................................................ (12,065)
Fund administration fees waived (note 2) ................................................ (1,452)
Distribution and service fees waived - Investor Class (note 3) .......................... (1,513)
Fund accounting fees waived (note 2) .................................................... (5,500)
Shareholder recordkeeping fees waived (note 2) .......................................... (750)
Other accounting fees waived (note 2) ................................................... (1,861)
--------
Net expenses ................................................................................. 38,575
--------
Net investment income ................................................................... 2,129
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investment transactions .......................................................... 43,050
Decrease in unrealized appreciation on investments ...................................................... (90,508)
--------
Net realized and unrealized loss on investments .................................................... (47,458)
--------
Net decrease in net assets resulting from operations ......................................... $(45,329)
========
See accompanying notes to financial statements
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The CarolinasFund
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
August 31, February 28,
1999 1999
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS
Operations
Net investment income (loss) ...................................................... $ 2,129 $ (4,018)
Net realized gain from investment transactions .................................... 43,050 864,496
Decrease in unrealized appreciation on investments ................................ (90,508) (1,206,312)
---------- ----------
Net decrease in net assets resulting from operations .......................... (45,329) (345,834)
---------- ----------
Distributions to shareholders from
Net investment income ............................................................. (3,065) 0
Net realized gain from investment transactions .................................... 0 (692,322)
---------- ----------
Decrease in net assets resulting from distributions ........................... (3,065) (692,322)
---------- ----------
Capital share transactions
Decrease in net assets resulting from capital share transactions (a) .............. (631,465) (531,597)
---------- ----------
Total decrease in net assets ............................................. (679,859) (1,569,753)
NET ASSETS
Beginning of period .................................................................... 3,727,432 5,297,185
---------- ----------
End of period .......................................................................... $3,047,573 $3,727,432
========== ==========
(a) A summary of capital share activity follows:
-----------------------------------------------------------------------
Period ended Year ended
August 31, 1999 February 28, 1999
Shares Value Shares Value
-----------------------------------------------------------------------
- ---------------------------------------
INSTITUTIONAL CLASS
- ---------------------------------------
Shares sold ........................................ 1,829 $ 26,911 7,615 $ 127,042
Shares issued from reinvestment of distributions ... 222 3,065 13,319 197,642
Shares redeemed .................................... (604) (8,912) (10,198) (154,777)
---------- ---------- ---------- ----------
Net increase .................................. 1,447 $ 21,064 10,736 $ 169,907
========== ========== ========== ==========
- ---------------------------------------
INVESTOR CLASS
- ---------------------------------------
Shares sold ........................................ 821 $ 11,624 39,215 $ 686,284
Shares issued from reinvestment of distributions ... 0 0 34,155 493,202
Shares redeemed .................................... (46,649) (664,153) (114,228) (1,880,990)
---------- ---------- ---------- ----------
Net decrease .................................. (45,828) $ (652,529) (40,858) $ (701,504)
========== ========== ========== ==========
- ---------------------------------------
FUND SUMMARY
- ---------------------------------------
Shares sold ........................................ 2,650 $ 38,535 46,830 $ 813,326
Shares issued from reinvestment of distributions ... 222 3,065 47,474 690,844
Shares redeemed .................................... (47,253) (673,065) (124,426) (2,035,767)
---------- ---------- ---------- ----------
Net decrease .................................. (44,381) $ (631,465) (30,122) $ (531,597)
========== ========== ========== ==========
See accompanying notes to financial statements
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The CarolinasFund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL CLASS
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
For the
period from
May 22, 1995
(commencement of
Period ended Year ended Year ended Year ended operations) to
August 31, February 28, February 28, February 28, February 29,
1999 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................. $14.01 $17.83 $13.55 $12.57 $10.72
(Loss) income from investment operations
Net investment income ...................... 0.02 0.05 0.05 0.01 0.02
Net realized and unrealized (loss) gain
on investments .......................... (0.33) (1.08) 4.23 0.97 1.88
---------- ---------- ---------- ---------- ----------
Total from investment operations ........ (0.31) (1.03) 4.28 0.98 1.90
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ...................... (0.04) 0.00 0.00 0.00 (0.02)
Net realized gain from investment transactions 0.00 (2.79) 0.00 0.00 (0.03)
---------- ---------- ---------- ---------- ----------
Total distributions ..................... (0.04) (2.79) 0.00 0.00 (0.05)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ....................... $13.66 $14.01 $17.83 $13.55 $12.57
========== ========== ========== ========== ==========
Total return (a) ..................................... (2.29)% (6.66)% 31.59 % 7.81 % 17.68 %
========== ========== ========== ========== ==========
Ratios/supplemental data
Net assets, end of period ...................... $1,064,325 $1,071,567 $1,172,074 $ 735,087 $ 24,576
========== ========== ========== ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.98 %(b) 3.75 % 3.61 % 4.85 % 8.40 %(b)
After expense reimbursements and waived fees 2.00 %(b) 1.75 % 1.75 % 1.73 % 1.69 %(b)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (0.65)%(b) (1.67)% -- -- (6.07)%(b)
After expense reimbursements and waived fees 0.33 %(b) 0.33 % 0.36 % 0.22 % 0.64 %(b)
Portfolio turnover rate ........................ 8.20 % 22.24 % 7.00 % 5.00 % 16.00 %
(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
See accompanying notes to financial statements
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The CarolinasFund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INVESTOR CLASS
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
August 31, February 28, February 28, February 28, February 29,
1999 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $13.61 $17.48 $13.36 $12.44 $10.54
(Loss) income from investment operations
Net investment (loss) income .............. 0.00 (0.04) (0.02) (0.02) 0.01
Net realized and unrealized (loss) gain
on investments ......................... (0.32) (1.04) 4.14 0.94 1.95
---------- ---------- ---------- ---------- ----------
Total from investment operations ....... (0.32) (1.08) 4.12 0.92 1.96
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income ..................... 0.00 0.00 0.00 0.00 (0.03)
Net realized gain from investment transactions 0.00 (2.79) 0.00 0.00 (0.03)
---------- ---------- ---------- ---------- ----------
Total distributions .................... 0.00 (2.79) 0.00 0.00 (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ...................... $13.29 $13.61 $17.48 $13.36 $12.44
========== ========== ========== ========== ==========
Total return (a) .................................... (2.35)% (7.11)% 30.84 % 7.41 % 18.59 %
========== ========== ========== ========== ==========
Ratios/supplemental data
Net assets, end of period ..................... $1,983,248 $2,655,865 $4,125,111 $2,706,214 $1,897,814
========== ========== ========== ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 3.29 %(b) 4.26 % 4.12 % 5.33 % 9.45 %(b)
After expense reimbursements and waived fees 2.31 %(b) 2.25 % 2.25 % 2.22 % 2.17 %(b)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (0.96)%(b) (2.23)% -- -- (7.21)%(b)
After expense reimbursements and waived fees 0.02 %(b) (0.22)% (0.14)% (0.20)% 0.06 %(b)
Portfolio turnover rate 8.20 % 22.24 % 7.00 % 5.00 % 16.00 %
(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
See accompanying notes to financial statements
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The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The CarolinasFund (the "Fund") is a diversified, open-end 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 investment
objective of the Fund is to provide long-term capital growth by
investing primarily in common stocks of publicly traded companies
headquartered in North and South Carolina. Current income is of
secondary importance.
The Fund has an unlimited number of authorized shares, which are
divided into two classes - Institutional and Investor Shares. Each
class of shares has equal rights of the assets of the Fund, and the
classes of shares are identical except for differences in their sales
charge structures and ongoing distribution and service fees. Income,
expenses (other than distribution and service fees, which are only
attributable to the Investor Class), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. Investor Shares purchased are subject to
a maximum sales charge of three and one-half percent. Both classes have
equal voting privileges, except where otherwise required by law or when
the Board of Trustees determines that the matter to be voted on affects
only the interests of the shareholders of a particular class. The
following is a summary of significant accounting policies followed by
the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., New York
time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. Federal Income Taxes - 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.
The Fund files a tax return annually using tax accounting
methods required under provisions of the Code which may differ
from generally accepted accounting principles, the basis on
which these financial statements are prepared. Accordingly,
the character of distributions to shareholders reported in the
financial highlights may differ from that reported to
shareholders for Federal income tax purposes. Distributions
which exceed net investment income and net realized gains for
financial reporting purposes but not for tax purposes, if any,
are shown as distributions in excess of net investment income
and net realized gains in the accompanying statements.
C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
(Continued)
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The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
(Unaudited)
D. Distributions to Shareholders - The Fund may declare dividends
at least annually on a date selected by the Trust's Trustees.
Distributions to shareholders are recorded on the ex-dividend
date. In addition, distributions may be made annually in
December out of net realized gains through October 31 of that
year. The Fund may make a supplemental distribution subsequent
to the end of its fiscal year ending February 28.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
F. Risk Factors - The Fund's concentration in companies
headquartered in North and South Carolina generally will tie
the performance of the Fund to the economic environment of the
two states and the surrounding area. There is no assurance
that the demographic and economic characteristics and other
factors that the Advisor believes favor companies in North and
South Carolina will continue in the future.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Morehead Capital Advisors
LLC (the "Advisor"), provides the fund with a continuous program of
supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 1.00% of the Fund's average daily net assets.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 2.00% of the average daily net
assets of the Fund's Institutional Class and a maximum of 2.50% of the
average daily net assets of the Fund's Investor Class. There can be no
assurance that the foregoing voluntary fee waivers or reimbursements
will continue. The Advisor has voluntarily waived a portion of its fee
amounting to $12,065 ($0.05 per share) and has reimbursed expenses
amounting to $17,338 for the period ended August 31, 1999.
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 a fund accounting and compliance agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.175% of the Fund's first $50 million of average daily
net assets, 0.15% of the next $50 million, and 0.125% of average daily
net assets over $100 million. The Administrator also receives a monthly
fee of $2,000 for accounting and record-keeping services for the
initial class of shares and $750 per month for each additional class of
shares. The contract with the Administrator provides that the aggregate
fees for the aforementioned administration, accounting, and
recordkeeping services shall not be less than $4,000 per month. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities. The Administrator has
voluntarily waived a portion of its fees amounting to $8,813 ($0.04 per
share) for the period ended August 31, 1999.
(Continued)
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The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
(Unaudited)
North Carolina Shareholder Services, LLC (the "Transfer Agent") serves
as the Fund's transfer, dividend paying, and shareholder servicing
agent. The Transfer Agent maintains the records of each shareholder's
account, answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent, and performs other shareholder servicing
functions. The Transfer Agent has voluntarily waived a portion of its
fee amounting to $750 for the period ended August 31, 1999.
Capital Investment Group, Inc. (the "Distributor"), serves as the
Fund's principal underwriter and distributor. The Distributor receives
any sales charges imposed on purchases of Investor Shares and
re-allocates a portion of such charges to dealers through whom the sale
was made, if any. For the period ended August 31, 1999, the Distributor
retained sales charges in the amount of $41.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust as defined in the Investment Company Act of 1940
(the "Act"), as amended, adopted a distribution and service plan
pursuant to Rule 12b-1 of the Act (the "Plan") applicable to the
Investor Shares. The Act regulates the manner in which a regulated
investment company may assume costs of distributing and promoting the
sales of its shares and servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.50% per annum of the Investor Shares' average daily net assets
for each year elapsed subsequent to adoption of the Plan, for payment
to the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel, or other expenses reasonably
intended to result in sales of Investor Shares in the Fund or support
servicing of Investor Share shareholder accounts. Such expenditures
incurred as service fees may not exceed 0.25% per annum of the Investor
Shares' average daily net assets. The Fund incurred $5,922 of such
expenses under the Plan for the period ended August 31, 1999. The
Distributor has waived a portion of its fee amounting to $1,513.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $266,066 and $860,771 respectively, for the period ended
August 31, 1999.
NOTE 5 - DEFERRED ORGANIZATION EXPENSES
Expenses totaling $13,968 incurred in connection with its organization
on January 3, 1995, and the registration of its shares have been
assumed by the Fund. The organization expenses are being amortized over
a period of sixty months. Investors purchasing shares of the Fund bear
such expenses only as they are amortized against the Fund's investment
income.
