Semi-Annual Report 2000
Balanced Fund
Equity Fund
Small Company Fund
International Equity Fund
September 30, 2000
[LOGO]
BROWN CAPITAL MANAGEMENT
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
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Value
Shares (note 1)
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COMMON STOCKS - 72.18%
Commercial Services - 3.59%
Equifax Inc. ................................................................ 9,525 $ 256,580
(a)Fiserv, Inc. ................................................................ 4,880 292,190
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548,770
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Computer Software & Services - 4.96%
(a)Compuware Corporation ....................................................... 16,800 140,700
(a)Microsoft Corporation ....................................................... 4,600 277,150
(a)Network Associates, Inc. .................................................... 4,650 105,206
(a)Oracle Corporation .......................................................... 3,000 236,250
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759,306
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Computers - 4.51%
(a)Dell Computer Corporation ................................................... 2,800 86,275
(a)EMC Corporation ............................................................. 2,000 198,250
International Business Machines Corporation ................................. 3,600 405,000
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689,525
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Diversified Operations - 3.31%
General Electric Company .................................................... 8,765 506,179
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Electronics - 4.87%
(a)Altera Corporation .......................................................... 5,400 257,850
Corning Incorporated ........................................................ 800 237,638
(a)Solectron Corporation ....................................................... 5,400 249,412
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744,900
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Electronics - Semiconductor - 3.19%
Intel Corporation ........................................................... 5,300 220,613
(a)SCI Systems, Inc. ........................................................... 1,300 53,300
(a)Xilinx, Inc. ................................................................ 2,500 214,062
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487,975
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Entertainment - 1.82%
Carnival Corporation ........................................................ 11,275 278,352
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Financial - Banks, Money Center - 5.12%
Citigroup Inc. .............................................................. 6,866 371,193
Mellon Financial Corporation ................................................ 5,450 252,744
The Chase Manhattan Corporation ............................................. 3,469 160,224
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784,161
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Financial - Securities Brokers - 1.16%
Franklin Resources, Inc. .................................................... 4,000 177,560
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(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
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Value
Shares (note 1)
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COMMON STOCKS - (Continued)
Financial Services - 4.24%
T. Rowe Price Associates, Inc. .............................................. 8,225 $ 386,061
USA Education Inc. .......................................................... 5,475 263,484
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649,545
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Hand & Machine Tools - 1.22%
Danaher Corporation ......................................................... 3,750 186,562
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Household Products & Housewares - 0.66%
The Procter & Gamble Company ................................................ 1,500 100,500
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Insurance - Life & Health - 2.73%
AFLAC INCORPORATED .......................................................... 65,100 417,047
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Industrial Materials - Specialty - 1.56%
Fastenal Company ............................................................ 41,500 239,144
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Leisure Time - 1.33%
Harley-Davidson, Inc. ....................................................... 4,250 203,469
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Medical - Biotechnology - 1.22%
PE Corp-PE Biosystems Group ................................................. 1,600 186,400
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Medical - Hospital Management & Services - 1.99%
(a)Health Management Associates, Inc. .......................................... 14,600 303,862
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Medical Supplies - 2.03%
(a)Guidant Corporation ......................................................... 2,100 148,444
Johnson & Johnson ........................................................... 1,725 162,042
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310,486
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Miscellaneous Manufacturing - 0.81%
Illinois Tool Works Inc. .................................................... 2,225 124,183
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Oil & Gas - Equipment & Services - 1.13%
Schlumberger Limited ........................................................ 3,750 172,856
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Pharmaceuticals - 5.20%
(a)Alza Corporation ............................................................ 1,900 164,350
Cardinal Health, Inc. ....................................................... 4,958 437,234
Merck & Co., Inc. ........................................................... 2,600 193,538
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795,122
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(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
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Value
Shares (note 1)
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COMMON STOCKS - (Continued)
Retail - Apparel - 1.72%
The TJX Companies, Inc. .................................................. 11,700 $ 263,250
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Retail - Department Stores - 0.89%
Dollar General Corporation ............................................... 8,114 135,905
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Retail - Grocery - 1.86%
(a)Safeway, Inc. ............................................................ 6,100 284,794
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Retail - General Merchandise - 1.07%
(a)Staples, Inc. ............................................................ 11,575 164,220
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Retail - Specialty Line - 2.00%
The Home Depot, Inc. ..................................................... 5,762 305,746
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Telecommunications - 1.43%
(a)WorldCom, Inc. ........................................................... 7,200 218,700
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Telecommunications Equipment - 4.86%
(a)ADC Telecommunications, Inc. ............................................. 5,400 145,209
(a)Conexant Systems, Inc. ................................................... 4,595 192,416
Nokia Oyj ................................................................ 4,400 175,450
(a)Tellabs, Inc. ............................................................ 4,800 229,200
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742,275
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Utilities - Electric - 1.70%
(a)AES Corporation .......................................................... 3,800 260,300
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Total Common Stocks (Cost $8,979,466) ............................................................. 11,041,094
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Interest Maturity
Principal Rate Date
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U.S. GOVERNMENT & AGENCY OBLIGATIONS - 3.13%
United States Treasury Note ............................ $ 20,000 8.000% 11/15/21 24,441
United States Treasury Note ............................ 100,000 7.500% 02/15/05 106,109
United States Treasury Note ............................ 20,000 6.250% 08/15/23 20,394
United States Treasury Note ............................ 90,000 6.375% 08/15/02 90,548
Federal Home Loan Bank ................................. 100,000 5.330% 05/05/04 96,052
(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
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Interest Maturity
Principal Rate Date
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U.S. GOVERNMENT & AGENCY OBLIGATIONS - (Continued)
Federal Home Loan Bank Strip ........................... $100,000 0.000% 07/14/17 $ 25,031
Federal National Mortgage Association .................. 115,000 6.800% 01/10/03 115,726
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Total U.S. Government and Agency Obligations (Cost $478,180) ...................................... 478,301
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CORPORATE OBLIGATIONS - 9.58%
Alabama Power Company .................................. 35,000 7.750% 02/01/23 33,198
AMR Corporation ........................................ 10,000 10.000% 02/01/01 10,083
Associates Corporation ................................. 100,000 5.750% 11/01/03 96,620
AT&T Corporation ....................................... 75,000 5.625% 03/15/04 71,531
Boston Edison Company .................................. 60,000 7.800% 05/15/10 60,848
Chase Manhattan Corporation ............................ 45,000 6.500% 08/01/05 43,706
Chesapeake & Potomac Telephone of Virginia ............. 90,000 7.250% 06/01/12 83,813
CitiCorp ............................................... 25,000 7.125% 06/01/03 25,109
Dow Chemical Capital Debentures ........................ 15,000 9.200% 06/01/10 16,569
Ford Motor Credit ...................................... 55,000 7.250% 09/01/10 55,022
ITT Corporation ........................................ 95,000 7.375% 11/15/15 84,550
Merrill Lynch .......................................... 160,000 7.150% 07/30/12 152,724
Monsanto Company ....................................... 95,000 6.210% 02/05/08 89,555
Nalco Chemical ......................................... 50,000 6.250% 05/15/08 47,590
Nationsbank Corporation ................................ 15,000 6.875% 02/15/05 14,880
Procter & Gamble ....................................... 100,000 6.600% 12/15/04 99,562
RJ Reynolds Tobacco Corp. .............................. 30,000 8.750% 04/15/04 29,325
The Rouse Company ...................................... 35,000 8.500% 01/15/03 35,575
The Walt Disney Company ................................ 100,000 7.750% 09/30/11 100,464
Time Warner, Inc. ...................................... 35,000 9.150% 02/01/23 37,887
U.S.F. & G. Corporation ................................ 90,000 7.125% 06/01/05 89,214
Wachovia Corporation ................................... 100,000 7.450% 07/15/05 101,809
Wal-Mart Stores ........................................ 80,000 8.070% 12/21/12 86,064
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Total Corporate Obligations (Cost $1,500,708) ..................................................... 1,465,698
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COMMERCIAL PAPER - 6.91%
American Express - 6.53%, due 10/02/00 ................. 1,056,411 1,056,411
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(Cost $1,056,411)
(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
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Value
Shares (note 1)
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INVESTMENT COMPANIES - 9.29%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................. 710,475 $ 710,475
Evergreen Money Market Treasury Institutional Treasury
Market Market Fund Institutional Shares .................................. 710,475 710,475
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Total Investment Companies (Cost $1,420,950) ...................................................... 1,420,950
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Total Value of Investments (Cost $13,435,715 (b)) ................................... 101.09 % $15,462,454
Liabilities In Excess of Other Assets ............................................... (1.09)% (166,491)
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Net Assets .................................................................... 100.00 % $15,295,963
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(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 ........................................................................... $ 2,776,177
Unrealized depreciation ........................................................................... (749,438)
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Net unrealized appreciation ........................................................... $ 2,026,739
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The following acronym is used in this portfolio:
ADR - American Depository Receipt
See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
ASSETS
Investments, at value (cost $13,435,715) .......................................................... $15,462,454
Cash .............................................................................................. 4,148
Income receivable ................................................................................. 46,142
Other assets ...................................................................................... 1,907
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Total assets ................................................................................. 15,514,651
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LIABILITIES
Accrued expenses .................................................................................. 2,680
Payable for investment purchases .................................................................. 216,008
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Total liabilities ............................................................................ 218,688
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NET ASSETS
(applicable to 821,609 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ........................................... $15,295,963
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NET ASSET VALUE, REDEMPTION AND OFFERING PRICE
PER INSTITUTIONAL CLASS SHARE
($15,295,963 / 821,609 shares) .................................................................... $ 18.62
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NET ASSETS CONSIST OF
Paid-in capital ................................................................................... $12,663,196
Undistributed net investment income ............................................................... 9,178
Undistributed net realized gain on investments .................................................... 596,850
Net unrealized appreciation on investments ........................................................ 2,026,739
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$15,295,963
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See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
STATEMENT OF OPERATIONS
Period ended September 30, 2000
(Unaudited)
NET INVESTMENT INCOME
Income
Interest ....................................................................................... $ 58,897
Dividends ...................................................................................... 69,263
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Total income .............................................................................. 128,160
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Expenses
Investment advisory fees (note 2) .............................................................. 47,831
Fund administration fees (note 2) .............................................................. 12,878
Custody fees ................................................................................... 2,106
Registration and filing administration fees (note 2) ........................................... 2,205
Fund accounting fees (note 2) .................................................................. 12,000
Audit fees ..................................................................................... 5,516
Legal fees ..................................................................................... 2,507
Securities pricing fees ........................................................................ 3,039
Shareholder recordkeeping fees ................................................................. 4,500
Shareholder servicing expenses ................................................................. 1,354
Registration and filing expenses ............................................................... 4,262
Printing expenses .............................................................................. 2,076
Trustee fees and meeting expenses .............................................................. 2,006
Other operating expenses ....................................................................... 1,755
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Total expenses ............................................................................ 104,035
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Less investment advisory fees waived (note 2) ............................................. (15,412)
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Net expenses .............................................................................. 88,623
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Net investment income ................................................................. 39,537
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ...................................................... 595,676
Increase in unrealized appreciation on investments .................................................. 125,184
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Net realized and unrealized gain on investments ................................................ 720,860
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Net increase in net assets resulting from operations ...................................... $ 760,397
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See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
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Period ended Year ended
September 30, March 31,
2000 (a) 1999
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INCREASE IN NET ASSETS
Operations
Net investment income ..................................................... $ 39,537 $ 69,780
Net realized gain from investment transactions ............................ 595,676 853,186
Increase in unrealized appreciation on investments ........................ 125,184 192,375
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Net increase in net assets resulting from operations .................. 760,397 1,115,341
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Distributions to shareholders from
Net investment income ..................................................... (32,326) (67,826)
Net realized gain from investment transactions ............................ (376,316) (670,268)
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Decrease in net assets resulting from distributions ................... (408,642) (738,094)
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Capital share transactions
Increase in net assets resulting from capital share transactions (b) ...... 665,736 4,298,321
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Total increase in net assets .................................. 1,017,491 4,675,568
NET ASSETS
Beginning of period ............................................................ 14,278,472 9,602,904
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End of period (including undistributed net investment income of $9,178
at September 30, 2000 and $1,967 at March 31, 2000) .......... $15,295,963 $14,278,472
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(a) Unaudited
(b) A summary of capital share activity follows:
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Period ended Year ended
September 30, 2000 (a) March 31, 1999
Shares Value Shares Value
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Shares sold ....................................... 36,262 $ 664,947 273,858 4,834,949
Shares issued for reinvestment of distributions ... 22,757 408,423 41,152 $ 737,421
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59,019 1,073,370 315,010 5,572,370
Shares redeemed ................................... (22,149) (407,634) (70,482) (1,274,049)
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Net increase ................................. 36,870 $ 665,736 244,$28 $ 4,298,321
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See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
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Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
2000 (a) 2000 1999 1998 1997
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Net asset value, beginning of period ................... $ 18.20 $ 17.78 $ 16.83 $ 13.60 $ 13.76
Income from investment operations
Net investment income ....................... 0.05 0.10 0.13 0.17 0.21
Net realized and unrealized gain on investments 0.88 1.34 1.39 4.65 0.76
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Total from investment operations ....... 0.93 1.44 1.52 4.82 0.97
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Distributions to shareholders from
Net investment income ....................... (0.04) (0.10) (0.13) (0.17) (0.21)
Net realized gain from investment transactions (0.47) (0.92) (0.44) (1.42) (0.92)
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Total distributions .................... (0.51) (1.02) (0.57) (1.59) (1.13)
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Net asset value, end of period ......................... $ 18.62 $ 18.20 $ 17.78 $ 16.83 $ 13.60
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Total return ........................................... 5.29 % 8.22 % 8.99 % 36.19 % 7.03 %
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Ratios/supplemental data
Net assets, end of period ........................ $15,295,963 $14,278,472 $ 9,602,904 $ 6,077,737 $ 3,874,653
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Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.42 %(b) 1.59 % 2.11 % 2.22 % 2.85 %
After expense reimbursements and waived fees 1.20 %(b) 1.20 % 1.20 % 1.20 % 1.20 %
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 0.32 %(b) 0.21 % (0.17)% 0.05 % (0.13)%
After expense reimbursements and waived fees 0.52 %(b) 0.60 % 0.74 % 1.08 % 1.51 %
Portfolio turnover rate .......................... 16.53 % 45.01 % 58.38 % 33.54 % 45.58 %
(a) Unaudited.
(b) Annualized. See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Brown Capital Management Balanced Fund (the "Fund") is a
diversified series of shares of beneficial interest of The
Nottingham Investment Trust II (the "Trust"). The Trust, an
open-ended investment company, was organized on October 25, 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 its shareholders with a
maximum total return consisting of any combination of capital
appreciation by investing in a flexible portfolio of equity
securities, fixed income securities and money market instruments.
The Fund began operations on August 11, 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 subject to a maximum 3.50% sales
charge 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 the last sales price
as of 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 substantially all taxable income has been
distributed to shareholders. 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.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
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 on an accrual basis. Dividend income is recorded
on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare 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.
(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
Distributions to shareholders are recorded on the ex-dividend
date. 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 estimates.
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.
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. 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 $15,412
($0.02 per share) for the period ended September 30, 2000.
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 received 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 of average daily net assets,
0.125% of the next $50 million of average daily net assets, and
0.10% of average daily net assets over $150 million. The
Administrator also receives a monthly fee of $2,000 for accounting
and recordkeeping services. 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.
NC 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 shares, acts as
dividend and distribution disbursing agent, and performs other
shareholder servicing functions.
Certain Trustees and officers of the Trust are also officers of
the Advisor, the distributor or the Administrator.
Note 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $3,075,591 and $2,008,850, respectively,
for the period ended September 30, 2000.
(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 4 - DISTRIBUTIONS TO SHAREHOLDERS
For federal income tax purposes, the Fund must report
distributions from net realized gain from investment transactions
that represent long-term capital gain to its shareholders. The
Fund paid a total amount of $0.51 per share distributions for the
period ended September 30, 2000, including $0.47 that is
classified as long term gain. Shareholders should consult a tax
advisor on how to report distributions for state and local income
tax purposes.
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
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Value
Shares (note 1)
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COMMON STOCKS - 95.73%
Building Materials - 1.08%
Illinois Tool Works Inc. ................................................ 2,400 $ 133,950
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Commercial Building Products - 2.05%
Fastenal Company ........................................................ 4,400 253,550
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Computer Software & Services - 8.56%
(a)Compuware Corporation ................................................... 18,000 150,750
(a)Fiserv, Inc. ............................................................ 4,500 269,437
(a)Microsoft Corporation ................................................... 4,700 283,175
(a)Network Associates, Inc. ................................................ 4,600 104,075
Oracle Corporation ...................................................... 3,200 252,000
-----------
1,059,437
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Computers - 5.44%
(a)Dell Computer Corporation ............................................... 2,700 83,194
(a)EMC Corporation ......................................................... 2,100 208,163
International Business Machines Corporation ............................. 3,400 382,500
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673,857
-----------
Cosmetics & Personal Care - 0.87%
Procter & Gamble Company ................................................ 1,600 107,200
-----------
Diversified Manufacturing - 5.66%
Corning Incorporated .................................................... 900 267,342
General Electric Company ................................................ 7,500 433,125
-----------
700,467
-----------
Electric - Generation - 2.27%
The AES Corporation ..................................................... 4,100 280,850
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Electronic Components - Semiconductor - 5.38%
(a)Conexant Systems, Inc. .................................................. 4,995 209,166
Intel Corporation ....................................................... 5,700 237,262
(a)SCI Systems, Inc. ....................................................... 1,400 57,400
(a)Xilinx, Inc. ............................................................ 1,900 162,687
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666,515
-----------
Electronics - 4.26%
(a)Altera Corporation ...................................................... 6,000 286,500
(a)Solectron Corporation ................................................... 5,200 240,175
-----------
526,675
-----------
Entertainment - 2.42%
Carnival Corporation .................................................... 12,120 299,213
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Banks, Money Center - 3.73%
Citigroup Inc. ............................................................ 5,400 $ 291,937
The Chase Manhattan Corporation ........................................... 3,660 169,046
-----------
460,983
-----------
Financial Services - 10.58%
Equifax Inc. .............................................................. 9,250 249,172
Mellon Financial Corporation .............................................. 7,000 324,625
T. Rowe Price Associates, Inc. ............................................ 8,600 403,663
USA Education Inc. ........................................................ 6,900 332,063
-----------
1,309,523
-----------
Hand & Machine Tools - 1.61%
Danaher Corporation ....................................................... 4,000 199,000
-----------
Health Care Services - Distribution - 3.82%
Cardinal Health, Inc. ..................................................... 5,362 472,861
-----------
Household Products & Housewares - 1.35%
Newell Rubbermaid Inc. .................................................... 7,300 166,531
-----------
Human Resources - 1.12%
Robert Half International Inc. ............................................ 4,000 138,750
-----------
Insurance - Life & Health - 3.43%
AFLAC INCORPORATED ........................................................ 6,624 424,350
-----------
Investment Management & Advisory Services - 1.40%
Franklin Resources, Inc. .................................................. 3,900 173,121
-----------
Leisure Time - 1.82%
Harley-Davidson, Inc. ..................................................... 4,700 225,013
-----------
Medical - Hospital Management & Services - 3.06%
(a)Health Management Associates, Inc. ........................................ 18,200 378,787
-----------
Medical Products - 1.14%
(a)Guidant Corporation ....................................................... 2,000 141,375
-----------
Medical Supplies - 1.52%
Johnson & Johnson ......................................................... 2,000 187,875
-----------
Medical Technology Products - 1.41%
PE Corp-PE Biosystems Group ............................................... 1,500 174,750
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Oil & Gas - Equipment & Services - 1.40%
Schlumberger Limited ...................................................... 2,100 $ 172,856
-----------
Pharmaceuticals - 2.90%
ALZA Corporation .......................................................... 2,000 173,000
Merck & Co., Inc. ......................................................... 2,500 186,094
-----------
359,094
-----------
Retail - Discount - 3.30%
Dollar General Corporation ................................................ 7,598 127,258
The TJX Companies, Inc. ................................................... 12,500 281,250
-----------
408,508
-----------
Retail - Grocery - 2.45%
Safeway, Inc. ............................................................. 6,500 303,469
-----------
Retail - Specialty - 4.17%
(a)Staples, Inc. ............................................................. 12,800 181,600
The Home Depot, Inc. ...................................................... 6,300 334,294
-----------
515,894
-----------
Telecommunications Equipment - 5.70%
(a)ADC Telecommunications, Inc. .............................................. 5,800 155,965
Lucent Technologies Inc. .................................................. 3,600 109,800
Nokia Oyj - ADR ........................................................... 4,800 191,400
(a)Tellabs, Inc. ............................................................. 5,200 248,300
-----------
705,465
-----------
Utilities - Telecommunications - 1.83%
(a)MCI Worldcom, Inc. ........................................................ 7,450 226,294
-----------
Total Common Stocks (Cost $9,453,318) ............................................................ 11,846,213
-----------
INVESTMENT COMPANIES - 4.19%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares .................................. 375,025 375,025
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares .................................. 143,533 143,533
-----------
Total Investment Companies (Cost $518,558) ....................................................... 518,558
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
Total Value of Investments (Cost $9,971,876 (b)) .................................. 99.92 % $12,364,771
Other Assets Less Liabilities ..................................................... 0.08 % 9,734
------ -----------
Net Assets .................................................................. 100.00 % $12,374,505
====== ===========
(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 .................................................................... $3,196,991
Unrealized depreciation .................................................................... (804,096)
----------
Net unrealized appreciation ...................................................... $2,392,895
==========
The following acronym is used in this portfolio:
ADR - American Depository Receipt
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
ASSETS
Investments, at value (cost $9,971,876) ......................................................... $ 12,364,771
Cash ............................................................................................ 2,076
Income receivable ............................................................................... 7,399
Prepaid expenses ................................................................................ 2,538
------------
Total assets ............................................................................... 12,376,784
------------
LIABILITIES
Accrued expenses ................................................................................ 1,937
Other liabilities ............................................................................... 342
------------
Total liabilities .......................................................................... 2,279
------------
NET ASSETS
(applicable to 513,215 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ......................................... $ 12,374,505
============
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE
PER INSTITUTIONAL CLASS SHARE
($12,374,505 / 513,215 shares) .................................................................. $ 24.11
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 9,136,739
Accumulated net investment loss ................................................................. (24,009)
Undistributed net realized gain on investments .................................................. 868,880
Net unrealized appreciation on investments ...................................................... 2,392,895
------------
$ 12,374,505
============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF OPERATIONS
Period ended September 30, 2000
(Unaudited)
NET INVESTMENT LOSS
Income
Dividends ...................................................................................... $ 45,484
---------
Expenses
Investment advisory fees (note 2) .............................................................. 37,682
Fund administration fees (note 2) .............................................................. 10,145
Custody fees ................................................................................... 2,006
Registration and filing administration fees (note 2) ........................................... 2,326
Fund accounting fees (note 2) .................................................................. 12,000
Audit fees ..................................................................................... 5,516
Legal fees ..................................................................................... 2,507
Securities pricing fees ........................................................................ 1,886
Shareholder recordkeeping fees ................................................................. 4,500
Other accounting fees (note 2) ................................................................. 1,854
Shareholder servicing expenses ................................................................. 1,856
Registration and filing expenses ............................................................... 3,510
Printing expenses .............................................................................. 2,657
Trustee fees and meeting expenses .............................................................. 2,006
Other operating expenses ....................................................................... 1,905
---------
Total expenses ............................................................................ 92,356
---------
Less investment advisory fees waived (note 2) ............................................. (22,863)
---------
Net expenses .............................................................................. 69,493
---------
Net investment loss ................................................................... (24,009)
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ...................................................... 868,614
Decrease in unrealized appreciation on investments .................................................. (54,837)
---------
Net realized and unrealized gain on investments ................................................ 813,777
---------
Net increase in net assets resulting from operations ...................................... $ 789,768
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
2000 (a) 2000
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ...................................................... $ (24,009) $ (39,398)
Net realized gain from investment transactions ........................... 868,614 1,393,611
Decrease in unrealized appreciation on investments ....................... (54,837) (80,452)
----------- -----------
Net increase in net assets resulting from operations ................. 789,768 1,273,761
----------- -----------
Distributions to shareholders from
Net realized gain from investment transactions ........................... (776,536) (830,681)
----------- -----------
Capital share transactions
Increase in net assets resulting from capital share transactions (b) ..... 1,967,080 128,944
----------- -----------
Total increase in net assets ................................. 1,980,312 572,024
NET ASSETS
Beginning of period ........................................................... 10,394,193 9,822,169
----------- -----------
End of period ................................................................. $12,374,505 $10,394,193
=========== ===========
(a) Unaudited.
(b) A summary of capital share activity follows:
--------------------------------------------------------------------------------
Period ended Year ended
September 30, 2000 (a) March 31, 2000
Shares Value Shares Value
--------------------------------------------------------------------------------
Shares sold ................................... 76,621 $ 1,802,423 52,085 $ 1,201,520
Shares issued for reinvestment of distributions 32,799 753,726 35,138 825,028
----------- ----------- ----------- -----------
109,420 2,556,149 87,223 2,026,548
Shares redeemed ............................... (24,644) (589,069) (81,386) (1,897,604)
----------- ----------- ----------- -----------
Net increase ............................. 84,776 $ 1,967,080 5,837 $ 128,944
=========== =========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
2000 (a) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................... $ 24.26 $ 23.24 $ 21.87 $ 16.61 $ 15.81
Income from investment operations
Net investment (loss) income ................ (0.05) (0.09) (0.08) (0.03) 0.05
Net realized and unrealized gain on investments 1.53 3.13 2.14 7.31 1.36
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... 1.48 3.04 2.06 7.28 1.41
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ....................... 0.00 0.00 0.00 0.00 (0.05)
Net realized gain from investment transactions (1.63) (2.02) (0.69) (1.98) (0.56)
Distributions in excess of net realized gains 0.00 0.00 0.00 (0.04) 0.00
----------- ----------- ----------- ----------- -----------
Total distributions .................... (1.63) (2.02) (0.69) (2.02) (0.61)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ......................... $ 24.11 $ 24.26 $ 23.24 $ 21.87 $ 16.61
=========== =========== =========== =========== ===========
Total return ........................................... 6.44 % 13.41 % 9.34 % 44.68 % 8.91 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $12,374,505 $10,394,193 $ 9,822,169 $ 8,149,770 $ 4,405,020
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.60 %(b) 1.75 % 1.88 % 1.98 % 3.37 %
After expense reimbursements and waived fees 1.20 %(b) 1.20 % 1.20 % 1.20 % 1.20 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (0.82)%(b) (0.95)% (1.07)% (0.94)% (1.85)%
After expense reimbursements and waived fees (0.42)%(b) (0.40)% (0.39)% (0.16)% (0.32)%
Portfolio turnover rate .......................... 17.04 % 52.09 % 67.43 % 38.42 % 34.21 %
(a) Unaudited.
(b) Annualized. See accompanying notes to financial statements
</TABLE>
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(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-ended investment company, was organized on October 25, 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 seek capital appreciation principally
through investments in equity securities, such as common and
preferred stocks and securities convertible into common stocks.
The Fund began operations on August 11, 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 subject to a maximum 3.50% sales
charge 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 the last sales price
as of 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 substantially all taxable income has been
distributed to shareholders. 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.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
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 is
recorded on the ex-dividend date.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
D. Distributions to Shareholders - The Fund may declare 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. Distributions
to shareholders are recorded on the ex-dividend date. 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 estimates.
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.
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. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Advisor has
voluntarily waived its fee amounting to $22,863 ($0.05 per share)
for the period ended September 30, 2000.
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 of average daily net assets,
0.125% of the next $50 million of average daily net assets, and
0.10% of average daily net assets over $150 million. The
Administrator also receives a monthly fee of $2,000 for accounting
and recordkeeping services. 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.
NC Shareholder Services, LLC (the "Transfer Agent") serves as the
Funds' 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 shares, acts as
dividend and distribution disbursing agent, and performs other
shareholder servicing functions.
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, 2000
(Unaudited)
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $2,797,210 and $1,894,218, respectively,
for the period ended September 30, 2000.
NOTE 4 - DISTRIBUTIONS TO SHAREHOLDERS
For federal income tax purposes, the Fund must report
distributions from net realized gain from investment transactions
that represent long-term capital gain to its shareholders. The
Fund paid a total amount of $1.63 per share distributions for the
period ended September 30, 2000, including $1.14 that is
classified as long term gain. Shareholders should consult a tax
advisor on how to report distributions for state and local income
tax purposes.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 86.14%
Advertising - 1.94%
(a)Catalina Marketing Corporation ........................................ 43,200 $ 1,625,400
-----------
Biopharmaceuticals - 1.37%
(a)Gene Logic Inc. ....................................................... 49,900 1,147,700
-----------
Chemicals - 0.14%
(a)Synthetech, Inc. ...................................................... 44,700 118,737
-----------
Commercial Services - 15.13%
(a)Acxiom Corporation .................................................... 36,700 1,165,225
(a)Dendrite International, Inc. .......................................... 66,150 1,773,647
Fair, Isaac and Company, Incorporated ................................. 41,700 1,754,006
(a)infoUSA Inc. .......................................................... 70,100 350,500
(a)Manugistics Group, Inc. ............................................... 40,900 4,013,313
(a)NetScout Systems, Inc. ................................................ 109,600 2,603,000
(a)QRS Corporation ....................................................... 60,050 904,503
(a)Quintiles Transnational Corp. ......................................... 6,200 98,812
-----------
12,663,006
-----------
Computers - 3.02%
(a)Landmark Systems Corporation .......................................... 160,981 664,047
(a)RadiSys Corporation ................................................... 36,800 1,860,700
-----------
2,524,747
-----------
Computer Software & Services - 18.34%
(a)Advent Software, Inc. ................................................. 27,800 1,942,525
(a)American Software, Inc. ............................................... 150,300 511,967
(a)Concord Communications, Inc. .......................................... 91,000 2,411,500
(a)Datastream Systems, Inc. .............................................. 129,400 1,666,025
(a)Engineering Animation, Inc. ........................................... 70,700 958,869
(a)Hyperion Solutions Corporation ........................................ 24,110 623,846
(a)Network Associates, Inc. .............................................. 7,287 164,868
(a)Peregrine Systems, Inc. ............................................... 54,075 1,024,045
(a)SPSS Inc. ............................................................. 79,900 2,142,319
(a)Structural Dynamics Research Corporation .............................. 111,900 1,832,363
(a)Transaction Systems Architects, Inc. .................................. 127,400 2,070,250
-----------
15,348,577
-----------
Electronics - 1.31%
(a)Molecular Devices Corporation ......................................... 11,200 1,100,400
-----------
Electronics - Semiconductor - 1.00%
(a)Medialink Worldwide Incorporated ...................................... 119,300 835,100
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial Services - 2.61%
T. Rowe Price Associates, Inc. .......................................... 10,400 $ 488,150
(a)The BISYS Group, Inc. ................................................... 21,900 1,693,144
-----------
2,181,294
-----------
Foreign Securities - 0.16%
Cordiant Communications Group plc - ADR ................................. 6,967 131,067
-----------
Hand & Machine Tools - 1.16%
(a)Flow International Corporation .......................................... 89,000 967,875
-----------
Machine - Diversified - 1.04%
(a)Cognex Corporation ...................................................... 22,100 871,569
-----------
Medical - Biotechnology - 9.87%
(a)Affymetrix, Inc. ........................................................ 13,200 658,350
(a)BioReliance Corporation ................................................. 76,400 1,146,000
(a)Cerner Corporation ...................................................... 43,900 2,038,606
(a)Human Genome Sciences, Inc. ............................................. 8,200 1,419,625
(a)Incyte Genomics, Inc. ................................................... 14,400 592,200
(a)Pharmacopeia, Inc. ...................................................... 48,600 1,239,300
(a)Synbiotics Corporation .................................................. 12,400 25,963
(a)Tripos, Inc. ............................................................ 39,800 1,144,250
-----------
8,264,294
-----------
Medical Supplies - 8.47%
Diagnostic Products Corporation ......................................... 69,800 3,743,025
(a)Eclipse Surgical Technologies, Inc. ..................................... 185,227 740,908
(a)Techne Corporation ...................................................... 23,300 2,609,600
-----------
7,093,533
-----------
Pharmaceuticals - 9.54%
(a)Albany Molecular Research, Inc. ......................................... 46,200 2,595,863
(a)Applied Analytical Industries, Inc. ..................................... 138,000 1,069,500
(a)Kendle International Inc. ............................................... 115,000 959,537
(a)King Pharmaceuticals, Inc. .............................................. 36,243 1,211,875
(a)Lynx Therapeutics, Inc. ................................................. 81 2,536
(a)Professional Detailing, Inc. ............................................ 37,700 2,148,900
-----------
7,988,211
-----------
Real Estate Investment Trust - 0.63%
Post Properties, Inc. ................................................... 12,200 531,462
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Restaurants & Food Services - 7.32%
(a)Panera Bread Company .................................................... 130,800 $2,730,450
(a)The Cheesecake Factory Incorporated ..................................... 78,600 3,399,450
-----------
6,129,900
-----------
Retail - General Merchandise - 1.25%
(a)Restoration Hardware, Inc. .............................................. 298,400 1,044,400
-----------
Retail - Specialty Line - 0.98%
Fastenal Company ........................................................ 14,300 824,037
-----------
Scientific & Technological Instruments - 0.86%
(a)Dionex Corporation ...................................................... 1,100 30,388
(a)FEI Company ............................................................. 31,900 691,831
-----------
722,219
-----------
Total Common Stocks (Cost $50,604,747) .......................................................... 72,113,528
-----------
------------------------------------------------------------------------------------------------------------------------------------
Principal
------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER - 3.94%
American Express - 6.53%, due 10/02/00 .................................. $ 3,297,451 3,297,451
(Cost $3,297,451) -----------
------------------------------------------------------------------------------------------------------------------------------------
Shares
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 9.02%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................ 3,775,374 3,775,374
Evergreen Money Market Treasury Institutional Treasury
Market Fund Institutional Service Shares ................................ 3,775,374 3,775,374
-----------
Total Investment Companies (Cost $7,550,748 ) ................................................... 7,550,748
-----------
Total Value of Investments (Cost $61,452,946 (b)) .................................. 99.10 % $82,961,727
Other Assets Less Liabilities ...................................................... 0.90 % 751,165
------ -----------
Net Assets ................................................................... 100.00 % $83,712,892
====== ===========
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
(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 ......................................................................... $26,917,622
Unrealized depreciation ......................................................................... (5,408,841)
-----------
Net unrealized appreciation ......................................................... $21,508,781
===========
The following acronym is used in this portfolio:
ADR - American Depository Receipt
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
ASSETS
Investments, at value (cost $61,452,946) ........................................................ $ 82,961,727
Cash ............................................................................................ 558,294
Income receivable ............................................................................... 45,214
Receivable for fund shares sold ................................................................. 213,100
Other assets .................................................................................... 5,767
------------
Total assets ............................................................................... 83,784,102
------------
LIABILITIES
Accrued expenses ................................................................................ 1,691
Payable for investment purchases ................................................................ 35,329
Other liabilities ............................................................................... 34,190
------------
Total liabilities .......................................................................... 71,210
------------
NET ASSETS
(applicable to 2,505,269 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ......................................... $ 83,712,892
============
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE
PER INSTITUTIONAL CLASS SHARE
($83,712,892 / 2,505,269 shares) ................................................................ $ 33.41
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 60,704,563
Accumulated net investment loss ................................................................. (198,425)
Undistributed net realized gain on investments .................................................. 1,697,973
Net unrealized appreciation on investments ...................................................... 21,508,781
------------
$ 83,712,892
============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
STATEMENT OF OPERATIONS
Period ended September 30, 2000
(Unaudited)
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 12,626
Dividends ..................................................................................... 209,071
Miscellaneous ................................................................................. 1,621
-----------
Total income ............................................................................. 223,318
-----------
Expenses
Investment advisory fees (note 2) ............................................................. 313,812
Fund administration fees (note 2) ............................................................. 53,339
Custody fees .................................................................................. 2,908
Registration and filing administration fees (note 2) .......................................... 4,092
Fund accounting fees (note 2) ................................................................. 12,000
Audit fees .................................................................................... 2,507
Legal fees .................................................................................... 5,516
Securities pricing fees ....................................................................... 2,062
Shareholder recordkeeping fees ................................................................ 4,500
Shareholder servicing expenses ................................................................ 2,507
Registration and filing expenses .............................................................. 9,275
Printing expenses ............................................................................. 4,712
Trustee fees and meeting expenses ............................................................. 2,006
Other operating expenses ...................................................................... 2,507
-----------
Total expenses ........................................................................... 421,743
-----------
Net investment loss .................................................................. (198,425)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 1,902,675
Increase in unrealized appreciation on investments ................................................. 4,687,315
-----------
Net realized and unrealized gain on investments ............................................... 6,589,990
-----------
Net increase in net assets resulting from operations ..................................... $ 6,391,565
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
2000 (a) 2000
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ...................................................... $ (198,425) $ (329,472)
Net realized gain from investment transactions ........................... 1,902,675 4,978,403
Increase in unrealized appreciation on investments ....................... 4,687,315 15,894,471
----------- -----------
Net increase in net assets resulting from operations ................. 6,391,565 20,543,402
----------- -----------
Distributions to shareholders from
Net realized gain from investment transactions ........................... (3,224,882) (3,150,167)
----------- -----------
Capital share transactions
Increase in net assets resulting from capital share transactions (b) ..... 19,526,576 19,548,813
----------- -----------
Total increase in net assets ................................. 22,693,259 36,942,048
NET ASSETS
Beginning of period ........................................................... 61,019,633 24,077,585
----------- -----------
End of period ................................................................. $83,712,892 $61,019,633
=========== ===========
(a) Unaudited.
(b) A summary of capital share activity follows:
---------------------------------------------------------------------------
Period ended Year ended
September 30, 2000 (a) March 31, 2000
Shares Value Shares Value
---------------------------------------------------------------------------
Shares sold ............................................ 795,736 $24,619,008 938,827 $27,362,789
Shares issued for reinvestment of distributions ........ 101,262 3,075,335 89,749 2,538,093
----------- ----------- ----------- -----------
896,998 27,694,343 1,028,576 29,900,882
Shares redeemed ........................................ (273,489) (8,167,767) (382,550) (10,352,069)
----------- ----------- ----------- -----------
Net increase ...................................... 623,509 $19,526,576 646,026 $19,548,813
=========== =========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
2000 (a) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................... $ 32.43 $ 19.48 $ 21.02 $ 15.01 $ 15.13
Income (loss) from investment operations
Net investment loss .......................... (0.08) (0.18) (0.12) (0.11) (0.03)
Net realized and unrealized gain (loss)
on investments .......................... 2.72 15.25 (1.19) 6.36 0.27
----------- ----------- ----------- ----------- -----------
Total from investment operations ........ 2.64 15.07 (1.31) 6.25 0.24
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net realized gain from investment transactions (1.66) (2.12) (0.23) (0.24) (0.36)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .......................... $ 33.41 $ 32.43 $ 19.48 $ 21.02 $ 15.01
=========== =========== =========== =========== ===========
Total return ............................................ 8.67 % 78.85 % (6.27) % 41.84 % 1.56 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ......................... $83,712,892 $61,019,633 $24,077,585 $11,565,944 $ 6,518,687
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.34 %(b) 1.48 % 1.85 % 2.05 % 2.70 %
After expense reimbursements and waived fees 1.34 %(b) 1.43 % 1.50 % 1.50 % 1.50 %
Ratio of net investment income to average net assets
Before expense reimbursements and waived fees (0.64)%(b) (0.99)% (1.33)% (1.23)% (1.50)%
After expense reimbursements and waived fees (0.64)%(b) (0.94)% (0.98)% (0.68)% (0.30)%
Portfolio turnover rate ........................... 8.12 % 28.26 % 29.45 % 11.64 % 13.39 %
(a) Unaudited.
(b) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Brown Capital Management Small Company Fund (the "Fund") is a
diversified series of shares of beneficial interest of The
Nottingham Investment Trust II (the "Trust"). The Trust, an
open-ended investment company, was organized on October 25, 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 seek capital appreciation principally
through investments in equity securities of those companies with
operating revenues of $250 million or less at the time of initial
investment. The Fund began operations on July 23, 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 subject to a maximum 3.50% sales
charge 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 the last sales price
as of 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 substantially all taxable income has been
distributed to shareholders. 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.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
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 is
recorded on the ex-dividend date.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
D. Distributions to Shareholders - The Fund may declare 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. Distributions
to shareholders are recorded on the ex-dividend date. 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 estimates.
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 1.00%
of the Fund's average daily net assets.
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 of average daily net assets,
0.125% of the next $50 million of average daily net assets, and
0.10% of average daily net assets over $150 million. The
Administrator also receives a monthly fee of $2,000 for accounting
and recordkeeping services. 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
investment securities.
NC 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 shares, acts as
dividend and distribution disbursing agent, and performs other
shareholder servicing functions.
Certain Trustees and officers of the Trust are also officers of
the Advisor, the distributor or the Administrator.
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $20,534,200 and $4,219,609, respectively,
for the period ended September 30, 2000.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 4 - DISTRIBUTIONS TO SHAREHOLDERS
For federal income tax purposes, the Fund must report
distributions from net realized gain from investment transactions
that represent long-term capital gain to its shareholders. The
Fund paid a total amount of $1.66 per share distributions for the
period ended September 30, 2000, including $1.45 that is
classified as long term gain. Shareholders should consult a tax
advisor on how to report distributions for state and local income
tax purposes.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 91.07%
Australian Equities - 3.91%
Goodman Fielder Limited ................................................. 61,000 $ 39,563
National Australia Bank Limited ......................................... 2,900 40,147
Westpac Banking Corporation Limited ..................................... 6,000 41,520
----------
121,230
----------
Austrian Equity - 1.19%
OMV AG .................................................................. 510 36,834
----------
Belgium Equity - 1.45%
Dexia ................................................................... 302 44,992
----------
Bermuda Equities - 1.60%
Ace Limited ............................................................. 650 25,269
XL Capital Ltd. - Class A ............................................... 330 24,420
----------
49,689
----------
Brazilian Equities - 1.63%
(a)America Online Latin America, Inc. ...................................... 3,700 29,137
(a)Petroleo Brasileiro S.A. - ADR .......................................... 750 21,281
----------
50,418
----------
British Equities - 12.56%
Allied Zurich Plc ....................................................... 3,600 40,840
Amvescap Plc ............................................................ 4,000 86,317
Enterprise Oil plc ...................................................... 2,700 22,028
J Sainsbury plc ......................................................... 4,400 24,191
LASMO plc ............................................................... 9,900 18,788
Man Group plc ........................................................... 5,000 37,808
Morgan Crucible Company plc ............................................. 6,500 24,863
Rolls-Royce plc ......................................................... 16,000 40,210
(a)Shire Pharmaceuticals Group PLC ......................................... 2,200 37,843
Unigate plc ............................................................. 5,400 16,357
United News & Media plc ................................................. 3,700 39,785
----------
389,030
----------
Canadian Equities - 4.42%
Noranda, Inc. ........................................................... 2,900 27,389
Royal Bank of Canada .................................................... 800 47,600
The Toronto-Dominion Bank ............................................... 400 11,919
The Toronto-Dominion Bank - ADR ......................................... 1,700 50,150
----------
137,058
----------
Danish Equity - 1.64%
(a)Danske Bank ............................................................. 400 50,800
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
French Equities - 5.16%
Alcatel ................................................................... 500 $ 31,975
Alstom .................................................................... 2,000 46,132
Aventis S. A .............................................................. 400 29,990
Pechiney SA ............................................................... 800 31,966
Scor ...................................................................... 450 19,648
----------
159,711
----------
German Equities - 4.61%
Adidas-Salomon AG ......................................................... 800 43,751
ProSieben Media AG ........................................................ 300 34,136
Rhoen-Klinikum AG ......................................................... 1,400 65,079
----------
142,966
----------
Hong Kong Equities - 1.73%
CLP Holdings Limited ...................................................... 3,500 15,713
Esprit Holdings Limited ................................................... 46,000 37,762
----------
53,475
----------
Hungarian Equity - 1.22%
Magyar Tavkozlesi Rt - ADR ................................................ 1,600 37,700
----------
Indian Equity - 0.67%
(a)Videsh Sanchar Nigam Ltd. - GDR ........................................... 2,600 20,800
----------
Isralian Equity - 2.42%
(a)Partner Communications Company Ltd. - ADR ................................. 3,100 23,831
Teva Pharmaceutical Industries Ltd. ....................................... 700 51,231
----------
75,062
----------
Japanese Equities - 9.46%
Autobacs Seven Co., Ltd. .................................................. 1,400 40,507
Coca-Cola West Japan Company Limited ...................................... 2,000 66,556
Daito Trust Construction Co., Ltd. ........................................ 3,400 54,969
Futaba Corporation ........................................................ 1,200 48,697
(a)House Foods Corporation ................................................... 3,000 41,154
(a)Ono Pharmaceutical Co., Ltd. .............................................. 1,000 41,043
----------
292,926
----------
Korean Equity - 0.87%
(a)Korea Telecom Corporation - ADR ........................................... 800 26,900
----------
Luxembourg Equity - 1.48%
Societe Europeene des Satellites .......................................... 300 45,912
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Mexican Equities - 3.23%
Cemex S.A. de C.V ........................................................... 7,400 $ 29,833
Fomento Economico Mexicano, S.A. de C.V. - ADR .............................. 800 31,200
(a)Wal-Mart de Mexico SA de CV ................................................. 18,700 39,150
----------
100,183
----------
Netherlands Equities - 9.63%
ABN AMRO Holding NV ......................................................... 1,716 39,958
Akzo Nobel N.V .............................................................. 1,300 54,812
Buhrmann NV ................................................................. 1,500 37,708
DSM NV ...................................................................... 1,200 35,036
Koninklijke (Royal) Philips Electronics N.V ................................. 876 37,684
Vedior NV ................................................................... 3,200 46,573
Royal Vendex KBB N. V ....................................................... 3,435 46,570
----------
298,341
----------
New Zealand Equity - 1.23%
Telecom Corporation of New Zealand Limited .................................. 15,300 38,180
----------
Norwegian Equity - 0.50%
Storebrand ASA .............................................................. 2,200 15,631
----------
Portugal Equity - 1.86%
Portugal Telecom SA - rights attached ....................................... 5,600 57,546
----------
Singapore Equity - 1.76%
(a)Creative Technology Limited ................................................. 1,400 29,621
(a)ST Assembly Test Services Limited ........................................... 1,300 24,863
----------
54,484
----------
Spanish Equities - 6.51%
Endesa S.A .................................................................. 2,200 41,334
Repsol-YPF, S.A ............................................................. 2,200 40,460
(a)Telefonica, S.A ............................................................. 862 51,235
Telefonica Publicidad e Informacion, S.A .................................... 3,200 27,097
Union Electrica Fenosa, S.A ................................................. 2,300 41,407
----------
201,533
----------
Swedish Equities - 3.78%
Holmen AB - B Shares ........................................................ 1,200 27,962
(a)Nordic Baltic Holding (NBH) AB .............................................. 2,540 17,871
Skandinaviska Enskilda Banken (SEB) ......................................... 2,420 29,198
Volvo AB .................................................................... 2,620 42,193
----------
117,224
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Swiss Equities - 6.55%
(a)ABB Ltd. ................................................................. 628 $ 61,116
(a)Distefora Holding AG ..................................................... 250 58,362
Gretag Imaging Group ..................................................... 200 45,531
Swisscom AG .............................................................. 155 38,025
----------
203,034
----------
Total Common Stocks (Cost $2,713,362) ................................................. 2,821,659
----------
INVESTMENT COMPANIES - 9.12%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................. 141,301 141,301
Evergreen Money Market Treasury Institutional Treasury
Market Market Fund Institutional Shares .................................. 141,301 141,301
----------
Total Investment Companies (Cost $282,602) ........................................................ 282,602
----------
Total Value of Investments (Cost $2,995,964 (b)) .................................... 100.19 % $3,104,261
Liabilities in Excess of Other Assets ............................................... (0.19)% (6,046)
------ ----------
Net Assets .................................................................... 100.00 % $3,098,215
====== ==========
(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 ........................................................................... $ 302,532
Unrealized depreciation ........................................................................... (194,235)
----------
Net unrealized appreciation ........................................................... $ 108,297
==========
The following acronyms are used in this portfolio:
AB - Aktiebolag (Swedish)
ADR - American Depository Receipt
AG - Aktiengesellschaft (German)
GDR - Global Depository Receipt
NV - Naamloze Vennootschap (Dutch)
PLC - Public Limited Company (British)
SA - Socieded Anonima (Spanish)
SA - Societe Anonyme (French)
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
ASSETS
Investments, at value (cost $2,995,964) ................................................................ $ 3,104,261
Income receivable (cost $6,633) ........................................................................ 6,610
Receivable for investments sold ........................................................................ 5,068
Prepaid expenses ....................................................................................... 1,328
Due from advisor (note 2) .............................................................................. 10,457
-----------
Total assets .................................................................................... 3,127,724
-----------
LIABILITIES
Accrued expenses ....................................................................................... 7,164
Other liabilities ...................................................................................... 117
Disbursements in excess of cash on demand deposit ...................................................... 22,228
-----------
Total liabilities ............................................................................... 29,509
-----------
NET ASSETS
(applicable to 281,437 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ................................................ $ 3,098,215
===========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($3,098,215 / 281,437 shares) .......................................................................... $ 11.01
===========
NET ASSETS CONSIST OF
Paid-in capital ........................................................................................ $ 3,021,466
Undistributed net investment income .................................................................... 7,985
Accumulated net realized loss on investments and foreign currency transactions ......................... (39,510)
Net unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies ........................................................... 108,274
-----------
$ 3,098,215
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
Period ended September 30, 2000
(Unaudited)
NET INVESTMENT INCOME
Income
Dividends (net of withholding taxes of $4,478) .......................................... $ 27,637
---------
Expenses
Investment advisory fees (note 2) ....................................................... 9,822
Fund administration fees (note 2) ....................................................... 1,719
Custody fees ............................................................................ 3,510
Registration and filing administration fees (note 2) .................................... 575
Fund accounting fees (note 2) ........................................................... 12,000
Audit fees .............................................................................. 7,521
Legal fees .............................................................................. 2,507
Securities pricing fees ................................................................. 5,707
Shareholder recordkeeping fees .......................................................... 4,500
Other accounting fees (note 2) .......................................................... 10,281
Shareholder servicing expenses .......................................................... 1,052
Registration and filing expenses ........................................................ 1,855
Printing expenses ....................................................................... 902
Trustee fees and meeting expenses ....................................................... 2,357
Other operating expenses ................................................................ 602
---------
Total expenses ...................................................................... 64,910
---------
Less:
Expense reimbursements (note 2) ................................................ (35,436)
Investment advisory fees waived (note 2) ....................................... (9,822)
---------
Net expenses ........................................................................ 19,652
---------
Net investment income .......................................................... 7,985
---------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investment and foreign currency transactions .......................... (39,342)
Decrease in unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies ................................................... (94,848)
---------
Net realized and unrealized loss on investments ......................................... (134,190)
---------
Net decrease in net assets resulting from operations ................................ $(126,205)
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Period ended
September 30, March 31,
2000 (a) 2000 (b)
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income .............................................................. $ 7,985 $ 1,339
Net realized (loss) gain from investment transactions .............................. (39,342) 45,215
(Decrease) increase in unrealized appreciation on investments
and translation of assets and liablities in foreign currencies .................. (94,848) 203,122
---------- ----------
Net (decrease) increase in net assets resulting from operations ................. (126,205) 249,676
---------- ----------
Distributions to shareholders from
Net investment income .............................................................. 0 (1,339)
Net realized gain from investment transactions ..................................... (44,714) 0
Tax distribution in excess of net investment income ................................ 0 (669)
---------- ----------
Decrease in net assets resulting from distributions ............................. (44,714) (2,008)
---------- ----------
Capital share transactions
Increase in net assets resulting from capital share transactions (c) ............... 1,621,597 1,399,869
---------- ----------
Total increase in net assets ............................................. 1,450,678 1,647,537
NET ASSETS
Beginning of period ..................................................................... 1,647,537 0
---------- ----------
End of period (including undistributed net investment income
of $7,985 at September 30, 2000 and $1,339 at March 31, 2000)............. $3,098,215 $1,647,537
========== ==========
(a) Unaudited.
(b) For the period from May 28, 1999 (commencement of operations) to March 31, 2000.
(c) A summary of capital share activity follows:
------------------------------------------------------------------------
Period ended Period ended
September 30, 2000 (a) March 31, 2000 (b)
Shares Value Shares Value
------------------------------------------------------------------------
Shares sold ................................................ 138,262 $1,577,293 139,161 $1,398,376
Shares issued for reinvestment of distributions ............ 3,899 44,448 179 2,008
---------- ---------- ---------- ----------
142,161 1,621,741 139,340 1,400,384
Shares redeemed ............................................ (12) (144) (52) (515)
---------- ---------- ---------- ----------
Net increase .......................................... 142,149 $1,621,597 139,288 $1,399,869
========== ========== ========== ==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Period ended
September 30, March 31,
2000 (a) 2000 (b)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................................................. $ 11.83 $ 10.00
(Loss) income from investment operations
Net investment income .................................................... 0.03 0.02
Net realized and unrealized (loss) gain on investments and translation of
assets and liabilities in foreign currencies ...................... (0.55) 1.83
----------- -----------
Total from investment operations .................................. (0.52) 1.85
----------- -----------
Distributions to shareholders from
Net investment income .................................................... 0.00 (0.02)
Net realized gain from investment transactions ........................... (0.30) 0.00
----------- -----------
Total distributions ............................................... (0.30) (0.02)
----------- -----------
Net asset value, end of period ........................................................ $ 11.01 $ 11.83
=========== ===========
Total return .......................................................................... (4.56)% 18.56 %
=========== ===========
Ratios/supplemental data
Net assets, end of period ....................................................... $ 3,098,215 $ 1,647,537
=========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ............................ 6.60 %(c) 9.23 %(c)
After expense reimbursements and waived fees ............................. 2.00 %(c) 2.00 %(c)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees ............................ (3.79)%(c) (7.11)%(c)
After expense reimbursements and waived fees ............................. 0.81 %(c) 0.12 %(c)
Portfolio turnover rate ......................................................... 6.05 % 23.61 %
(a) Unaudited.
(b) For the period from May 28, 1999 (commencement of operations) to March 31, 2000.
(c) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Brown Capital Management International 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-ended investment company, was organized on October 25, 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 its shareholders with
long-term capital growth, consisting of both realized and
unrealized capital gains, through investment in a diversified
international portfolio of marketable securities, primarily equity
securities, including common stock, preferred stocks and debt
securities convertible into common stocks. The Fund invests on a
worldwide basis in equity securities of companies which are
incorporated in foreign countries. The Fund began operations on
May 28, 1999. 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 the last sales price
as of 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 the Fund intends to distribute
substantially all taxable income to shareholders. 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.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
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 the accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund will made a
determination each year as to the distribution of its net
investment income, if any, and of its realized capital gains,
if any, based upon tax considerations both at the Fund level,
and the tax considerations of its shareholders. There is no
fixed dividend rate, and there can be no assurance as to the
payment of any dividends or the realization of any gains.
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 amount of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
F. Foreign Currency Translation - Portfolio securities and other
assets and liabilities denominated in foreign currencies are
translated into U.S. dollars based on the exchange rate of
such currencies against U.S. dollars on the date of valuation.
Purchases and sales of securities and income items denominated
in foreign currencies are translated into U.S. dollars at the
exchange rate in effect on the transaction date.
The Fund does not separately report the effect of changes in
foreign exchange rates from changes in market prices on
securities held. Such changes are included in net realized and
unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions and
the difference between the recorded amounts of dividends,
interest, and foreign withholding taxes, and the U.S. dollar
equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from
changes in foreign exchange rates on foreign denominated
assets and liabilities other than investments in securities
held at the end of the reporting period.
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 1.00%
on the first $100 million of the average daily net assets of the
Fund and 0.75% of the average daily net assets over $100 million.
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 2.00% of the average daily net assets of the
Fund. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Advisor has
voluntarily waived its fee amounting to $9,822 ($0.06 per share)
and has voluntarily agreed to reimburse $35,436 of the Fund's
operating expenses for the period ended September 30, 2000.
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
0.175% of the Fund's first $50 million of average daily net
assets, 0.15% of the next $50 million of average daily net assets,
0.125% of the next $50 million of average daily net assets, and
0.10% of average daily net assets over $150 million. The
Administrator also received a monthly fee of $2,000 for accounting
and recordkeeping services during this time period. The contract
with the Administrator provides that the aggregate fees for the
aforementioned administration fees 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.
NC 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 shares, acts as
dividend and distribution disbursing agent, and performs other
shareholder servicing functions.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
Capital Investment Group, Inc. (the "Distributor"), an affiliate
of the Advisor, serves as the Fund's principal underwriter and
distributor. The Distributor receives any sales charges imposed on
purchases of shares and re-allocates a portion of such charges to
dealers through whom the sale was made, if any.
Certain Trustees and officers of the Trust are also officers of
the Advisor, the Distributor or the Administrator.
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $1,492,935 and $109,224, respectively, for
the period ended September 30, 2000.
<PAGE>
The Brown Capital Management
Mutual Funds are a series of
The Nottingham Investment Trust II
For Shareholder Service Inquiries: For Investment Advisor Inquiries:
Documented: Documented:
The Nottingham Company Brown Capital Management
105 North Washington Street 1201 North Calvert Street
Post Office Drawer 69 Baltimore, Maryland 21202
Rocky Mount, North Carolina 27802-0069
Toll-Free Telephone: Toll-Free Telephone:
1-800-525-3863 1-877-892-4BCM, 1-877-892-4226
World Wide Web @: World Wide Web @:
ncfunds.com browncapital.com
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BROWN CAPITAL MANAGEMENT
