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[LOGO HERE]
BROWN CAPITAL MANAGEMENT FUNDS
________________________________________________________________________________
Series of The Nottingham Investment Trust II
SEMI-ANNUAL REPORT 1999
FOR THE PERIOD ENDED SEPTEMBER 30
INVESTMENT ADVISOR
Brown Capital Management, Inc.
1201 North Calvert Street
Baltimore, Maryland 21202
1-800-809-fund
www.browncapital.com
BROWN CAPITAL MANAGEMENT FUNDS
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This Report has been prepared for
shareholders and may be distributed
to others only if preceded or
accompanied by a current
prospectus.
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 95.95%
Biopharmaceuticals - 2.80%
PE Corp-PE Biosystems Group ............................................ 3,600 $ 260,100
----------
Building Materials - 1.92%
Illinois Tool Works Inc. ............................................... 2,400 178,950
----------
Computers - 7.51%
Compaq Computer Corporation ............................................ 2,100 48,300
(a)EMC Corporation ........................................................ 4,000 285,750
International Business Machines Corporation ............................ 3,000 364,125
----------
698,175
----------
Computer Software & Services - 14.57%
(a)Acxiom Corporation ..................................................... 7,200 141,525
(a)BMC Software, Inc. ..................................................... 4,000 286,250
(a)Fiserv, Inc. ........................................................... 4,500 146,250
(a)Microsoft Corporation .................................................. 3,400 307,913
Network Associates, Inc. ............................................... 12,400 237,150
(a)Sterling Commerce, Inc. ................................................ 4,872 90,437
(a)Sterling Software, Inc. ................................................ 7,300 146,000
----------
1,355,525
----------
Cosmetics & Personal Care - 2.08%
The Dial Corporation ................................................... 3,200 81,600
The Gillette Company ................................................... 3,300 111,994
----------
193,594
----------
Educational Services - 0.67%
(a)Sylvan Learning Systems, Inc. .......................................... 3,200 62,000
----------
Electronics - 3.75%
General Electric Company ............................................... 2,400 284,550
(a)Solectron Corporation .................................................. 900 64,463
----------
349,013
----------
Entertainment - 3.10%
Carnival Corporation ................................................... 6,620 287,970
----------
Financial - Banks, Money Center - 5.57%
Bank of America Corporation ............................................ 2,800 155,925
Citigroup Inc. ......................................................... 4,050 178,200
The Chase Manhattan Corporation ........................................ 2,440 183,915
----------
518,040
----------
Financial - Savings/Loans/Thrifts - 2.54%
Mellon Bank Corporation ................................................ 7,000 236,250
----------
(Continued)
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Securities Brokers - 3.19%
SLM Holding Corporation ................................................ 6,900 $ 296,700
----------
Financial Services - 4.46%
Equifax Inc. ........................................................... 7,350 206,259
T. Rowe Price Associates, Inc. ......................................... 7,600 208,525
----------
414,784
----------
Hand & Machine Tools - 0.85%
Danaher Corporation .................................................... 1,500 79,031
----------
Household Products & Housewares - 2.32%
Newell Rubbermaid, Inc. ................................................ 7,550 215,647
----------
Human Resources - 1.52%
Robert Half International, Inc. ........................................ 5,900 141,600
----------
Insurance - Life & Health - 1.86%
AFLAC Incorporated ..................................................... 4,124 172,692
----------
Leisure Time - 2.31%
Harley-Davidson, Inc. .................................................. 4,300 215,269
----------
Medical - Biotechnology - 3.67%
Covance Inc. ........................................................... 7,800 75,562
Merck & Co., Inc. ...................................................... 4,100 265,731
----------
341,293
----------
Medical - Hospital Management & Services - 5.49%
Guidant Corporation .................................................... 4,400 235,950
(a)HCR Manor Care, Inc. ................................................... 8,200 140,937
(a)Health Management Associates, Inc. ..................................... 18,200 134,225
----------
511,112
----------
Medical Supplies - 1.98%
Johnson & Johnson ...................................................... 2,000 183,750
----------
Oil & Gas - Equipment & Services - 2.34%
Schlumberger Limited ................................................... 3,500 218,094
----------
Pharmaceuticals - 3.38%
Cardinal Health, Inc. .................................................. 5,762 314,029
----------
(Continued)
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Retail - Department Stores - 3.71%
Dollar General Corporation ............................................. 11,078 $ 345,495
----------
Retail - General Merchandise - 1.76%
(a)Staples, Inc. .......................................................... 7,500 163,594
----------
Retail - Specialty - 1.77%
The Home Depot, Inc. ................................................... 2,400 164,700
----------
Telecommunications Equipment - 6.94%
(a)ADC Telecommunications, Inc. ........................................... 4,800 201,300
Lucent Technologies Inc. ............................................... 3,600 233,550
(a)Tellabs, Inc. .......................................................... 3,700 210,669
----------
645,519
----------
Utilities - Telecommunications - 3.89%
AT&T Corp. ............................................................. 4,200 182,700
MCI WorldCom, Inc. ..................................................... 2,500 179,688
----------
362,388
----------
Total Common Stocks (Cost $7,616,271) .................................. 8,925,314
----------
INVESTMENT COMPANY - 3.99%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ............................... 371,783 371,783
(Cost $371,783) ----------
Total Value of Investments (Cost $7,988,054 (b)) ................................... 99.94 % $9,297,097
Other Assets Less Liabilities ...................................................... 0.06 % 5,221
------ ----------
Net Assets .................................................................. 100.00 % $9,302,318
====== ==========
(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 .................................................................. $1,988,776
Unrealized depreciation .................................................................. (679,733)
----------
Net unrealized appreciation $1,309,043
==========
See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
ASSETS
Investments, at value (cost $7,988,054) .............................................................. $9,297,097
Cash ................................................................................................. 106
Income receivable .................................................................................... 7,056
Other assets ......................................................................................... 3,961
----------
Total assets .................................................................................... 9,308,220
----------
LIABILITIES
Accrued expenses ..................................................................................... 5,902
----------
NET ASSETS
(applicable to 412,528 Institutional class shares outstanding; unlimited
shares of no par value beneficial interest authorized) .............................................. $9,302,318
==========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE
PER INSTITUTIONAL CLASS SHARE
($9,302,318 / 412,528 shares) ........................................................................ $22.55
==========
NET ASSETS CONSIST OF
Paid-in capital ...................................................................................... $6,801,767
Accumulated net realized gain on investments ......................................................... 1,191,508
Net unrealized appreciation on investments ........................................................... 1,309,043
----------
$9,302,318
==========
See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF OPERATIONS
Period ended September 30, 1999
(Unaudited)
INVESTMENT LOSS
Income
Dividends .................................................................................... $ 37,737
-----------
Expenses
Investment advisory fees (note 2) ............................................................ 31,842
Fund administration fees (note 2) ............................................................ 8,573
Custody fees ................................................................................. 2,305
Registration and filing administration fees (note 2) ......................................... 2,406
Fund accounting fees (note 2) ................................................................ 12,000
Audit fees ................................................................................... 5,365
Legal fees ................................................................................... 2,507
Securities pricing fees ...................................................................... 1,612
Shareholder recordkeeping fees ............................................................... 4,500
Other accounting fees (note 2) ............................................................... 3,304
Shareholder servicing expenses ............................................................... 1,755
Registration and filing expenses ............................................................. 2,808
Printing expenses ............................................................................ 1,253
Trustee fees and meeting expenses ............................................................ 1,855
Other operating expenses ..................................................................... 1,378
-----------
Total expenses ......................................................................... 83,463
-----------
Less investment advisory fees waived (note 2) .......................................... (24,792)
-----------
Net expenses ........................................................................... 58,671
-----------
Net investment loss ............................................................... (20,934)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investment transactions .................................................... 959,172
Decrease in unrealized appreciation on investments ................................................ (1,219,141)
-----------
Net realized and unrealized loss on investments .............................................. (259,969)
-----------
Net decrease in net assets resulting from operations ................................... $ (280,903)
===========
See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
1999 1999
------------------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN NET ASSETS
Operations
Net investment loss .................................................................... $ (20,934) $ (32,585)
Net realized gain from investment transactions ......................................... 959,172 528,673
(Decrease) increase in unrealized appreciation on investments .......................... (1,219,141) 343,908
---------- ----------
Net (decrease) increase in net assets resulting from operations .................... (280,903) 839,996
---------- ----------
Distribution to shareholders from
Net realized gain from investment transactions ......................................... 0 (261,668)
---------- ----------
Capital share transactions
(Decrease) increase in net assets resulting from capital share transactions (a) ........ (238,948) 1,094,071
---------- ----------
Total (decrease) increase in net assets ....................................... (519,851) 1,672,399
NET ASSETS
Beginning of period ......................................................................... 9,822,169 8,149,770
---------- ----------
End of period ............................................................................... $9,302,318 $9,822,169
========== ==========
(a) A summary of capital share activity follows:
---------------------------------------------------------------------------
Period ended Year ended
September 30, 1999 March 31, 1999
Shares Value Shares Value
---------------------------------------------------------------------------
Shares sold .................................... 20,201 $ 477,169 83,530 $1,844,436
Shares issued for reinvestment
of distributions .......................... 0 0 11,017 259,788
---------- ---------- ---------- ----------
20,201 477,169 94,547 2,104,224
Shares redeemed ................................ (30,275) (716,117) (44,515) (1,010,153)
---------- ---------- ---------- ----------
Net (decrease) increase ................... (10,074) $ (238,948) 50,032 $1,094,071
========== ========== ========== ==========
See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
1999 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $23.24 $21.87 $16.61 $15.81 $12.36
(Loss) income from investment operations
Net investment (loss) income ............. (0.05) (0.08) (0.03) 0.05 0.00
Net realized and unrealized (loss) gain
on investments ......................... (0.64) 2.14 7.31 1.36 3.72
---------- ---------- ---------- ---------- ----------
Total from investment operations .... (0.69) 2.06 7.28 1.41 3.72
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
Net investment income .................... (0.00) 0.00 0.00 (0.05) 0.00
Net realized gain from investment transactions (0.00) (0.69) (1.98) (0.56) (0.27)
Distributions in excess of net realized gains 0.00 0.00 (0.04) 0.00 0.00
---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.00) (0.69) (2.02) (0.61) (0.27)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ...................... $22.55 $23.24 $21.87 $16.61 $15.81
========== ========== ========== ========== ==========
Total return ........................................ (2.93)% 9.34 % 44.68 % 8.91 % 30.25 %
========== ========== ========== ========== ==========
Ratios/supplemental data
Net assets, end of period ..................... $9,302,318 $9,822,169 $8,149,770 $4,405,020 $1,965,862
========== ========== ========== ========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.70 %(a) 1.88 % 1.98 % 3.37 % 5.58 %
After expense reimbursements and waived fees 1.20 %(a) 1.20 % 1.20 % 1.20 % 1.56 %
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.94)%(a) (1.07)% (0.94)% (1.85)% (4.20)%
After expense reimbursements and waived fees (0.42)%(a) (0.39)% (0.16)% 0.32 % 0.01 %
Portfolio turnover rate .......................... 20.42 %(a) 67.43 % 38.42 % 34.21 % 48.06 %
(a) Annualized.
See accompanying notes to financial statements
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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 18, 1990
as a Massachusetts Business Trust and is registered under the
Investment Company Act of 1940, as amended. The investment
objective of the Fund is to 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.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $20,934 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decrease net
realized gain on investments.
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)
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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 $24,792 ($0.06 per share)
for the period ended September 30, 1999.
The Fund's administrator, The Nottingham Company (the
"Administrator"), provides administrative services to and is
generally responsible for the overall management and day-to-day
operations of the Fund pursuant to a fund accounting and
compliance agreement with the Trust. As compensation for its
services, the Administrator receives a fee at the annual rate of
0.175% of the Fund's first $50 million of average daily net
assets, 0.15% of the next $50 million 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)
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THE BROWN CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $1,926,249 and $2,083,688, respectively,
for the period ended September 30, 1999.
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 72.44%
Biopharmaceuticals - 1.81%
PE Corp-PE Biosystems Group ............................................ 2,700 $ 195,075
-----------
Building Materials - 0.15%
Fastenal Company ....................................................... 350 16,494
-----------
Commercial Services - 1.94%
Equifax Inc. ........................................................... 5,925 166,270
(a)Sylvan Learning Systems, Inc. .......................................... 2,200 42,625
-----------
208,895
-----------
Computers - 5.95%
Compaq Computer Corporation ............................................ 1,500 34,500
(a)EMC Corporation ........................................................ 4,050 289,322
International Business Machines Corporation ............................ 2,600 315,575
-----------
639,397
-----------
Computer Software & Services - 10.93%
(a)Acxiom Corporation ..................................................... 6,575 129,240
(a)BMC Software, Inc. ..................................................... 3,425 245,102
(a)Fiserv, Inc. ........................................................... 3,880 126,100
(a)Microsoft Corporation .................................................. 3,100 280,744
(a)Network Associates, Inc. ............................................... 9,550 182,644
(a)Sterling Commerce, Inc. ................................................ 4,040 74,992
(a)Sterling Software, Inc. ................................................ 5,950 136,000
-----------
1,174,822
-----------
Cosmetics & Personal Care - 1.55%
The Dial Corporation ................................................... 2,800 71,400
The Gillette Company ................................................... 2,800 95,025
-----------
166,425
-----------
Electronics - 3.29%
(a)Altera Corporation ..................................................... 500 21,688
General Electric Company ............................................... 1,955 231,790
(a)Solectron Corporation .................................................. 1,400 100,275
-----------
353,753
-----------
Entertainment - 2.53%
Carnival Corporation ................................................... 5,875 255,563
The Walt Disney Company ................................................ 625 16,172
-----------
271,735
-----------
Financial - Banks, Money Center - 5.58%
Bank of America Corporation ............................................ 2,100 116,944
Citigroup Inc. ......................................................... 2,850 125,400
(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Banks, Money Center - (Continued)
Mellon Bank Corporation ................................................ 5,450 $ 183,938
The Chase Manhattan Corporation ........................................ 2,313 174,342
-----------
600,624
-----------
Financial Services - 4.01%
SLM Holding Corporation ................................................ 5,475 235,425
T. Rowe Price Associates, Inc. ......................................... 7,125 195,492
-----------
430,917
-----------
Hand & Machine Tools - 0.66%
Danaher Corporation .................................................... 1,350 71,128
-----------
Household Products & Housewares - 1.53%
Newell Rubbermaid Inc. ................................................. 5,750 164,234
-----------
Human Resources - 1.00%
(a)Robert Half International Inc. ......................................... 4,500 108,000
-----------
Insurance - Life & Health - 1.99%
AFLAC Incorporated ..................................................... 5,110 213,981
-----------
Leisure Time - 1.71%
Harley-Davidson, Inc. .................................................. 3,675 183,979
-----------
Manufacturing - 1.54%
Illinois Tool Works Inc. ............................................... 2,225 165,902
-----------
Medical - Hospital Management & Service - 2.05%
(a)HCR Manor Care, Inc. ................................................... 6,562 112,784
(a)Health Management Associates, Inc. ..................................... 14,600 107,675
-----------
220,459
-----------
Medical Supplies - 3.12%
Guidant Corporation .................................................... 3,300 176,963
Johnson & Johnson ...................................................... 1,725 158,484
-----------
335,447
-----------
Oil & Gas - Equipment & Services - 1.62%
Schlumberger Limited ................................................... 2,800 174,475
-----------
Pharmaceuticals - 5.27%
(a)ALZA Corporation ....................................................... 500 21,406
Cardinal Health, Inc. .................................................. 4,858 264,761
(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Pharmaceuticals - (Continued)
(a)Covance Inc. ........................................................... 5,600 $ 54,250
Merck & Co., Inc. ...................................................... 3,500 226,844
-----------
567,261
-----------
Real Estate Investment Trusts - 0.17%
The Rouse Company ...................................................... 800 18,400
-----------
Restaurants & Food Service - 0.09%
CBRL Group, Inc. ....................................................... 650 10,075
-----------
Retail - Department Stores - 2.35%
Dollar General Corporation ............................................. 8,091 252,338
-----------
Retail - General Merchandise - 1.74%
(a)Staples, Inc. .......................................................... 8,575 187,043
-----------
Retail - Grocery - 0.11%
Casey's General Stores, Inc. ........................................... 850 11,395
-----------
Retail - Specialty Line - 1.73%
(a)AutoZone, Inc. ......................................................... 825 23,152
The Home Depot, Inc. ................................................... 2,375 162,984
-----------
186,136
-----------
Telecommunications Equipment - 6.56%
(a)ADC Telecommunications, Inc. ........................................... 3,900 163,556
Lucent Technologies Inc. ............................................... 2,600 168,675
(a)Tellabs, Inc. .......................................................... 3,400 193,587
(a)MCI WorldCom, Inc. ..................................................... 2,500 179,688
-----------
705,506
-----------
Utilities - Telecommunications - 1.46%
AT&T Corp. ............................................................. 3,600 156,600
-----------
Total Common Stocks (Cost $7,030,844) .......................................................... 7,790,496
-----------
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 3.41%
United States Treasury Note ..................... $ 20,000 6.250% 08/15/23 19,703
United States Treasury Note ..................... 20,000 8.000% 11/15/21 23,659
(Continued)
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THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Principal Rate Date (note 1)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - (Continued)
United States Treasury Note ..................... $ 90,000 6.375% 08/15/02 $ 91,560
United States Treasury Note ..................... 100,000 7.500% 02/15/05 107,000
United States Treasury Note ..................... 100,000 7.750% 01/31/00 100,848
Federal Home Loan Bank Strip .................... 100,000 0.000% 07/14/17 23,313
General National Mortgage Association
Pool #238773 ............................... 871 9.500% 11/15/17 935
-----------
Total U.S. Government and Agency Obligations (Cost $363,660) ................................... 367,018
-----------
CORPORATE OBLIGATIONS - 10.95%
Alabama Power Company ........................... 35,000 7.750% 02/01/23 34,241
AMR Corporation ................................. 10,000 10.000% 02/01/01 10,388
AT&T Corporation ................................ 75,000 5.625% 03/15/04 72,000
Boston Edison Company ........................... 60,000 7.800% 05/15/10 62,398
Chase Manhattan Corporation ..................... 45,000 6.500% 08/01/05 44,156
Chesapeake & Potomac Telephone of Virginia ...... 90,000 7.250% 06/01/12 88,425
Citicorp ........................................ 25,000 7.125% 06/01/03 25,234
Dow Chemical Capital Debentures ................. 15,000 9.200% 06/01/10 16,954
Ford Motor Credit Corporation ................... 55,000 7.250% 09/01/10 54,247
ITT Corporation ................................. 95,000 7.375% 11/15/15 79,953
Merrill Lynch ................................... 160,000 7.150% 07/30/12 154,227
Monsanto Company ................................ 95,000 6.210% 02/05/08 90,131
Nalco Chemical .................................. 50,000 6.250% 05/15/08 45,826
Nationsbank Corporation ......................... 15,000 6.875% 02/15/05 14,875
RJR Nabisco, Corp. .............................. 30,000 8.750% 04/15/04 30,675
The Rouse Company ............................... 35,000 8.500% 01/15/03 35,762
The Walt Disney Company ......................... 100,000 7.750% 09/30/11 101,011
Time Warner, Inc. ............................... 35,000 9.150% 02/01/23 39,113
U. S. F. & G. Corporation ....................... 90,000 7.125% 06/01/05 90,348
Wal-Mart Stores ................................. 80,000 8.070% 12/21/12 87,430
-----------
Total Corporate Obligations (Cost $1,203,856) .................................................. 1,177,394
-----------
--------------
Shares
--------------
INVESTMENT COMPANIES - 8.91%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ............................... 479,014 479,014
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - (Continued)
Evergreen Money Market Treasury Institutional Treasury
Money Market Fund Institutional Shares ................................. 479,014 $ 479,014
-----------
Total Investment Companies (Cost $958,028) ............................. 958,028
-----------
Total Value of Investments (Cost $9,556,388 (b)) ................................... 95.71% $10,292,936
Other Assets Less Liabilities ...................................................... 4.29% 461,713
------ -----------
Net Assets .................................................................. 100.00% $10,754,649
====== ===========
(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 ........................................................................ $ 1,305,427
Unrealized depreciation ........................................................................ (568,879)
-----------
Net unrealized appreciation .................................................... $ 736,548
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
ASSETS
Investments, at value (cost $9,556,388) ......................................................... $10,292,936
Cash ............................................................................................ 430,030
Income receivable ............................................................................... 33,472
Other assets .................................................................................... 4,316
-----------
Total assets ............................................................................... 10,760,754
-----------
LIABILITIES
Accrued expenses ................................................................................ 5,170
Payable for investment purchases ................................................................ 935
-----------
Total liabilities .......................................................................... 6,105
-----------
NET ASSETS
(applicable to 622,679 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ......................................... $10,754,649
===========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE
PER INSTITUTIONAL CLASS SHARE
($10,754,649 / 622,679 shares) .................................................................. $17.27
===========
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 9,144,419
Undistributed net investment income ............................................................. 2,899
Accumulated net realized gain on investments .................................................... 870,783
Net unrealized appreciation on investments ...................................................... 736,548
-----------
$10,754,649
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
STATEMENT OF OPERATIONS
Period ended September 30, 1999
(Unaudited)
INVESTMENT INCOME
Income
Interest ...................................................................................... $ 48,052
Dividends ..................................................................................... 44,146
---------
Total income ............................................................................ 92,198
---------
Expenses
Investment advisory fees (note 2) ............................................................. 32,386
Fund administration fees (note 2) ............................................................. 8,719
Custody fees .................................................................................. 2,102
Registration and filing administration fees (note 2) .......................................... 2,326
Fund accounting fees (note 2) ................................................................. 12,000
Audit fees .................................................................................... 5,355
Legal fees .................................................................................... 2,503
Securities pricing fees ....................................................................... 2,797
Shareholder recordkeeping fees ................................................................ 4,500
Other accounting fees (note 2) ................................................................ 3,094
Shareholder servicing expenses ................................................................ 1,151
Registration and filing expenses .............................................................. 2,603
Printing expenses ............................................................................. 801
Trustee fees and meeting expenses ............................................................. 1,852
Other operating expenses ...................................................................... 1,372
---------
Total expenses .......................................................................... 83,561
---------
Less: Investment advisory fees waived (note 2) .......................................... (23,727)
---------
Net expenses ............................................................................ 59,834
---------
Net investment income .............................................................. 32,364
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 676,101
Decrease in unrealized appreciation on investments ................................................. (972,632)
---------
Net realized and unrealized loss on investments ............................................... (296,531)
---------
Net decrease in net assets resulting from operations .................................... $(264,167)
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
1999 1999
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income ..................................................... $ 32,364 $ 50,874
Net realized gain from investment transactions ............................ 676,101 338,978
(Decrease) increase in unrealized appreciation on investments ............. (972,632) 195,131
----------- -----------
Net (decrease) increase in net assets resulting from operations ....... (264,167) 584,983
----------- -----------
Distributions to shareholders from
Net investment income ..................................................... (29,478) (50,801)
Net realized gain from investment transactions ............................ 0 (161,031)
----------- -----------
Decrease in net assets resulting from distributions ................... (29,478) (211,832)
----------- -----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ...... 1,445,390 3,152,016
----------- -----------
Total increase in net assets .................................. 1,151,745 3,525,167
NET ASSETS
Beginning of period ............................................................ 9,602,904 6,077,737
----------- -----------
End of period (including undistributed net investment income of $13 ............ $10,754,649 $ 9,602,904
on March 31, 1999 and $2,899 at September 30, 1999) =========== ===========
(a) A summary of capital share activity follows:
----------------------------------------------------------------------------------
Period ended Year ended
September 30, 1999 March 31, 1999
Shares Value Shares Value
----------------------------------------------------------------------------------
Shares sold .................................... 113,862 $ 2,011,298 220,097 $ 3,825,498
Shares issued for reinvestment
of distributions .......................... 1,642 29,145 11,926 210,991
----------- ----------- ----------- -----------
115,504 2,040,443 232,023 4,036,489
Shares redeemed ................................ (33,036) (595,053) (52,851) (884,473)
----------- ----------- ----------- -----------
Net increase .............................. 82,468 $ 1,445,390 179,172 $ 3,152,016
=========== =========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
1999 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................... $17.78 $16.83 $13.60 $13.76 $11.56
Income (loss) from investment operations
Net investment income ....................... 0.05 0.13 0.17 0.21 0.12
Net realized and unrealized (loss) gain
on investments ............................ (0.51) 1.39 4.65 0.76 2.98
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... (0.46) 1.52 4.82 0.97 3.10
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ....................... (0.05) (0.13) (0.17) (0.21) (0.12)
Net realized gain from investment transactions (0.00) (0.44) (1.42) (0.92) (0.78)
----------- ----------- ----------- ----------- -----------
Total distributions .................... (0.05) (0.57) (1.59) (1.13) (0.90)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ......................... $17.27 $17.78 $16.83 $13.60 $13.76
=========== =========== =========== =========== ===========
Total return ........................................... (2.54)% 8.99 % 36.19 % 7.01 % 27.04 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $10,754,649 $ 9,602,904 $ 6,077,737 $ 3,874,653 $ 3,319,314
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.68 %(a) 2.11 % 2.22 % 2.85 % 3.50 %
After expense reimbursements and waived fees 1.20 %(a) 1.20 % 1.20 % 1.20 % 1.59 %
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 0.18 %(a) (0.17)% 0.05 % (0.13)% (0.97)%
After expense reimbursements and waived fees 0.66 %(a) 0.74 % 1.08 % 1.51 % 0.94 %
Portfolio turnover rate .......................... 18.86 % 58.38 % 33.54 % 45.58 % 43.59 %
(a) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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 18, 1990
as a Massachusetts Business Trust and is registered under the
Investment Company Act of 1940, as amended. The investment
objective of the Fund is to provide 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.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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 $23,727 ($0.04 per share)
for the period ended September 30, 1999.
The Fund's administrator, The Nottingham Company (the
"Administrator"), provides administrative services to and is
generally responsible for the overall management and day-to-day
operations of the Fund pursuant to a fund accounting and
compliance agreement with the Trust. As compensation for its
services, the Administrator receives a fee at the annual rate of
0.175% of the Fund's first $50 million of average daily net
assets, 0.15% of the next $50 million 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
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.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $2,981,843 and $1,606,162, respectively,
for the period ended September 30, 1999.
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 93.49%
Chemicals - 0.71%
(a)Synthetech, Inc. ..................................................... 44,700 $ 192,769
-----------
Commercial Services - 19.56%
(a)Acxiom Corporation ................................................... 36,700 721,386
(a)Dendrite International, Inc. ......................................... 20,900 987,525
Fair, Isaac and Company, Incorporated ................................ 24,700 693,144
(a)Harbinger Corporation ................................................ 38,400 648,000
(a)Healthworld Corporation .............................................. 21,200 296,800
(a)infoUSA Inc. - Class A ............................................... 27,800 187,650
(a)infoUSA Inc. - Class B ............................................... 28,300 194,562
(a)Manugistics Group, Inc. .............................................. 36,900 387,450
(a)QRS Corporation ...................................................... 16,550 1,061,269
(a)Quintiles Transnational Corp. ........................................ 6,200 117,994
-----------
5,295,780
-----------
Computers - 2.52%
(a)RadiSys Corporation .................................................. 17,400 682,949
-----------
Computer Software & Services - 20.47%
(a)Advent Software, Inc. ................................................ 17,400 1,083,150
(a)American Software, Inc. .............................................. 150,300 432,112
(a)Best Software, Inc. .................................................. 38,800 766,300
(a)BMC Software, Inc. ................................................... 13,043 933,390
(a)Concord Communications, Inc. ......................................... 4,800 190,800
(a)Datastream Systems, Inc. ............................................. 70,900 930,562
(a)Hyperion Solutions Corporation ....................................... 13,710 301,620
(a)Network Associates, Inc. ............................................. 7,287 139,369
(a)SPSS Inc. ............................................................ 39,400 765,837
-----------
5,543,140
-----------
Cosmetics & Personal Care - 0.64%
Kimberly-Clark Corporation ........................................... 3,284 172,410
-----------
Electronics - Semiconductor - 1.23%
(a)Medialink Worldwide Incorporated ..................................... 31,800 333,900
-----------
Financial Services - 4.43%
(a)BISYS Group, Inc. (the) .............................................. 15,300 717,666
(a)CFI ProServices, Inc. ................................................ 20,100 196,604
T. Rowe Price Associates, Inc. ....................................... 10,400 285,350
-----------
1,199,620
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Hand & Machine Tools - 1.95%
(a)Flow International Corporation ....................................... 50,800 $ 527,050
-----------
Machine - Diversified - 4.47%
(a)Cognex Corporation ................................................... 17,100 516,206
(a)Structural Dynamics Research Corporation ............................. 46,200 694,446
-----------
1,210,652
-----------
Medical - Biotechnologhy - 14.41%
(a)Affymetrix, Inc. ..................................................... 13,400 1,319,062
(a)BioReliance Corporation .............................................. 37,200 232,500
(a)Cerner Corporation ................................................... 20,300 309,575
(a)ChiRex Inc. .......................................................... 31,500 813,094
(a)Human Genome Sciences, Inc. .......................................... 4,100 302,375
(a)Incyte Pharmaceuticals, Inc. ......................................... 9,500 219,687
(a)Pharmacopeia, Inc. ................................................... 38,600 419,775
(a)Synbiotics Corporation ............................................... 12,400 31,775
(a)Tripos, Inc. ......................................................... 39,800 253,725
-----------
3,901,568
-----------
Medical Supplies - 7.78%
Diagnostic Products Corporation ...................................... 33,600 903,000
(a)Techne Corporation ................................................... 38,400 1,204,800
-----------
2,107,800
-----------
Pharmaceuticals - 5.98%
(a)ALZA Corporation ..................................................... 15,100 646,469
(a)Albany Molecular Research, Inc. ...................................... 8,400 211,050
(a)Applied Analytical Industries, Inc. .................................. 29,700 334,125
(a)Kendle International Inc. ............................................ 26,300 208,756
(a)Lynx Therapeutics, Inc. .............................................. 81 911
(a)Professional Detailing, Inc. ......................................... 8,400 217,875
-----------
1,619,186
-----------
Real Estate Investment Trust - 0.55%
Post Properties, Inc. ................................................ 3,800 149,387
-----------
Restaurants & Food Services - 6.30%
(a)Panera Bread Company ................................................. 100,800 667,800
(a)The Cheesecake Factory Incorporated .................................. 37,400 1,037,850
-----------
1,705,650
-----------
Retail - Specialty Line - 2.49%
Fastenal Company ..................................................... 14,300 673,887
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Warrants - 0.00%
(a)ALZA Corporation, expiration date December 31, 1999 .................. 150 $ 5
-----------
Total Common Stocks (Cost $21,188,138) ............................... 25,315,753
-----------
INVESTMENT COMPANIES - 6.44%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ............................. 1,185,732 1,185,732
Evergreen Money Market Treasury Institutional Treasury
Money Market Fund Institutional Service Shares ....................... 558,542 558,542
-----------
Total Investment Companies (Cost $1,744,274) ......................... 1,744,274
-----------
Total Value of Investments (Cost $22,932,412 (b)) ................................ 99.93 % $27,060,027
Other Assets Less Liabilities .................................................... 0.07 % 17,647
------ -----------
Net Assets ................................................................ 100.00 % $27,077,674
====== ===========
(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 .................................................................... $ 6,426,643
Unrealized depreciation .................................................................... (2,299,028)
-----------
Net unrealized appreciation ................................................ $ 4,127,615
===========
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, 1999
(Unaudited)
ASSETS
Investments, at value (cost $22,932,412) ............................................................ $27,060,027
Cash ................................................................................................ 8,470
Income receivable ................................................................................... 10,184
Receivable for fund shares sold ..................................................................... 4,000
Other assets ........................................................................................ 916
-----------
Total assets ................................................................................... 27,083,597
-----------
LIABILITIES
Accrued expenses .................................................................................... 5,923
-----------
NET ASSETS
(applicable to 1,179,012 Institutional shares outstanding; unlimited
shares of no par value beneficial interest authorized) ............................................. $27,077,674
===========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE
PER INSTITUTIONAL CLASS SHARE
($27,077,674 / 1,179,012 shares) .................................................................... $22.97
===========
NET ASSETS CONSIST OF
Paid-in capital ..................................................................................... $20,576,420
Accumulated net realized gain on investments ........................................................ 2,373,639
Net unrealized appreciation on investments .......................................................... 4,127,615
-----------
$27,077,674
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
STATEMENT OF OPERATIONS
Period ended September 30, 1999
(Unaudited)
INVESTMENT LOSS
Income
Dividends .................................................................................... $ 49,477
----------
Expenses
Investment advisory fees (note 2) ............................................................ 129,773
Fund administration fees (note 2) ............................................................ 22,710
Custody fees ................................................................................. 2,252
Registration and filing administration fees (note 2) ......................................... 4,118
Fund accounting fees (note 2) ................................................................ 12,000
Audit fees ................................................................................... 5,355
Legal fees ................................................................................... 2,503
Securities pricing fees ...................................................................... 1,966
Shareholder recordkeeping fees ............................................................... 4,500
Shareholder servicing expenses ............................................................... 2,252
Registration and filing expenses ............................................................. 8,509
Printing expenses ............................................................................ 1,376
Trustee fees and meeting expenses ............................................................ 1,852
Other operating expenses ..................................................................... 1,721
----------
Total expenses ......................................................................... 200,887
----------
Less investment advisory fees waived (note 2) .......................................... (7,401)
----------
Net expenses ........................................................................... 193,486
----------
Net investment loss ............................................................... (144,009)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions .................................................... 996,232
Increase in unrealized appreciation on investments ................................................ 3,200,620
----------
Net realized and unrealized gain on investments .............................................. 4,196,852
----------
Net increase in net assets resulting from operations ................................... $4,052,843
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
1999 1999
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ............................................................ $ (144,009) $ (148,904)
Net realized gain from investment transactions ................................. 996,232 1,615,338
Increase (decrease) in unrealized appreciation on investments .................. 3,200,620 (3,101,684)
----------- -----------
Net increase (decrease) in net assets resulting from operations ............ 4,052,843 (1,635,250)
----------- -----------
Distributions to shareholders from
Net realized gain from investment transactions ................................. 0 (170,496)
----------- -----------
Capital share transactions
(Decrease) increase in net assets resulting from capital share transactions (a) (1,052,754) 14,317,387
----------- -----------
Total increase in net assets .......................................... 3,000,089 12,511,641
NET ASSETS
Beginning of period ................................................................. 24,077,585 11,565,944
----------- -----------
End of period ....................................................................... $27,077,674 $24,077,585
=========== ===========
(a) A summary of capital share activity follows:
-----------------------------------------------------------------------------------
Period ended Year ended
September 30, 1999 March 31, 1999
Shares Value Shares Value
-----------------------------------------------------------------------------------
Shares sold .................................... 122,332 $ 2,769,619 805,203 $16,718,958
Shares issued for reinvestment
of distributions .......................... 0 0 8,148 169,715
----------- ----------- ----------- -----------
122,332 2,769,619 813,351 16,888,673
Shares redeemed ................................ (179,054) (3,822,373) (127,744) (2,571,286)
----------- ----------- ----------- -----------
Net (decrease) increase ................... (56,722) $(1,052,754) 685,607 $14,317,387
=========== =========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
1999 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................... $19.48 $21.02 $15.01 $15.13 $12.24
(Loss) income from investment operations
Net investment loss ......................... (0.12) (0.12) (0.11) (0.03) (0.06)
Net realized and unrealized gain (loss)
on investments ............................ 3.61 (1.19) 6.36 0.27 4.00
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... 3.49 (1.31) 6.25 0.24 3.94
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net realized gain from investment transactions (0.00) (0.23) (0.24) (0.36) (1.05)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ......................... $22.97 $19.48 $21.02 $15.01 $15.13
=========== =========== =========== =========== ===========
Total return ........................................... 17.86 % (6.27)% 41.84 % 1.56 % 33.00 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $27,077,674 $24,077,585 $11,565,944 $ 6,518,687 $ 3,740,208
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.56 %(a) 1.85 % 2.05 % 2.70 % 3.49 %
After expense reimbursements and waived fees 1.50 %(a) 1.50 % 1.50 % 1.50 % 1.69 %
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (1.16)%(a) (1.33)% (1.23)% (1.50)% (2.29)%
After expense reimbursements and waived fees (1.12)%(a) (0.98)% (0.68)% (0.30)% (0.50)%
Portfolio turnover rate .......................... 9.66 % 29.45 % 11.64 % 13.39 % 23.43 %
(a) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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 18, 1990
as a Massachusetts Business Trust and is registered under the
Investment Company Act of 1940, as amended. The investment
objective of the Fund is to 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.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $144,009 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decrease net
realized gain on investments.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
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.
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 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 1.50% 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 $7,401 ($0.01 per share)
for the period ended September 30, 1999.
The Fund's administrator, The Nottingham Company (the
"Administrator"), provides administrative services to and is
generally responsible for the overall management and day-to-day
operations of the Fund pursuant to a fund accounting and
compliance agreement with the Trust. As compensation for its
services, the Administrator receives a fee at the annual rate of
0.175% of the Fund's first $50 million of average daily net
assets, 0.15% of the next $50 million 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
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 SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
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 $2,343,498 and $2,637,647, respectively,
for the period ended September 30, 1999.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 94.84%
Austrian Equity - 1.50%
OMV AG ..................................................................... 200 $ 18,620
----------
Australian Equities - 4.75%
Goodman Fielder Limited .................................................... 16,100 14,920
National Australia Bank Limited ............................................ 900 13,215
Pioneer International Limited .............................................. 6,700 16,528
Westpac Banking Corporation ................................................ 2,300 14,185
----------
58,848
----------
British Securities - 22.87%
Allied Zurich Plc .......................................................... 1,600 18,787
Amvescap Plc ............................................................... 4,000 32,640
British Airways plc ........................................................ 1,400 7,862
J Sainsbury plc ............................................................ 4,400 27,463
Man (E D & F) Group plc .................................................... 3,000 16,279
Morgan Crucible Company plc ................................................ 3,500 14,929
National Westminster Bank PLC .............................................. 1,000 23,319
PowerGen plc ............................................................... 1,400 14,260
Rolls-Royce plc ............................................................ 3,800 13,189
(a)Select Appointments Holdings plc ........................................... 1,500 25,407
(a)Shire Pharmaceuticals Group PLC ............................................ 1,500 14,056
Unigate plc ................................................................ 2,200 11,231
United Biscuits (Holdings) plc ............................................. 5,300 15,973
United News & Media plc .................................................... 4,100 39,500
United Utilities plc ....................................................... 800 8,755
----------
283,650
----------
Canadian Equity - 0.99%
Noranda, Inc. .............................................................. 900 12,296
----------
Danish Equities - 2.93%
Den Danske Bank Group ...................................................... 200 22,779
Unidanmark A/S ............................................................. 200 13,553
----------
36,332
----------
French Equities - 7.78%
Alcatel .................................................................... 100 13,839
Alstom ..................................................................... 300 10,068
Dexia France ............................................................... 100 14,973
Pechiney SA ................................................................ 400 22,246
Rhone-Poulenc S.A .......................................................... 400 20,748
Scor ....................................................................... 300 14,599
----------
96,473
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (Continued)
German Equities - 7.68%
Adidas-Salomon AG .......................................................... 200 $ 17,110
DaimlerChrysler AG ......................................................... 300 20,817
ProSieben Media AG ......................................................... 400 17,326
Rhoen-Klinikum AG .......................................................... 200 23,101
Volkswagen AG .............................................................. 300 16,873
----------
95,227
----------
Hong Kong Equities - 2.81%
Axa China Region Limited ................................................... 19,200 12,605
CLP Holdings Limited ....................................................... 2,000 9,397
Esprit Holdings Limited .................................................... 14,000 12,886
----------
34,888
----------
Luxembourg Equity - 1.06%
Societe Europeene des Satellites ........................................... 100 13,141
----------
Mexican Equity - 1.08%
Cemex SA de CV ............................................................. 2,800 13,462
----------
Netherlands Equities - 6.54%
ABN AMRO Holding NV ........................................................ 700 15,796
Akzo Nobel N.V ............................................................. 500 21,283
DSM NV ..................................................................... 600 23,871
Koninklijke (Royal) Philips Electronics N.V ................................ 200 20,213
----------
81,163
----------
New Zealand Equity - 1.08%
Telecom Corporation ........................................................ 3,400 13,446
----------
Norwegian Equity - 1.34%
(a)Storebrand ASA ............................................................. 2,200 16,566
----------
Portugal Equity - 1.69%
Portugal Telecom SA ........................................................ 500 20,898
----------
Singapore Equity - 2.12%
Creative Technology Limited ................................................ 1,400 15,330
Dairy Farm International Holdings Limited .................................. 11,000 10,945
----------
26,275
----------
Spanish Equities - 4.29%
Endesa S.A ................................................................. 700 13,356
Repsol-YPF, S.A ............................................................ 800 15,734
Union Electrica Fenosa, S.A ................................................ 1,600 24,111
----------
53,201
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (Continued)
Swedish Equities - 4.60%
Mo och Domsjoe AB .......................................................... 600 $ 17,961
Skandinaviska Enskilda Banken .............................................. 1,600 16,358
Volvo AB ................................................................... 800 22,675
----------
56,994
----------
Swiss Equities - 4.91%
(a)ABB Ltd. ................................................................... 178 18,457
(a)Distefora Holding AG ....................................................... 200 26,760
Swisscom AG ................................................................ 50 15,654
----------
60,871
----------
U. S. Domestic Equities - 14.82%
Ace Limited ................................................................ 600 10,200
(a)Asia Pulp & Paper Company Ltd. - ADR ....................................... 700 4,112
Fomento Economico Mexicano, S.A. de C.V. - ADR ............................. 500 15,656
Industrie Natuzzi SpA - ADR ................................................ 700 13,737
Magyar Tavkozlesi Rt - ADR ................................................. 400 10,900
New Holland N.V ............................................................ 910 14,560
Petroleo Brasileiro S.A. - ADR ............................................. 600 9,407
Royal Bank of Canada ....................................................... 300 12,488
Telefonica del Peru S.A.A. - ADR ........................................... 1,000 13,500
Telesp Participacoes S.A. - ADR ............................................ 350 5,513
Teva Pharmaceutical Industries Ltd. - ADR .................................. 300 15,094
The Toronto-Dominion Bank .................................................. 1,200 23,400
Transportadora de Gas del Sur S.A. - ADR ................................... 1,100 9,006
Videsh Sanchar Nigam Ltd. .................................................. 900 12,668
XL Capital Ltd. ............................................................ 300 13,500
----------
183,741
----------
Total Common Stocks (Cost $1,188,674) ............................. 1,176,092
----------
INVESTMENT COMPANIES - 9.18%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares .......................... 56,952 56,952
Evergreen Money Market Treasury Institutional Treasury
Money Market Fund Institutional Service Shares .................... 56,952 56,952
----------
Total Investment Companies (Cost $113,904) ........................ 113,904
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value in US$
(note 1)
------------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (Cost $1,302,578 (b)) ................................. 104.02 % $1,289,996
Liabilities In Excess of Other Assets ............................................ (4.02)% (49,854)
------ ----------
Net Assets ................................................................ 100.00 % $1,240,142
====== ==========
(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 .................................................................. $ 65,116
Unrealized depreciation .................................................................. (77,698)
----------
Net unrealized depreciation $ (12,582)
==========
The following acronym is used in this portfolio:
AB - Aktiebolag (Swedish)
ADR - American Depository Receipt
AG - Aktiengesellschaft (German)
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, 1999
(Unaudited)
ASSETS
Investments, at value (cost $1,302,578) ............................................................... $1,289,996
Cash .................................................................................................. 13,677
Income receivable (cost $3,066) ....................................................................... 3,096
Prepaid expenses ...................................................................................... 3,221
Due from advisor (note 2) ............................................................................. 7,088
----------
Total assets ..................................................................................... 1,317,078
----------
LIABILITIES
Accrued expenses ...................................................................................... 7,029
Payable for investment purchases ...................................................................... 69,907
----------
Total liabilities ................................................................................ 76,936
----------
NET ASSETS
(applicable to 126,033 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ............................................... $1,240,142
==========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($1,240,142 / 126,033 shares) ......................................................................... $9.84
==========
NET ASSETS CONSIST OF
Paid-in capital ....................................................................................... $1,258,597
Undistributed net investment income ................................................................... 1,295
Accumulated net realized loss from investments and foreign currency transactions ...................... (7,198)
Net unrealized depreciation on investments and translation of assets
and liabilities in foreign currencies ............................................................ (12,552)
----------
$1,240,142
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
For the period from May 28, 1999
(commencement of operations) to
September 30, 1999
(Unaudited)
INVESTMENT INCOME
Income
Interest ..................................................................................... $ 1,182
Dividends (net of withholding taxes of $783) ................................................. 7,488
--------
Total income ........................................................................... 8,670
--------
Expenses
Investment advisory fees (note 2) ............................................................ 3,698
Fund administration fees (note 2) ............................................................ 647
Custody fees ................................................................................. 2,006
Registration and filing administration fees (note 2) ......................................... 40
Fund accounting fees (note 2) ................................................................ 8,000
Audit fees ................................................................................... 3,978
Legal fees ................................................................................... 1,889
Securities pricing fees ...................................................................... 3,856
Shareholder recordkeeping fees ............................................................... 3,000
Other accounting fees (note 2) ............................................................... 7,350
Shareholder servicing expenses ............................................................... 1,003
Registration and filing expenses ............................................................. 752
Printing expenses ............................................................................ 1,003
Trustee fees and meeting expenses ............................................................ 1,237
Other operating expenses ..................................................................... 639
--------
Total expenses ......................................................................... 39,098
--------
Less:
Expense reimbursements (note 2) ................................................... (24,034)
Investment advisory fees waived (note 2) .......................................... (3,698)
Fund administration fees waived (note 2) .......................................... (304)
Other accounting fees waived (note 2) ............................................. (3,687)
--------
Net expenses ........................................................................... 7,375
--------
Net investment income ............................................................. 1,295
--------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investments and foreign currency transactions .............................. (7,198)
Decrease in unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies ........................................................ (12,552)
--------
Net realized and unrealized loss on investments .............................................. (19,750)
--------
Net decrease in net assets resulting from operations ................................... $(18,455)
========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period from May 28, 1999
(commencement of operations) to
September 30, 1999
(Unaudited)
INCREASE IN NET ASSETS
Operations
Net investment income .............................................................................. $ 1,295
Net realized loss from investments and foreign currency transactions ............................... (7,198)
Decrease in unrealized appreciation on investments and translation of assets
and liabilities in foreign currencies .......................................................... (12,552)
----------
Net decrease in net assets resulting from operations ........................................... (18,455)
----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ............................... 1,258,597
----------
Total increase in net assets .............................................................. 1,240,142
NET ASSETS
Beginning of period ..................................................................................... 0
----------
End of period (including undistributed net investment income of $1,295) ................................. $1,240,142
==========
(a) A summary of capital share activity follows:
-----------------------------------
Shares Value
-----------------------------------
Shares sold ............................................................................ 126,085 $1,259,112
Shares redeemed ........................................................................ (52) (515)
---------- ----------
Net increase ...................................................................... 126,033 $1,258,597
========== ==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
For the period from May 28, 1999
(commencement of operations) to
September 30, 1999
(Unaudited)
Net asset value, beginning of period .................................................................. $10.00
Loss from investment operations
Net investment income ...................................................................... 0.01
Net realized and unrealized loss on investments and translation of
assets and liabilities in foreign currencies .......................................... (0.17)
----------
Total from investment operations ...................................................... (0.16)
----------
Net asset value, end of period ........................................................................ $ 9.84
==========
Total return .......................................................................................... (1.60)%
==========
Ratios/supplemental data
Net assets, end of period ....................................................................... $1,240,142
==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees .............................................. 10.59 %(a)
After expense reimbursements and waived fees ............................................... 2.00 %(a)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees .............................................. (8.25)%(a)
After expense reimbursements and waived fees ............................................... 0.36 %(a)
Portfolio turnover rate ......................................................................... 8.82 %
(a) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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 18, 1990
as a Massachusetts Business Trust and is registered under the
Investment Company Act of 1940, as amended. The investment
objective of the Fund is to provide its shareholders with
long-term capital growth, consisting of both realized and
unrealized capital gains, through investment in a diversified
global 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 or in the United States. 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 it is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it
from all federal income taxes.
C. Investment Transactions - Investment transactions are
recorded on the trade date. Realized gains and losses are
determined using the specific identification cost method.
Interest income is recorded daily on 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.
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.
(Continued)
<PAGE>
THE BROWN CAPITAL MANAGEMENT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
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 it fee amounting to $3,698 ($0.03 per share)
and has voluntarily agreed to reimburse $24,034 of the Fund's
operating expenses for the period ended September 30, 1999.
The Fund's administrator, The Nottingham Company (the
"Administrator"), provides administrative services to and is
generally responsible for the overall management and day-to-day
operations of the Fund pursuant to 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. For the period ended September 30, 1999, the
administrator has voluntarily waived a portion of its fees
totaling $3,991 ($0.03 per share).
North Carolina Shareholder Services, LLC (the "Transfer Agent")
serves as the Fund's transfer, dividend paying, and shareholder
servicing agent. The Transfer Agent maintains the records of each
shareholder's account, answers shareholder inquiries concerning
accounts, processes purchases and redemptions of the Fund 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, 1999
(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 $1,291,477 and $95,732, respectively, for
the period ended September 30, 1999.
<PAGE>
________________________________________________________________________________
[LOGO HERE]
BROWN CAPITAL MANAGEMENT FUNDS
________________________________________________________________________________
Series of The Nottingham Investment Trust II
This Report has been prepared for
shareholders and may be distributed
to others only if preceded or
accompanied by a current
prospectus.
<PAGE>
________________________________________________________________________________
INVESTEK FIXED INCOME TRUST
________________________________________________________________________________
a series of The Nottingham Investment Trust II
SEMI-ANNUAL REPORT 1999
FOR THE PERIOD ENDED SEPTEMBER 30
INVESTMENT ADVISOR
Investek Capital Management
317 East Capitol Street
Post Office Box 2840
Jackson, Mississippi 39207
1-601-949-3105
INVESTEK FIXED INCOME TRUST
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This Report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Principal Rate Date (note 1)
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT AND AGENCY OBLIGATIONS - 55.60%
United States Treasury Note ............................... $600,000 4.250% 11/15/03 $ 566,438
A.I.D. - Equador .......................................... 78,049 7.050% 05/01/15 80,412
A.I.D. - Ivory Coast ...................................... 246,841 8.100% 12/01/06 248,691
A.I.D. - Peru ............................................. 153,844 8.350% 01/01/07 155,460
Attransco Title XI ........................................ 474,760 6.120% 04/01/08 457,373
B.A.L.T. Conway Partnership Title XI ...................... 125,643 10.750% 11/15/03 126,956
Chilbar Ship Co. Title XI ................................. 38,052 6.980% 07/15/01 37,825
Federal Agricultural Mortgage Corporation
Series AM-1003 ........................................ 649,617 6.820% 04/25/13 628,749
Federal National Mortgage Association
Pool #73401 ........................................... 482,289 6.440% 03/01/06 474,493
Pool #380484 .......................................... 988,238 6.390% 07/01/16 911,346
Lawrence Steamship Company Title XI ....................... 260,493 7.270% 09/01/03 263,100
Small Business Administration 98-B ........................ 935,731 6.150% 02/01/18 891,800
----------
Total U. S. Government and Agency Obligations (Cost $5,022,863) .......................................... 4,842,643
----------
U. S. GOVERNMENT INSURED OBLIGATIONS - 11.64%
Federal Housing Authority Project Loan
Downtowner Apartments ................................. 153,238 8.375% 11/01/11 154,851
GMAC 32 ............................................... 84,440 7.430% 12/01/21 84,985
Reilly #046 ........................................... 379,315 6.970% 06/01/14 362,545
USGI #87 .............................................. 409,506 7.430% 08/01/23 411,797
----------
Total U. S. Government Insured Obligations (Cost $1,034,258) ............................................. 1,014,178
----------
CORPORATE OBLIGATIONS - 21.65%
California Infrastructure SDG&E Series 1997-1 ............. 500,000 6.370% 12/26/09 480,156
Continental Airlines Inc. ................................. 464,975 7.750% 07/02/14 463,533
Great Northern Railroad Series Q .......................... 676,000 2.625% 01/01/10 456,300
Union Pacific Corporation ................................. 477,163 7.280% 04/30/15 485,920
----------
Total Corporate Obligations (Cost $1,979,326) ............................................................ 1,885,909
----------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Principal Rate Date (note 1)
------------------------------------------------------------------------------------------------------------------------------------
CONVENTIONAL MORTGAGE BACKED SECURITIES - 5.64%
Prudential Home Mortgage Securities
REMIC Series 1994-2 Class A8 .......................... $500,000 6.750% 02/25/24 $ 491,563
(Cost $489,115) ----------
PRIVATE MORTGAGE BACKED SECURITIES - 0.46%
National Housing Partnership .............................. 39,916 9.500% 05/01/03 39,939
(Cost $39,916) ----------
INVESTMENT COMPANY - 3.93%
AIM Short Term Prime Fund A ............................... 342,268 342,268
(Cost $342,268) ----------
Total Value of Investments (Cost $8,907,746 (a)) ................................... 98.92% $8,616,500
Other Assets in Excess of Liabilities .............................................. 1.08% 94,452
------ ----------
Net Assets .................................................................... 100.00% $8,710,952
====== ==========
(a) 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 ........................................................................ $ 23,190
Unrealized depreciation ........................................................................ (314,436)
---------
Net unrealized depreciation .................................................... $(291,246)
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
INVESTEK FIXED INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
ASSETS
Investments, at value (cost $8,907,746) ......................................................... $8,616,500
Income receivable ............................................................................... 109,920
Other assets .................................................................................... 1,614
Due from advisor (note 2) ....................................................................... 4,714
----------
Total assets ............................................................................... 8,732,748
----------
LIABILITIES
Accrued expenses ................................................................................ 5,377
Disbursements in excess of cash on demand deposit ............................................... 16,419
----------
Total liabilities .......................................................................... 21,796
----------
NET ASSETS
(applicable to 877,480 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ......................................... $8,710,952
==========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($8,710,952 / 877,480 shares) ................................................................... $9.93
==========
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $9,318,302
Undistributed net investment income ............................................................. 1,355
Accumulated net realized loss on investments .................................................... (317,459)
Net unrealized depreciation on investments ...................................................... (291,246)
----------
$8,710,952
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
INVESTEK FIXED INCOME TRUST
STATEMENT OF OPERATIONS
Period ended September 30, 1999
(Unaudited)
INVESTMENT INCOME
Income
Interest ..................................................................................... $ 325,151
Dividends .................................................................................... 7,158
---------
Total Income ........................................................................... 332,309
---------
Expenses
Investment advisory fees (note 2) ............................................................ 22,213
Fund administration fees (note 2) ............................................................ 6,170
Custody fees ................................................................................. 3,006
Registration and filing administration fees (note 2) ......................................... 1,471
Fund accounting fees (note 2) ................................................................ 12,000
Audit fees ................................................................................... 5,825
Legal fees ................................................................................... 2,505
Securities pricing fees ...................................................................... 1,253
Shareholder recordkeeping fees ............................................................... 4,500
Other accounting fees (note 2) ............................................................... 5,940
Shareholder servicing expenses ............................................................... 1,303
Registration and filing expenses ............................................................. 1,253
Printing expenses ............................................................................ 2,004
Trustee fees and meeting expenses ............................................................ 1,854
Other operating expenses ..................................................................... 1,533
---------
Total expenses ......................................................................... 72,830
---------
Less:
Expense reimbursements (note 2) ................................................... (6,243)
Investment advisory fees waived (note 2) .......................................... (22,213)
---------
Net expenses ........................................................................... 44,374
---------
Net investment income ............................................................. 287,935
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investment transactions .................................................... 19,959
Decrease in unrealized appreciation on investments ................................................ (375,062)
---------
Net realized and unrealized loss on investments .............................................. (355,103)
---------
Net decrease in net assets resulting from operations ................................... $ (67,168)
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
1999 1999
------------------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS
Operations
Net investment income ........................................................... $ 287,935 $ 772,074
Net realized gain from investment transactions .................................. 19,959 174,228
Decrease in unrealized appreciation on investments .............................. (375,062) (137,045)
----------- -----------
Net (decrease) increase in net assets resulting from operations ........... (67,168) 809,257
----------- -----------
Distributions to shareholders from
Net investment income ........................................................... (286,637) (775,430)
----------- -----------
Capital share transactions
Decrease in net assets resulting from capital share transactions (a) ............ (2,402,013) (2,466,286)
----------- -----------
Total decrease in net assets ........................................... (2,755,818) (2,432,459)
NET ASSETS
Beginning of period .................................................................. 11,466,770 13,899,229
----------- -----------
End of period (including undistributed net investment income of $57 at ............... $ 8,710,952 $11,466,770
March 31, 1999 and $1,355 at September 30, 1999) =========== ===========
(a) A summary of capital share activity follows:
--------------------------------------------------------------------------------
Period ended Year ended
September 30, 1999 March 31, 1999
Shares Value Shares Value
--------------------------------------------------------------------------------
Shares sold .................................... 90,552 $ 913,180 158,434 $ 1,670,902
Shares issued for reinvestment
of distributions ........................ 15,167 152,706 50,406 526,027
----------- ----------- ----------- -----------
105,719 1,065,886 208,840 2,196,929
Shares redeemed ................................ (341,929) (3,467,899) (442,853) (4,663,215)
----------- ----------- ----------- -----------
Net decrease .............................. (236,210) $(2,402,013) (234,013) $(2,466,286)
=========== =========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
1999 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ........... $10.30 $10.31 $ 9.98 $10.11 $ 9.74
(Loss) income from investment operations
Net investment income ................. 0.30 0.62 0.64 0.65 0.66
Net realized and unrealized (loss) gain
on investments ...................... (0.37) (0.01) 0.33 (0.13) 0.37
----------- ----------- ----------- ----------- -----------
Total from investment operations (0.07) 0.61 0.97 0.52 1.03
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................. (0.30) (0.62) (0.64) (0.65) (0.66)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ................. $ 9.93 $10.30 $10.31 $ 9.98 $10.11
=========== =========== =========== =========== ===========
Total return ................................... (0.68)% 5.97% 9.91% 5.38% 10.70%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period .................. $ 8,710,952 $11,466,770 $13,899,229 $11,227,141 $12,261,121
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.48%(a) 1.22% 1.10% 1.20% 1.08%
After expense reimbursements and waived fees 0.90%(a) 0.90% 0.90% 0.90% 0.87%
Ratio of net investment income to average net assets
Before expense reimbursements and waived fees 5.28%(a) 5.53% 6.01% 6.07% 6.02%
After expense reimbursements and waived fees 5.84%(a) 5.85% 6.21% 6.37% 6.41%
Portfolio turnover rate .................... 14.40% 50.90% 38.46% 32.94% 16.57%
(a) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
INVESTEK FIXED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Investek Fixed Income Trust (the "Fund") is a diversified series of
shares of beneficial interest of The Nottingham Investment Trust II
(the "Trust"). The Trust, an open-end investment company, was organized
on October 18, 1990 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940, as amended. The investment
objective of the Fund is to preserve capital and maximize total returns
through active management of investment grade fixed income securities.
The Fund began operations on November 15, 1991.
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 Shares of the Fund on August 1, 1996, and an additional
class of shares, the Investor Shares, was authorized. To date, only
Institutional Shares have been issued by the Fund. The Investor Shares
will be sold with a sales charge and will bear potential distribution
expenses and service fees. The Institutional Shares are sold without a
sales charge and bears no shareholder servicing or distribution fees.
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. Securities for which market
quotations are not readily available are valued in good faith
using a method approved by the Trust's Board of Trustees,
taking into consideration institutional bid and last sale
prices, and securities prices, yields, estimated maturities,
call features, ratings, institutional trading in similar
groups of securities and developments related to specific
securities. Short-term investments are valued at cost which
approximates value.
The financial statements include securities valued at
$4,924,442 (56.53% of net assets) whose values have been
estimated using a method approved by the Trust's Board of
Trustees. Such securities are valued by using a matrix system,
which is based upon the factors described above and
particularly the spread between yields on the securities being
valued and yields on U. S. Treasury securities with similar
remaining years to maturity. Those estimated values may differ
from the values that would have resulted from actual purchase
and sale transactions.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes
The Fund has capital loss carryforwards for federal income tax
purposes of $335,001, $316,968 of which expires in the year
2003 and $18,033 of which expires in the year 2004. It is the
intention of the Board of Trustees of the Trust not to
distribute any realized gains until the carryforwards have
been offset or expire.
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.
(Continued)
<PAGE>
INVESTEK FIXED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
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.
D. Distributions to Shareholders - The Fund generally declares
dividends monthly, 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, Investek 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 0.45% of the Fund's average daily net assets.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and reimburse expenses of the Fund to limit total Fund
operating expenses to 0.90% 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 $22,213 ($0.02 per share) and
reimbursed expenses totaling $6,243 for the period ended September 30,
1999.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to a fund accounting and compliance agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's average daily net assets. 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 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>
INVESTEK FIXED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $1,366,854 and $3,931,955, respectively, for the period
ended September 30, 1999.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
CAPITAL VALUE FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 67.41%
Auto & Trucks - 3.27%
DaimlerChrysler AG .................................................... 810 $ 56,244
Delphi Automotive Systems Corporation ................................. 1,048 16,833
Ford Motor Company .................................................... 4,000 200,250
General Motors Corporation ............................................ 1,500 94,406
-----------
367,733
-----------
Beverages - 0.54%
PepsiCo, Inc. ......................................................... 2,000 60,500
-----------
Brewery - 0.96%
Adolph Coors Company .................................................. 2,000 108,250
-----------
Broadcast - Radio & Television - 1.21%
(a)MediaOne Group, Inc. .................................................. 2,000 136,625
-----------
Building Materials - 0.76%
Louisiana-Pacific Corporation ......................................... 5,500 85,937
-----------
Commercial Services - 0.79%
Automatic Data Processing, Inc. ....................................... 2,000 89,250
-----------
Computers - 5.81%
Compaq Computer Corporation ........................................... 16,000 368,000
(a)EMC Corporation ....................................................... 4,000 285,750
-----------
653,750
-----------
Computer Software & Services - 21.44%
(a)3Com Corporation ...................................................... 8,500 244,375
(a)At Home Corporation ................................................... 4,000 165,750
(a)Brooktrout Inc. ....................................................... 4,300 59,662
(a)Cisco Systems, Inc. ................................................... 12,500 857,031
(a)Network Associates, Inc. .............................................. 5,000 95,625
(a)New Era of Networks, Inc. ............................................. 13,000 281,125
(a)Novell, Inc. .......................................................... 10,500 217,219
(a)Oracle Corporation .................................................... 7,000 318,500
(a)Parametric Technology Corporation ..................................... 13,000 175,500
-----------
2,414,787
-----------
Electronics - 6.74%
(a)Cree Research, Inc. ................................................... 12,000 407,250
Motorola, Inc. ........................................................ 4,000 352,000
-----------
759,250
-----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
CAPITAL VALUE FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Banks, Commercial - 6.73%
BankBoston Corporation ................................................ 2,000 $ 86,750
Bank of America Corporation ........................................... 3,000 167,063
First Union Corporation ............................................... 6,000 213,375
(a)Knight/Trimark Group, Inc. ............................................ 3,000 88,875
The Bear Stearns Companies Inc. ....................................... 5,250 201,796
-----------
757,859
-----------
Foreign Securities - 1.99% (b)
Alcatel - ADR ......................................................... 4,200 116,550
Norsk Hydro ASA - ADR ................................................. 2,500 107,500
-----------
224,050
-----------
Industrial Materials - Specialty - 1.31%
(a)The AES Corporation ................................................... 2,500 147,500
-----------
Pharmaceuticals - 2.76%
McKesson HBOC, Inc. ................................................... 1,700 49,300
Mylan Laboratories Inc. ............................................... 6,000 110,250
(a)Roberts Pharmaceutical Corporation .................................... 5,000 151,250
-----------
310,800
-----------
Restaurants & Food Service - 0.44%
(a)Starbucks Corporation ................................................. 2,000 49,563
-----------
Retail - Apparel - 2.26%
NIKE, Inc. ............................................................ 4,500 254,813
-----------
Retail - Department Stores - 3.25%
Sears, Roebuck & Company .............................................. 7,100 222,763
Wal-Mart Stores, Inc. ................................................. 3,000 142,688
-----------
365,451
-----------
Telecommunications Equipment - 1.21%
(a)PairGain Technologies, Inc. ........................................... 10,000 127,500
(a)Premisys Communications, Inc. ......................................... 1,000 8,313
-----------
135,813
-----------
Transportation - Air - 0.70%
(a)US Airways Group, Inc. ................................................ 3,000 78,750
-----------
Utilities - Telecommunications - 5.24%
GTE Corporation ....................................................... 2,000 153,625
(a)Qwest Communications International Inc. ............................... 7,300 215,806
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CAPITAL VALUE FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Utilities - Telecommunications - (Continued)
SBC Communications Inc. ............................................... 2,194 $ 112,031
Sprint Corporation .................................................... 2,000 108,500
-----------
589,962
-----------
Total Common Stocks (Cost $5,323,865) ........................................... 7,590,643
-----------
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 16.72%
A T & T Corporation ..................... $ 50,000 7.500% 06/01/06 51,500
A T & T Corporation ..................... 50,000 8.125% 01/15/22 51,125
A T & T Corporation ..................... 50,000 8.125% 07/15/24 50,813
A T & T Corporation ..................... 100,000 8.625% 12/01/31 104,875
American Express Company ................ 50,000 8.625% 05/15/22 51,408
Anheuser-Busch Companies, Inc. .......... 25,000 9.000% 12/01/09 28,708
Archer Daniels Midland Corporation ...... 100,000 6.250% 05/15/03 99,166
Archer Daniels Midland Corporation ...... 25,000 8.875% 04/15/11 28,492
BellSouth Telecommunications ............ 50,000 6.250% 05/15/03 49,813
BellSouth Telecommunications ............ 50,000 7.000% 02/01/05 50,313
BellSouth Telecommunications ............ 25,000 7.875% 08/01/32 25,250
BellSouth Telecommunications ............ 125,000 6.750% 10/15/33 111,250
The Boeing Company ...................... 150,000 8.750% 09/15/31 172,597
The Coca-Cola Company ................... 70,000 8.500% 02/01/22 76,998
Du Pont (E.I.) De Nemours & Company ..... 50,000 8.125% 03/15/04 52,949
Du Pont (E.I.) De Nemours & Company ..... 50,000 7.950% 01/15/23 51,017
Duke Energy Corp ........................ 20,000 6.375% 03/01/08 19,050
Duke Energy Corp ........................ 100,000 6.750% 08/01/25 90,375
General Electric Capital Corporation .... 100,000 8.750% 05/21/07 110,567
International Business Machines ......... 50,000 8.375% 11/01/19 56,000
Morgan Stanley Group, Inc. .............. 75,000 7.500% 02/01/24 73,317
Pacific Bell ............................ 100,000 6.250% 03/01/05 98,125
United Parcel Service of America ........ 50,000 8.375% 04/01/20 55,890
U S West Communications Group ........... 50,000 6.875% 09/15/33 43,070
Wachovia Corporation .................... 75,000 6.375% 04/15/03 74,185
Wal-Mart Stores, Inc. ................... 25,000 6.500% 06/01/03 25,069
Wal-Mart Stores, Inc. ................... 150,000 8.875% 06/29/11 154,926
Wal-Mart Stores, Inc. ................... 25,000 8.500% 09/15/24 26,242
----------
Total Corporate Obligations (Cost $1,796,629) ................................... 1,883,090
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
CAPITAL VALUE FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.99%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares .............................. 506,054 $ 506,054
Evergreen Money Market Treasury Institutional Treasury Money
Market Fund Institutional Service Shares .............................. 506,053 506,053
-----------
Total Investment Companies (Cost $1,012,107) .................................... 1,012,107
-----------
Total Value of Investments (Cost $8,132,601 (c)) ................................. 93.12% $10,485,840
Other Assets Less Liabilities .................................................... 6.88% 775,220
------ -----------
Net Assets .................................................................. 100.00% $11,261,060
====== ===========
(a) Non-income producing investment.
(b) Foreign securities represent securities issued in the United States markets by non-domestic companies.
(c) Aggregate cost for financial reporting and federal income tax purposes is the same. Unrealized appreciation
(depreciation) of investments for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ....................................................................... $ 2,891,806
Unrealized depreciation ....................................................................... (538,567)
-----------
Net unrealized appreciation .................................................... $ 2,353,239
===========
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>
CAPITAL VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
ASSETS
Investments, at value (cost $8,132,601) ............................................................ $10,485,840
Cash ............................................................................................... 748,625
Income receivable .................................................................................. 45,030
Other assets ....................................................................................... 2,906
-----------
Total assets .................................................................................. 11,282,401
-----------
LIABILITIES
Accrued expenses ................................................................................... 21,341
-----------
NET ASSETS
(applicable to 723,158 Investor Class Shares outstanding; unlimited
shares of no par value beneficial interest authorized) ............................................ $11,261,060
===========
NET ASSET VALUE AND REDEMPTION PRICE PER INVESTOR CLASS SHARE
($11,261,060 / 723,158 shares) ..................................................................... $15.57
===========
OFFERING PRICE PER INVESTOR CLASS SHARE
(100 / 96.5% of $15.57) ............................................................................ $16.13
===========
NET ASSETS CONSIST OF
Paid-in capital .................................................................................... $ 7,781,899
Undistributed net investment income ................................................................ 2,019
Accumulated net realized gain on investments ....................................................... 1,123,903
Net unrealized appreciation on investments ......................................................... 2,353,239
-----------
$11,261,060
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
CAPITAL VALUE FUND
STATEMENT OF OPERATIONS
Period ended September 30, 1999
(Unaudited)
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 71,858
Dividends ...................................................................................... 58,940
---------
Total income ............................................................................. 130,798
---------
Expenses
Investment advisory fees (note 2) .............................................................. 34,186
Fund administration fees (note 2) .............................................................. 9,971
Distribution and service fees - Investor Class Shares (note 3) ................................. 28,488
Custody fees ................................................................................... 1,904
Registration and filing administration fees (note 2) ........................................... 1,524
Fund accounting fees (note 2) .................................................................. 12,000
Audit fees ..................................................................................... 5,662
Legal fees ..................................................................................... 2,506
Securities pricing fees ........................................................................ 3,057
Shareholder recordkeeping fees ................................................................. 4,500
Other accounting fees (note 2) ................................................................. 2,006
Shareholder servicing expenses ................................................................. 2,105
Registration and filing expenses ............................................................... 1,754
Printing expenses .............................................................................. 1,353
Trustee fees and meeting expenses .............................................................. 1,904
Other operating expenses ....................................................................... 1,353
---------
Total expenses ........................................................................... 114,273
---------
Net investment income ............................................................... 16,525
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investment transactions ...................................................... 726,527
Decrease in unrealized appreciation on investments .................................................. (546,592)
---------
Net realized and unrealized gain on investments ................................................ 179,935
---------
Net increase in net assets resulting from operations ..................................... $ 196,460
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CAPITAL VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
1999 1999
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income ............................................................ $ 16,525 $ 40,509
Net realized gain from investment transactions ................................... 726,527 1,210,654
(Decrease) increase in unrealized appreciation on investments .................... (546,592) 169,272
----------- -----------
Net increase in net assets resulting from operations ......................... 196,460 1,420,435
----------- -----------
Distributions to shareholders from
Net investment income ............................................................ (14,506) (40,509)
Net realized gain from investment transactions ................................... 0 (813,281)
----------- -----------
Decrease in net assets resulting from distributions .......................... (14,506) (853,790)
----------- -----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ............. 22,832 601,561
----------- -----------
Total increase in net assets ............................................ 204,786 1,168,206
NET ASSETS
Beginning of period ................................................................... 11,056,274 9,888,068
----------- -----------
End of period (including undistributed net investment income .......................... $11,261,060 $11,056,274
of $2,019 at September 30, 1999) =========== ===========
(a) A summary of capital share activity follows:
---------------------------------------------------------------------------------
Period ended Year ended
September 30, 1999 March 31, 1999
Shares Value Shares Value
---------------------------------------------------------------------------------
Shares sold .................................... 28,528 $ 448,915 65,106 $ 969,346
Shares issued for reinvestment
of distributions .......................... 912 14,483 57,489 853,665
----------- ----------- ----------- -----------
29,440 463,398 122,595 1,823,011
Shares redeemed ................................ (28,186) (440,566) (82,277) (1,221,450)
----------- ----------- ----------- -----------
Net increase .............................. 1,254 $ 22,832 40,318 $ 601,561
=========== =========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL VALUE FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
1999 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......... $15.32 $14.51 $12.50 $11.92 $10.75
Income from investment operations
Net investment income ............... 0.02 0.06 0.13 0.15 0.19
Net realized and unrealized gain
on investments .................... 0.25 2.02 3.93 0.70 1.53
----------- ----------- ----------- ----------- -----------
Total from investment operations 0.27 2.08 4.06 0.85 1.72
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ............... (0.02) (0.06) (0.13) (0.15) (0.20)
Tax return of capital ............... 0.00 0.00 0.00 (0.01) 0.00
Net realized gain from investment
transactions ...................... (0.00) (1.21) (1.92) (0.11) (0.35)
----------- ----------- ----------- ----------- -----------
Total distributions ............ (0.02) (1.27) (2.05) (0.27) (0.55)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ............... $15.57 $15.32 $14.51 $12.50 $11.92
=========== =========== =========== =========== ===========
Total return (a) ............................. 1.76% 14.67% 32.89% 7.08% 16.16%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................ $11,261,060 $11,056,274 $ 9,888,068 $ 7,738,255 $ 7,551,803
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.02%(b) 2.15% 2.12% 2.38% 2.56%
After expense reimbursements and waived fees 2.02%(b) 2.15% 2.12% 2.38% 2.33%
Ratio of net investment income to average net assets
Before expense reimbursements and waived fees 0.30%(b) 0.40% 0.91% 1.12% 1.44%
After expense reimbursements and waived fees 0.30%(b) 0.40% 0.91% 1.12% 1.66%
Portfolio turnover rate .................. 20.65% 70.65% 33.50% 7.31% 12.33%
(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
CAPITAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Capital Value 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 18, 1990 as a Massachusetts Business Trust
and is registered under the Investment Company Act of 1940, as
amended. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any
combination of capital appreciation, both realized and unrealized,
and income under the constantly varying market conditions by
investing in a flexible portfolio of equity securities, fixed
income securities, and money market instruments. The Fund began
operations on November 16, 1990.
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 Investor Class of shares of the Fund on June 15, 1995 and
an additional class of shares, the Institutional shares, was
authorized. To date, only Investor Class shares have been issued
by the Fund. The Institutional Class shares will be sold without a
sales charge and will bear no distribution and service fees. The
Investor Class shares are subject to a maximum 3.50% sales charge
and 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 the accrual basis.
Dividend income is recorded on the ex-dividend date.
(Continued)
<PAGE>
CAPITAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
D. Distributions to Shareholders - The Fund generally declares
dividends quarterly, payable in March, June, September and
December, on a date selected by the Trust's Trustees. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year.
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 amount 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, Capital Investment
Counsel, 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 0.60%
of the first $250 million of the average daily net assets of the
Fund and 0.50% of average daily net assets over $250 million.
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.
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. For the period
ended September 30, 1999, the Distributor retained sales charges
in the amount of $554.
Certain Trustees and officers of the Trust are also officers of
the Advisor, the Distributor or the Administrator.
(Continued)
<PAGE>
CAPITAL VALUE FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who
are not "interested persons" of the Trust as defined in the
Investment Company Act of 1940 (the "Act"), as amended, adopted a
distribution plan pursuant to Rule 12b-1 of the Act (the "Plan").
The Act regulates the manner in which a regulated investment
company may assume expenses of distributing and promoting the
sales of its shares and servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain expenses, which
may not exceed 0.50% per annum of the Investor Class shares'
average daily net assets for each year elapsed subsequent to
adoption of the Plan, for payment to the Distributor and others
for items such as advertising expenses, selling expenses,
commissions, travel or other expenses reasonably intended to
result in sales of Investor shares of the Fund or support
servicing of shareholder accounts. Expenditures incurred as
service fees may not exceed 0.25% per annum of the Investor Class
shares' average daily net assets. The Fund incurred $28,488 of
such expenses under the Plan for the period ended September 30,
1999.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $1,934,007 and $2,224,282, respectively,
for the period ended September 30, 1999.
<PAGE>
--------------------------------------------------------------------------------
WST GROWTH & INCOME FUND
--------------------------------------------------------------------------------
a series of The Nottingham Investment Trust II
SEMI-ANNUAL REPORT 1999
FOR THE PERIOD ENDED SEPTEMBER 30
INVESTMENT ADVISOR
Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510
WST GROWTH & INCOME FUND
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This Report has been prepared for
shareholders and may be distributed to
others only if preceded or accompanied by
a current prospectus.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WST GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 92.61%
Beverages - 2.68%
PepsiCo, Inc. ...................................................... 14,000 $ 423,500
----------
Broadcast - Radio & Television - 2.54%
(a)Cox Communications, Inc. ........................................... 9,600 400,800
----------
Commercial Services - 1.73%
(a)ACNielsen Corporation .............................................. 12,000 273,750
----------
Computers - 2.36%
International Business Machines .................................... 2,000 242,750
(a)Sun Microsystems, Inc. ............................................. 1,400 130,200
----------
372,950
----------
Computer Software & Services - 6.70%
First Data Corporation ............................................. 7,000 307,125
(a)Oracle Corporation ................................................. 16,500 750,750
----------
1,057,875
----------
Cosmetics & Personal Care - 4.54%
Colgate-Palmolive Company .......................................... 2,000 91,500
Gillette Company ................................................... 8,000 271,500
(a)Playtex Products, Inc. ............................................. 24,000 354,000
----------
717,000
----------
Direct Marketing - 1.13%
(a)TeleSpectrum Worldwide Inc. ........................................ 30,000 178,125
----------
Diversified Manufacturing - 1.88%
General Electric Company ........................................... 2,500 296,406
----------
Electronics - Semiconductor - 2.82%
Intel Corporation .................................................. 6,000 445,875
----------
Entertainment - 2.48%
Carnival Corporation ............................................... 9,000 391,500
----------
Financial - Banks, Commercial - 7.41%
Bank of America Corporation ........................................ 7,000 389,812
Chase Manhattan Corporation ........................................ 2,400 180,900
Citigroup Inc. ..................................................... 7,500 330,000
Resource Bankshares Corporation .................................... 17,800 269,225
----------
1,169,937
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WST GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Securities Brokers - 0.43%
The Charles Schwab Corporation .......................................... 2,000 $ 67,375
----------
Financial Services - 6.97%
American Express Company ................................................ 2,000 269,250
Equifax, Inc. ........................................................... 14,000 392,875
Fannie Mae .............................................................. 7,000 438,812
----------
1,100,937
----------
Insurance - Life & Health - 2.12%
AFLAC, Incorporated ..................................................... 8,000 335,000
----------
Insurance - Multiline - 2.75%
American International Group, Inc. ...................................... 5,000 434,687
----------
Manufacturing - Miscellaneous - 7.24%
AlliedSignal, Inc. ...................................................... 7,000 419,562
Tyco International Ltd. ................................................. 7,000 722,750
----------
1,142,312
----------
Medical Supplies - 1.92%
Johnson & Johnson ....................................................... 3,300 303,188
----------
Multimedia - 3.18%
The Walt Disney Company ................................................. 10,000 258,750
Time Warner, Inc. ....................................................... 4,000 243,000
----------
501,750
----------
Office Automation & Equipment - 2.66%
Xerox Corporation ....................................................... 10,000 419,375
----------
Oil & Gas - Exploration - 0.77%
Mobil Corporation ....................................................... 1,200 120,900
----------
Pharmaceuticals - 5.00%
Bristol-Meyers Squibb ................................................... 3,000 202,500
Merck & Co., Inc. ....................................................... 6,000 388,875
Pharmacia & Upjohn ...................................................... 4,000 198,500
----------
789,875
----------
Publishing - Newspapers - 2.38%
The New York Times Company .............................................. 10,000 375,000
----------
Restaurants & Food Service - 2.18%
McDonald's Corporation .................................................. 8,000 344,000
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WST GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Retail - General Merchandise - 3.04%
Dollar Tree Stores, Inc. ................................................ 12,000 $ 479,250
----------
Retail - Specialty Line - 5.06%
CVS Corporation ......................................................... 10,000 408,125
Lowe's Companies, Inc. .................................................. 8,000 390,000
----------
798,125
----------
Telecommunications - 8.77%
A T & T Corporation ..................................................... 8,143 354,221
Lucent Technologies, Inc. ............................................... 3,000 194,625
(a)MCI WorldCom, Inc. ...................................................... 9,500 682,813
Nortel Networks Corporation ............................................. 3,000 153,000
----------
1,384,659
----------
Utilities - Electric - 1.87%
MidAmerican Energy Holdings Co. ......................................... 10,000 295,000
----------
Total Common Stocks (Cost $12,841,614) .................................. 14,619,151
----------
Interest Maturity
Principal Rate Date
--------- -------- -------
CORPORATE OBLIGATION - 2.36%
Macsaver Financial Services............................................ $500,000 7.875% 8/01/03 372,500
(Cost $439,368) -----------
Shares
----------
INVESTMENT COMPANIES - 4.62%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares .................................. 27,640 27,640
Evergreen Money Market Treasury Institutional Treasury
Money Market Fund Institutional Service Shares ............................ 701,516 701,516
-----------
Total Investment Companies (Cost $729,157) ................................ 729,157
-----------
Total Value of Investments (Cost $ 14,010,139 (b)) .................................... 99.59 % $15,720,808
Other Assets Less Liabilities ......................................................... 0.41 % 64,136
-------- -----------
Net Assets ..................................................................... 100.00 % $15,784,944
======== ===========
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WST GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $14,074,847.
Unrealized appreciation (depreciation) of investments for federal
income tax purposes is as follows:
Unrealized appreciation ....................................................... $ 2,600,009
Unrealized depreciation ....................................................... (954,048)
-----------
Net unrealized appreciation .............................................. 1,645,961
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
WST GROWTH & INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
ASSETS
Investments, at value (cost $14,010,139) ......................................................... $ 15,720,808
Income receivable ................................................................................ 17,052
Receivable for fund shares sold .................................................................. 26,926
Other assets ..................................................................................... 12,302
Deferred organization expenses, net (note 4) ..................................................... 24,650
------------
Total assets ................................................................................ 15,801,738
------------
LIABILITIES
Accrued expenses ................................................................................. 16,794
------------
NET ASSETS .............................................................................................. $ 15,784,944
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 14,469,383
Accumulated net realized loss on investments ..................................................... (395,108)
Net unrealized appreciation on investments ....................................................... 1,710,669
------------
$ 15,784,944
============
CLASS C
Net asset value, redemption and maximum offering price per share
($89,487 / 7,365 shares) .................................................................... $ 12.15
============
INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($12,859,141 / 1,046,584 shares) ............................................................ $ 12.29
============
INVESTOR CLASS
Net asset value, redemption and offering price per share
($2,836,316 / 233,186 shares) ................................................................ $ 12.16
============
Maximum offering price per share (100 / 96.25% of $12.16) ........................................ $ 12.63
============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WST GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
Period ended September 30, 1999
(Unaudited)
INVESTMENT LOSS
Income
Interest ...................................................................................... $ 27,612
Dividends ..................................................................................... 77,081
---------
Total income ............................................................................ 104,693
---------
Expenses
Investment advisory fees (note 2) ............................................................. 59,710
Fund administration fees (note 2) ............................................................. 13,932
Distribution and service fees - Investor class (note 3) ....................................... 7,471
Distribution and service fees - Class C (note 3) .............................................. 202
Custody fees .................................................................................. 1,750
Registration and filing administration fees (note 2) .......................................... 2,767
Fund accounting fees (note 2) ................................................................. 19,500
Audit fees .................................................................................... 5,651
Legal fees .................................................................................... 3,599
Securities pricing fees ....................................................................... 1,406
Shareholder recordkeeping fees ................................................................ 4,500
Shareholder servicing expenses ................................................................ 2,254
Registration and filing expenses .............................................................. 3,007
Printing expenses ............................................................................. 3,978
Amortization of deferred organization expenses (note 4) ....................................... 4,125
Trustee fees and meeting expenses ............................................................. 1,880
Other operating expenses ...................................................................... 1,347
---------
Total expenses .......................................................................... 137,079
---------
Less investment advisory fees waived (note 2) ........................................... (2,910)
---------
Net expenses ............................................................................ 134,169
---------
Net investment loss ................................................................ (29,476)
---------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 226,015
Decrease in unrealized appreciation on investments ................................................. (873,085)
---------
Net realized and unrealized loss on investments ............................................... (647,070)
---------
Net decrease in net assets resulting from operations .................................... $(676,546)
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WST GROWTH & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
1999 1999
------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ............................................................... $ (29,476) $ (8,424)
Net realized income (loss) from investment transactions ........................... 226,015 (578,937)
(Decrease) increase in unrealized appreciation on investments ..................... (873,085) 1,853,775
------------ ------------
Net (decrease) increase in net assets resulting from operations .............. (676,546) 1,266,414
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) .............. 2,502,968 5,552,729
------------ ------------
Total increase in net assets ............................................ 1,826,422 6,819,143
NET ASSETS
Beginning of period ................................................................... 13,958,522 7,139,379
------------ ------------
End of period ......................................................................... $ 15,784,944 $ 13,958,522
============ ============
(a) A summary of capital share activity follows:
Period ended Year ended
September 30, 1999 March 31, 1999
Shares Value Shares Value
---------- ---------- ----------- -----------
------------------------------------------------------------
CLASS C (a)
------------------------------------------------------------
Shares sold ................................................ 7,365 $ 94,999 0 $ 0
Shares redeemed ............................................ 0 0 0 0
----------- ----------- ----------- -----------
Net increase .......................................... 7,365 $ 94,999 0 $ 0
=========== =========== =========== ===========
-------------------------------------------------------------
INSTITUTIONAL CLASS
-------------------------------------------------------------
Shares sold ................................................ 189,826 $ 2,460,823 361,611 $ 4,344,114
Shares redeemed ............................................ (37,558) (480,835) (32,095) (380,601)
----------- ----------- ----------- -----------
Net increase .......................................... 152,268 $ 1,979,988 329,516 $ 3,963,513
=========== =========== =========== ===========
------------------------------------------------------------
INVESTOR CLASS
------------------------------------------------------------
Shares sold ................................................ 56,437 $ 726,392 143,763 $ 1,721,117
Shares redeemed ............................................ (23,615) (298,411) (11,169) (131,901)
----------- ----------- ----------- -----------
Net increase .......................................... 32,822 $ 427,981 132,594 $ 1,589,216
=========== =========== =========== ===========
------------------------------------------------------------
FUND SUMMARY
------------------------------------------------------------
Shares sold ................................................ 253,628 $ 3,282,214 505,374 $ 6,065,231
Shares redeemed ............................................ (61,173) (779,246) (43,264) (512,502)
----------- ----------- ----------- -----------
Net increase .......................................... 192,455 $ 2,502,968 462,110 $ 5,552,729
=========== =========== =========== ===========
(a) For the period beginning May 20, 1999 (date of initial public investment) through September 30, 1999.
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
WST GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL CLASS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
For the
period from
September 30, 1997
(date of initial public
Period ended Year ended investment) to
September 30, March 31, March 31,
1999 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period............................... $ 12.77 $ 11.29 $ 10.02
(Loss) income from investment operations
Net investment loss..................................... (0.02) 0.00 0.00
Net realized and unrealized (loss) gain on investments.. (0.46) 1.48 1.27
---------------- -------------- ---------------
Total from investment operations................... (0.48) 1.48 1.27
---------------- -------------- ---------------
Net asset value, end of period..................................... $ 12.29 $ 12.77 $ 11.29
================ ============== ===============
Total return (a)................................................... (3.76)% 13.11 % 12.72 %
================ ============== ===============
Ratios/supplemental data
Net assets, end of period.................................... $ 12,859,141 $ 11,419,391 $ 6,376,193
================ ============== ===============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees........... 1.62 %(b) 2.08 % 3.15 %
After expense reimbursements and waived fees............ 1.60 %(b) 1.75 % 1.75 %
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees........... (0.31)%(b) (0.35)% (1.31)%
After expense reimbursements and waived fees............ (0.27)%(b) (0.01)% 0.09 %
Portfolio turnover rate 24.50 % 31.11 % 23.64 %
(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
WST GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INVESTOR CLASS
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
For the
period from
October 3, 1997
(date of initial public
Period ended Year ended investment) to
September 30, March 31, March 31,
1999 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.67 $ 11.26 $ 10.22
(Loss) income from investment operations
Net investment loss..................................... (0.05) (0.04) (0.01)
Net realized and unrealized (loss) gain on investments.. (0.46) 1.45 1.05
--------------- -------------- ------------
Total from investment operations................... (0.51) 1.41 1.04
--------------- -------------- ------------
Net asset value, end of period $ 12.16 $ 12.67 $ 11.26
=============== ============== ============
Total return (a) (4.03)% 12.52 % 10.52 %
=============== ============== ============
Ratios/supplemental data
Net assets, end of period $ 2,836,316 $ 2,539,131 $ 763,186
=============== ============== ============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees........... 2.14 % (b) 2.56 % 3.63 % (b)
After expense reimbursements and waived fees............ 2.09 % (b) 2.25 % 2.09 % (b)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees........... (0.82)% (b) (0.84)% (1.70)% (b)
After expense reimbursements and waived fees............ (0.77)% (b) (0.53)% (0.31)% (b)
Portfolio turnover rate 24.50 % 31.11 % 23.64 %
(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
See accompanying notes to financial statements (Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
WST GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS C
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
For the
period from
May 20, 1999
(date of initial public
investment) to
September 30,
1999
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period........................................... $ 13.05
Loss from investment operations
Net investment loss................................................. (0.04)
Net realized and unrealized loss on investments..................... (0.86)
-------------
Total from investment operations............................... (0.90)
-------------
Net asset value, end of period................................................. $ 12.15
=============
Total return (a)............................................................... (6.18)%
=============
Ratios/supplemental data
Net assets, end of period................................................ $ 89,487
=============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees....................... 4.33 % (b)
After expense reimbursements and waived fees........................ 2.33 % (b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees....................... (0.63)% (b)
After expense reimbursements and waived fees....................... (0.96)% (b)
Portfolio turnover rate 24.50 %
(a) Total return does not reflect payment of a sales charge.
(b) Annualized.
See accompanying notes to financial statements
</TABLE>
<PAGE>
WST GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The WST Growth & Income Fund (the "Fund") is a diversified series of
shares of beneficial interest of The Nottingham Investment Trust II
(the "Trust"). The Trust, an open-end investment company, was organized
on October 18, 1990 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940, as amended. The Fund began
operations on September 9, 1997. The investment objective of the fund
is to provide its shareholders with a maximum total return consisting
of any combination of capital appreciation, both realized and
unrealized, and income. The Board of Trustees of the Trust approved on
March 15, 1999 a plan to authorize a new class of shares designated as
Class C Shares. On May 20, 1999, the Class C Shares became effective.
The Fund has an unlimited number of authorized shares, which are
divided into three classes - Institutional Shares, Investor Shares, and
Class C.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are only attributable
to the Class C and Investor Class), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. Investor Shares purchased are subject to
a maximum sales charge of 3.75%. All three classes have equal voting
privileges, except where otherwise required by law or when the Board of
Trustees determines that the matter to be voted on affects only the
interests of the shareholders of a particular class. The following is a
summary of significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., New York
time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
The Fund has capital loss carryforwards for federal income tax
purposes of $384,452, of which $42,186 expires in the year
2006 and $342,266 expires in the year 2007. It is the
intention of the Board of Trustees of the Trust not to
distribute any realized gains until the carryforwards have
been offset or expire.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $29,476 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decrease paid in
capital.
(Continued)
<PAGE>
WST GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
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 to shareholders 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 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
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. 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, Wilbanks, Smith & Thomas
Asset 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 0.75% of the first $250 million of
the Fund's average daily net assets and 0.65% of all assets over $250
million.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.75% of the average daily net
assets of the Fund's Institutional Class, a maximum of 2.25% of the
average daily net assets of the Fund's Investor Class, and a maximum of
2.50% of the average daily net assets of the Fund's Class C. 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 $2,910 for the period ended September
30, 1999.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to 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, 0.125% of the next $50
million, and 0.10% of average daily net
(Continued)
<PAGE>
WST GROWTH & INCOME FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
assets over $150 million. The Administrator also receives a monthly fee
of $2,000 for accounting and record-keeping services for the initial
class of shares and $750 per month for each additional class of shares.
The contract with the Administrator provides that the aggregate fees
for the aforementioned administration, accounting, and recordkeeping
services shall not be less than $4,000 per month. The Administrator
also charges the Fund for certain expenses involved with the daily
valuation of portfolio securities.
North Carolina Shareholder Services, LLC (the "Transfer Agent") serves
as the Fund's transfer, dividend paying, and shareholder servicing
agent. The Transfer Agent maintains the records of each shareholder's
account, answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent, and performs other shareholder servicing
functions.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust as defined in the Investment Company Act of 1940
(the "Act"), adopted a distribution and service plan pursuant to Rule
12b-1 of the Act (the "Plan") applicable to the Investor and Class C
Shares. The Act regulates the manner in which a regulated investment
company may assume costs of distributing and promoting the sales of its
shares and servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.50% and 0.75% per annum of the average daily net assets of
Investor Shares and Class C Shares, respectively, for each year elapsed
subsequent to adoption of the Plan, for payment to the Distributor and
others for items such as advertising expenses, selling expenses,
commissions, travel, or other expenses reasonably intended to result in
sales of Investor Shares in the Fund or support servicing of Investor
Share shareholder accounts. Such expenditures incurred as service fees
may not exceed 0.25% per annum of the Investor Class and Class C
Shares' average daily net assets. The Fund incurred $7,471 of such
expenses for the Investor class and $202 of such expenses for the Class
C shares under the Plan for the period ended September 30, 1999.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization
and the registration of its shares have been assumed by the Fund. The
organization expenses are being amortized over a period of sixty
months. Investors purchasing shares of the Fund bear such expenses only
as they are amortized against the Fund's investment income.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $5,900,765 and $3,662,926, respectively, for the period
ended September 30, 1999.
