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WST GROWTH FUND
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a series of The Nottingham Investment Trust II
SEMI-ANNUAL REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2000
INVESTMENT ADVISOR
Wilbanks, Smith & Thomas Asset Management, LLC
One Commercial Place, Suite 1450
Norfolk, Virginia 23510
WST GROWTH FUND
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus. Mutual fund shares are not deposits
or obligations of, or guaranteed by, any depository institution. Shares are not
insured by the FDIC, Federal Reserve Board or any other agency, and are subject
to investment risks, including possible loss of principal amount invested.
Neither the fund nor the fund's distributor is a bank.
For more information about WST Growth Fund, including charges and expenses, call
the fund for a free prospectus. You should read the prospectus carefully before
you invest or send money.
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WST GROWTH FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
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COMMON STOCKS - 96.91%
Beverages - 3.69%
PepsiCo, Inc. ....................................................... 15,700 $ 722,200
-----------
Biopharmaceuticals - 1.46%
Pharmacia Corporation ............................................... 4,760 286,493
-----------
Building Materials - 3.44%
Lowe's Companies, Inc. .............................................. 15,000 673,125
-----------
Computers - 3.28%
(a) Sun Microsystems, Inc. .............................................. 5,500 642,125
-----------
Computer Software & Services - 13.89%
First Data Corporation .............................................. 16,000 626,000
(a) Microsoft Corporation ............................................... 6,000 361,500
(a) Oracle Corporation .................................................. 22,000 1,732,500
-----------
2,720,000
-----------
Electrical Equipment - 3.89%
Emerson Electric Co. ................................................ 5,000 335,000
Honeywell International Inc. ........................................ 12,000 427,500
-----------
762,500
-----------
Electronics - 4.08%
General Electric Company ............................................ 5,000 288,750
Motorola, Inc. ...................................................... 18,000 510,750
-----------
799,500
-----------
Electronics - Semiconductor - 2.55%
Intel Corporation ................................................... 12,000 499,500
-----------
Financial - Banks, Commercial - 2.41%
Bank of America Corporation ......................................... 9,000 471,375
-----------
Financial - Banks, Money Center - 4.08%
Citigroup Inc. ...................................................... 9,666 522,568
The Chase Manhattan Corporation ..................................... 6,000 277,125
-----------
799,693
-----------
Financial Services - 4.42%
American Express Company ............................................ 6,000 364,500
Fannie Mae .......................................................... 7,000 500,500
-----------
865,000
-----------
(Continued)
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WST GROWTH FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Insurance - Life & Health - 2.62%
AFLAC INCORPORATED .................................................... 8,000 $ 512,500
-----------
Insurance - Multiline - 2.56%
American International Group, Inc. .................................... 5,250 502,359
-----------
Medical - Supplies - 2.64%
Johnson & Johnson ..................................................... 5,500 516,656
-----------
Miscellaneous - Manufacturing - 4.24%
Tyco International Ltd. ............................................... 16,000 830,000
-----------
Oil & Gas - Equipment & Services - 3.36%
Schlumberger Limited .................................................. 8,000 658,500
-----------
Oil & Gas - Exploration - 3.18%
Exxon Mobil Corporation ............................................... 6,996 623,518
-----------
Pharmaceuticals - 3.74%
Bristol-Myers Squibb Company .......................................... 5,000 285,625
Merck & Co., Inc. ..................................................... 6,000 446,625
-----------
732,250
-----------
Publishing - Newspaper - 2.21%
The New York Times Company ............................................ 11,000 432,438
-----------
Retail - Drug Stores - 2.84%
CVS Corporation ....................................................... 12,000 555,750
-----------
Retail - General Merchandise - 4.97%
(a) Dollar Tree Stores, Inc. .............................................. 24,000 973,500
-----------
Telecommunications - 11.21%
ALLTEL Corporation .................................................... 12,200 637,450
(a) Tellabs, Inc. ......................................................... 10,000 477,500
Time Warner Inc. ...................................................... 8,500 665,125
Verizon Communications ................................................ 8,600 416,562
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2,196,637
-----------
Telecommunications Equipment - 3.05%
Nortel Networks Corporation ........................................... 10,000 597,500
-----------
(Continued)
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WST GROWTH FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Utilities - Telecommunications - 3.10%
(a) WorldCom, Inc. ............................................................. 20,000 $ 607,500
-----------
Total Common Stocks (Cost $15,044,815) ..................................... 18,980,619
-----------
INVESTMENT COMPANY - 1.36%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Shares ........................................... 267,239 267,239
(Cost $267,239) -----------
Total Value of Investments (Cost $15,312,054 (b)) ..................................... 98.27 % $19,247,858
Other Assets Less Liabilities ......................................................... 1.73 % 339,134
------ -----------
Net Assets ...................................................................... 100.00 % $19,586,992
====== ===========
(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 .................................................................. $ 5,009,038
Unrealized depreciation .................................................................. (1,073,234)
-----------
Net unrealized appreciation .................................................. $ 3,935,804
===========
See accompanying notes to financial statements
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WST GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
ASSETS
Investments, at value (cost $15,312,054) ......................................................... $ 19,247,858
Cash ............................................................................................. 170
Income receivable ................................................................................ 12,688
Receivable for investments sold .................................................................. 308,740
Receivable for fund shares sold .................................................................. 13,670
Deferred organization expenses, net (note 4) ..................................................... 16,401
Other assets ..................................................................................... 1,275
------------
Total assets ................................................................................ 19,600,802
------------
LIABILITIES
Accrued expenses ................................................................................. 13,810
------------
NET ASSETS ............................................................................................. $ 19,586,992
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 17,231,871
Accumulated net investment loss .................................................................. (79,106)
Accumulated net realized loss on investments ..................................................... (1,501,577)
Net unrealized appreciation on investments ....................................................... 3,935,804
------------
$ 19,586,992
============
CLASS C
Net asset value, redemption and offering price per share
($431,799 / 33,898 shares) .................................................................. $ 12.74
============
INSTITUTIONAL CLASS
Net asset value, redemption and offering price per share
($16,652,035 / 1,283,232 shares) ............................................................ $ 12.98
============
INVESTOR CLASS
Net asset value, redemption and offering price per share
($2,503,158 / 196,001 shares) ............................................................... $ 12.77
============
Maximum offering price per share (100 / 96.25 of $12.77) ......................................... $ 13.27
============
See accompanying notes to financial statements
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WST GROWTH FUND
STATEMENT OF OPERATIONS
Period ended September 30, 2000
(Unaudited)
NET INVESTMENT LOSS
Income
Interest ....................................................................................... $ 7,131
Dividends ...................................................................................... 91,526
-----------
Total income .............................................................................. 98,657
-----------
Expenses
Investment advisory fees (note 2) .............................................................. 80,237
Fund administration fees (note 2) .............................................................. 18,722
Distribution and service fees - Investor Class shares (note 3) ................................. 9,284
Distribution and service fees - Class C shares (note 3) ........................................ 1,707
Custody fees ................................................................................... 2,006
Registration and filing administration fees (note 2) ........................................... 3,049
Fund accounting fees (note 2) .................................................................. 21,000
Audit fees ..................................................................................... 6,017
Legal fees ..................................................................................... 3,510
Securities pricing fees ........................................................................ 1,497
Shareholder recordkeeping fees ................................................................. 4,500
Shareholder servicing expenses ................................................................. 3,810
Registration and filing expenses ............................................................... 2,858
Printing expenses .............................................................................. 11,029
Amortization of deferred organization expenses (note 4) ........................................ 4,125
Trustee fees and meeting expenses .............................................................. 2,006
Other operating expenses ....................................................................... 2,406
-----------
Total expenses ............................................................................ 177,763
-----------
Net investment loss ................................................................... (79,106)
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (324,541)
Decrease in unrealized appreciation on investments .................................................. (1,419,674)
-----------
Net realized and unrealized loss on investments ................................................ (1,744,215)
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Net decrease in net assets resulting from operations ...................................... $(1,823,321)
===========
See accompanying notes to financial statements
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WST GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
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Period ended Year ended
September 30, March 31,
2000 (a) 2000
------------------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN NET ASSETS
Operations
Net investment loss ............................................................ $ (79,106) $ (85,187)
Net realized loss from investment transactions ................................. (324,541) (555,913)
(Decrease) increase in unrealized appreciation on investments .................. (1,419,674) 2,771,724
----------- -----------
Net (decrease) increase in net assets resulting from operations ............ (1,823,321) 2,130,624
----------- -----------
Capital share transactions
(Decrease) increase in net assets resulting from capital share transactions (b) (423,619) 5,744,786
----------- -----------
Total (decrease) increase in net assets ............................ (2,246,940) 7,875,410
NET ASSETS
Beginning of period ................................................................. 21,833,932 13,958,522
----------- -----------
End of period ....................................................................... $19,586,992 $21,833,932
=========== ===========
(a) Unaudited.
(b) A summary of capital share activity follows:
--------------------------------------------------------------------------------
Period ended Year ended
September 30, 2000 (a) March 31, 2000
Shares Value Shares Value
--------------------------------------------------------------------------------
---------------------------------------------------
CLASS C
---------------------------------------------------
Shares sold ....................................... 1,449 $ 18,954 32,451 $ 426,228 (c)
Shares redeemed ................................... (3) (42) 0 0 (c)
----------- ----------- ----------- -----------
Net increase ................................. 1,446 $ 18,912 32,451 $ 426,228 (c)
=========== =========== =========== ===========
---------------------------------------------------
INSTITUTIONAL CLASS
---------------------------------------------------
Shares sold ....................................... 150,053 $ 2,059,519 331,219 $ 4,408,827
Shares redeemed ................................... (45,572) (629,130) (46,784) (604,849)
----------- ----------- ----------- -----------
Net increase ................................. 104,481 $ 1,430,389 284,435 $ 3,803,978
=========== =========== =========== ===========
---------------------------------------------------
INVESTOR CLASS
---------------------------------------------------
Shares sold ....................................... 15,014 $ 199,356 221,528 $ 2,686,217
Shares redeemed ................................... (150,202) (2,072,276) (90,704) (1,171,637)
----------- ----------- ----------- -----------
Net (decrease) increase ...................... (135,188) $(1,872,920) 130,824 $ 1,514,580
=========== =========== =========== ===========
---------------------------------------------------
FUND SUMMARY
---------------------------------------------------
Shares sold ....................................... 166,516 $ 2,277,829 585,198 $ 7,521,272
Shares redeemed ................................... (195,777) (2,701,448) (137,488) (1,776,486)
----------- ----------- ----------- -----------
Net (decrease) increase ...................... (29,261) $ (423,619) 447,710 $ 5,744,786
=========== =========== =========== ===========
(c) For the period beginning May 20, 1999 (date of initial public investment) through March 31, 2000.
See accompanying notes to financial statements
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WST GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS C
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Period ended Period ended
September 30, March 31,
2000 (a) 2000 (b)
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Net asset value, beginning of period .............................................. $ 13.99 $ 13.05
(Loss) income from investment operations
Net investment loss ....................................................... (0.09) (0.06)
Net realized and unrealized (loss) gain on investments .................... (1.16) 1.00
--------- ---------
Total from investment operations ...................................... (1.25) 0.94
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Net asset value, end of period .................................................... $ 12.74 $ 13.99
========= =========
Total return (c) .................................................................. (8.79)% 7.20 %
========= =========
Ratios/supplemental data
Net assets, end of period .................................................... $ 431,799 $ 453,984
========= =========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ............................. 2.31 % (d) 2.45 %(d)
After expense reimbursements and waived fees .............................. 2.31 % (d) 2.34 %(d)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ............................. (1.39)% (d) (1.30)%(d)
After expense reimbursements and waived fees .............................. (1.39)% (d) (1.19)%(d)
Portfolio turnover rate ...................................................... 23.82 % 50.40 %
(a) Unaudited.
(b) For the period from May 20, 1999 (date of initial public investment) to March 31, 2000.
(c) Total return does not reflect payment of a sales charge.
(d) Annualized.
See accompanying notes to financial statements (Continued)
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WST GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL CLASS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Period ended
September 30, March 31, March 31, March 31,
2000 (a) 2000 1999 1998 (b)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ........................ $ 14.20 $ 12.77 $ 11.29 $ 10.02
(Loss) income from investment operations
Net investment loss .................................. (0.04) (0.04) 0.00 0.00
Net realized and unrealized (loss) gain on investments (1.18) 1.47 1.48 1.27
----------- ----------- ----------- -----------
Total from investment operations ................... (1.22) 1.43 1.48 1.27
----------- ----------- ----------- -----------
Net asset value, end of period .............................. $ 12.98 $ 14.20 $ 12.77 $ 11.29
=========== =========== =========== ===========
Total return (c) ............................................ (8.52)% 11.20 % 13.11 % 12.72 %
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period .............................. $16,652,035 $16,737,026 $11,419,391 $ 6,376,193
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........ 1.56 %(d) 1.68 % 2.08 % 3.15 %(d)
After expense reimbursements and waived fees ......... 1.56 %(d) 1.60 % 1.75 % 1.75 %(d)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ........ (0.64)%(d) (0.45)% (0.35)% (1.31)%(d)
After expense reimbursements and waived fees ......... (0.64)%(d) (0.37)% (0.01)% 0.09 %(d)
Portfolio turnover rate ................................ 23.82 % 50.40 % 31.11 % 23.64 %
(a) Unaudited.
(b) For the period from September 30, 1997 (date of initial public investment) to March 31, 1998.
(c) Total return does not reflect payment of a sales charge.
(d) Annualized.
See accompanying notes to financial statements (Continued)
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WST GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INVESTOR CLASS
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Period ended Year ended Year ended Period ended
September 30, March 31, March 31, March 31,
2000 (a) 2000 1999 1998 (b)
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Net asset value, beginning of period ........................ $ 14.02 $ 12.67 $ 11.26 $ 10.22
(Loss) income from investment operations
Net investment loss .................................. (0.11) (0.10) (0.04) (0.01)
Net realized and unrealized (loss) gain on investments (1.14) 1.45 1.45 1.05
----------- ----------- ----------- -----------
Total from investment operations ................... (1.25) 1.35 1.41 1.04
----------- ----------- ----------- -----------
Net asset value, end of period .............................. $ 12.77 $ 14.02 $ 12.67 $ 11.26
=========== =========== =========== ===========
Total return (c) ............................................ (8.70)% 10.66 % 12.52 % 10.19 %
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period .............................. $ 2,503,158 $ 4,642,922 $ 2,539,131 $ 763,186
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ........ 2.06 %(d) 2.15 % 2.56 % 3.63 %(d)
After expense reimbursements and waived fees ......... 2.06 %(d) 2.10 % 2.25 % 2.25 %(d)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees ........ (1.13)%(d) (0.93)% (0.84)% (1.70)%(d)
After expense reimbursements and waived fees ......... (1.13)%(d) (0.88)% (0.53)% (0.31)%(d)
Portfolio turnover rate ................................ 23.82 % 50.40 % 31.11 % 23.64 %
(a) Unaudited
(b) For the period from October 3, 1997 (date of initial public investment) to March 31, 1998.
(c) Total return does not reflect payment of a sales charge.
(d) Annualized.
See accompanying notes to financial statements
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WST GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The WST Growth Fund (the "Fund"), formerly known as the WST Growth &
Income Fund prior to January 3, 2000, 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 25, 1990 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940 (the "Act"), 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 Class Shares, Investor
Class Shares, and Class C Shares.
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 Class C Shares and Investor Class Shares), 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 $919,853, of which $42,186 expires in the year
2006, $342,266 expires in the year 2007 and $535,401 expires
in the year 2008. 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 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.
(Continued)
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WST GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
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, LLC (the "Advisor"), provides the Fund with a
continuous program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations
with respect to investments, investment policies, and the purchase and
sale of securities. As compensation for its services, the Advisor
receives a fee at the annual rate of 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 Shares, Investor Class Shares,
and Class C Shares. There can be no assurance that the foregoing
voluntary fee waivers or reimbursements will continue.
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 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 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.
N.C. 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.
(Continued)
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WST GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
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 the Act, adopted a distribution
and service plan pursuant to Rule 12b-1 of the Act (the "Plan")
applicable to the Investor Class Shares 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 Class 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 Class Shares and Class C Shares in the Fund
or support servicing of those classes' shareholder accounts. Such
expenditures incurred as service fees may not exceed 0.25% per annum of
the Investor Class Shares' and Class C Shares' average daily net
assets. The Fund incurred $9,284 of such expenses for the Investor
Class Shares and $1,707 of such expenses for the Class C Shares under
the Plan for the period ended September 30, 2000.
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 $4,914,051 and $5,814,314, respectively, for the period
ended September 30, 2000.
<PAGE>
________________________________________________________________________________
EARNEST PARTNERS FIXED
INCOME TRUST
________________________________________________________________________________
a series of The Nottingham Investment Trust II
SEMI-ANNUAL REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 2000
INVESTMENT ADVISOR
EARNEST Partners Limited, LLC
75 Fourteenth Street
Suite 2300
Atlanta, GA 30309
EARNEST PARTNERS FIXED INCOME TRUST
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
1-800-525-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. This report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective prospectus. Mutual fund shares are not deposits
or obligations of, or guaranteed by, any depository institution. Shares are not
insured by the FDIC, Federal Reserve Board or any other agency, and are subject
to investment risks, including possible loss of principal amount invested.
Neither the fund nor the fund's distributor is a bank.
For more information about EARNEST Partners Fixed Income Trust, including
charges and expenses, call the fund for a free prospectus. You should read the
prospectus carefully before you invest or send money.
<PAGE>
----------------
EARNEST PARTNERS
----------------
[Letterhead]
Dear Shareholders of the EARNEST Partners Fixed Income Trust:
For the three months ending on 9/30/2000, your fund returned 2.66%,
lagging the Lipper Intermediate Investment Grade Index by 27 basis points. For
the trailing 12 months, however, the fund was up 6.18%, beating the Lipper Index
by six basis points. In addition, for the trailing five years, the fund was up
5.93%, ahead of the Lipper Index by four basis points. For the trailing year and
five years, the fund ranked at the 37th and 25th percentiles in the Lipper
category, respectively.
As you know, our philosophy centers on buying high quality bonds at
attractive spreads to Treasuries. Though this strategy works well over all
market cycles, it does suffer during periods within a cycle when spreads
themselves actually widen, as has been the case this year. Alas, this is another
one of those periods when Treasury bonds have been the best bonds to own. Still,
higher quality issues have faired better than lower-rated ones. For instance,
while the Lehman U.S. Agency index is up 6.90% for the year, the Lehman index of
Baa-rated bonds is up only 4.97% and the Lehman High Yield index is down 0.65%.
As always, we maintain that moves in spreads, as with moves in interest
rates, are hard to forecast reliably, making it difficult to know when to own
Treasuries or not. Therefore, we maintain our Treasury under weighting. Even
without the Treasuries, your portfolio still has an AAA-rated weighted average
quality rating, with 82% of its issues AAA-rated or better.
There is much uncertainty in the markets, of which these spread levels
are only an indication. Spreads in general are at levels not seen since before
the last recession. Through this, our experience tells us to stick to our guns,
and so we will.
Respectfully,
/s/ Douglas Folk
EARNEST Partners Limited, LLC
Douglas Folk, CFA
Partner
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
EARNEST Partners Fixed Income Trust
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Principal Rate Date (note 1)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 61.75%
United States Treasury Note ............................... $ 200,000 4.250% 11/15/03 $ 190,531
A.I.D. - Equador .......................................... 73,171 7.050% 05/01/15 74,001
A.I.D. - Ivory Coast ...................................... 222,212 8.100% 12/01/06 223,190
A.I.D. - Peru ............................................. 138,627 8.350% 01/01/07 139,498
Attransco Title XI ........................................ 424,281 6.120% 04/01/08 415,168
B.A.L.T. Conway Partnership Title XI ...................... 103,736 10.750% 11/15/03 106,928
Federal Agricultural Mortgage Corporation
Series AM-1003 ........................................ 632,415 6.820% 04/25/13 610,311
Federal National Mortgage Association
Pool #73401 ........................................... 476,316 6.440% 03/01/06 469,406
Pool #380484 .......................................... 977,357 6.390% 07/01/16 898,655
Lawrence Steamship Company Title XI ....................... 203,482 7.270% 09/01/03 204,617
Small Business Administration 98-B ........................ 893,458 6.150% 02/01/18 845,928
----------
Total U.S. Government and Agency Obligations (Cost $4,349,398) ....................................... 4,178,233
----------
U.S. GOVERNMENT INSURED OBLIGATIONS - 13.95%
Federal Housing Authority Project Loan
Downtowner Apartments ................................. 144,590 8.375% 11/01/11 148,485
GMAC 32 ............................................... 58,473 7.430% 12/01/21 58,288
Reilly #046 ........................................... 362,836 6.970% 06/01/14 351,225
USGI #87 .............................................. 386,918 7.430% 08/01/23 386,020
----------
Total U.S. Government Insured Obligations (Cost $959,821) ............................................ 944,018
----------
CORPORATE OBLIGATIONS - 33.04%
Burlington North Santa Fe ................................. 676,000 2.625% 01/01/10 469,820
California Infrastructure SDG&E Series 1997-1 ............. 500,000 6.370% 12/26/09 484,844
Continental Airlines Inc. ................................. 452,637 7.750% 07/02/14 445,876
Tennessee Valley Authority ................................ 400,000 5.375% 11/13/08 364,540
Union Pacific Corporation ................................. 461,861 7.280% 04/30/15 470,475
----------
Total Corporate Obligations (Cost $2,329,986) ........................................................ 2,235,555
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
EARNEST Partners Fixed Income Trust
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Principal Rate Date (note 1)
------------------------------------------------------------------------------------------------------------------------------------
PRIVATE MORTGAGE BACKED SECURITIES - 0.34%
National Housing Partnership .............................. $ 22,732 9.500% 05/01/03 $ 22,757
(Cost $22,732) ----------
INVESTMENT COMPANY - 3.69%
AIM Short Term Prime Fund A ............................... 249,846 249,846
(Cost $249,846) ----------
Total Value of Investments (Cost $7,911,783 (a)) ............................................. 112.77 % $7,630,409
Liabilities In Excess of Other Assets ........................................................ (12.77)% (863,776)
------ ----------
Net Assets ............................................................................. 100.00 % $6,766,633
====== ==========
(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 ........................................................................ $ 21,268
Unrealized depreciation ........................................................................ (302,642)
----------
Net unrealized depreciation .......................................................... $ (281,374)
==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
EARNEST Partners Fixed Income Trust
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
ASSETS
Investments, at value (cost $7,911,783) .......................................................... $ 7,630,409
Income receivable ................................................................................ 97,112
Due from advisor (note 2) ........................................................................ 5,435
Other assets ..................................................................................... 5,731
-----------
Total assets ................................................................................ 7,738,687
-----------
LIABILITIES
Disbursements in excess of cash on demand deposit ................................................ 972,054
-----------
NET ASSETS
(applicable to 681,649 shares outstanding; unlimited
shares of no par value beneficial interest authorized) .......................................... $ 6,766,633
===========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($6,766,633 / 681,649 shares) .................................................................... $ 9.93
===========
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 7,375,587
Undistributed net investment income .............................................................. 5,518
Accumulated net realized loss on investments ..................................................... (333,098)
Net unrealized depreciation on investments ....................................................... (281,374)
-----------
$ 6,766,633
===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
EARNEST Partners Fixed Income Trust
STATEMENT OF OPERATIONS
Period ended September 30, 2000
(Unaudited)
NET INVESTMENT INCOME
Income
Interest ....................................................................................... $ 277,014
Dividends ...................................................................................... 6,824
---------
Total income .............................................................................. 283,838
---------
Expenses
Investment advisory fees (note 2) .............................................................. 18,100
Fund administration fees (note 2) .............................................................. 5,028
Custody fees ................................................................................... 2,493
Registration and filing administration fees (note 2) ........................................... 1,363
Fund accounting fees (note 2) .................................................................. 12,000
Audit fees ..................................................................................... 6,017
Legal fees ..................................................................................... 2,756
Securities pricing fees ........................................................................ 1,237
Shareholder recordkeeping fees ................................................................. 4,500
Other accounting fees (note 2) ................................................................. 6,972
Shareholder servicing expenses ................................................................. 1,504
Registration and filing expenses ............................................................... 652
Printing expenses .............................................................................. 1,706
Trustee fees and meeting expenses .............................................................. 2,006
Other operating expenses ....................................................................... 2,657
---------
Total expenses ............................................................................ 68,991
---------
Less:
Expense reimbursements (note 2) ....................................................... (14,680)
Investment advisory fees waived (note 2) .............................................. (18,100)
---------
Net expenses .............................................................................. 36,211
---------
Net investment income ................................................................. 247,627
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (10,053)
Decrease in unrealized depreciation on investments .................................................. 73,228
---------
Net realized and unrealized gain on investments ................................................ 63,175
---------
Net increase in net assets resulting from operations ...................................... $ 310,802
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
EARNEST Partners Fixed Income Trust
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended
September 30, March 31,
2000 (a) 2000
------------------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS
Operations
Net investment income .............................................................. $ 247,627 $ 537,520
Net realized (loss) gain from investment transactions .............................. (10,053) 14,373
Decrease in unrealized depreciation (appreciation) on investments .................. 73,228 (438,418)
----------- -----------
Net increase in net assets resulting from operations ............................ 310,802 113,475
----------- -----------
Distributions to shareholders from
Net investment income .............................................................. (242,684) (537,002)
----------- -----------
Capital share transactions
Decrease in net assets resulting from capital share transactions (b) ............... (1,494,733) (2,849,995)
----------- -----------
Total decrease in net assets ............................................ (1,426,615) (3,273,522)
NET ASSETS
Beginning of period ................................................................... 8,193,248 11,466,770
----------- -----------
End of period (includes undistributed net investment income of $5,518
at September 30, 2000 and $575 at March 31, 2000) ...................... $ 6,766,633 $ 8,193,248
=========== ===========
(a) Unaudited.
(b) A summary of capital share activity follows:
------------------------------------------------------------------------
Period ended Year ended
September 30, 2000 (a) March 31, 2000
Shares Value Shares Value
------------------------------------------------------------------------
Shares sold ................................................ 16,783 $ 164,711 133,527 $ 1,336,147
Shares issued for reinvestment of distributions ............ 15,544 152,924 32,346 321,053
----------- ----------- ----------- -----------
32,327 317,635 165,873 1,657,200
Shares redeemed ............................................ (183,192) (1,812,368) (447,049) (4,507,195)
----------- ----------- ----------- -----------
Net decrease .......................................... (150,865) $(1,494,733) (281,176) $(2,849,995)
=========== =========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNEST Partners Fixed Income Trust
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
------------------------------------------------------------------------------------------------------------------------------------
Period ended Year ended Year ended Year ended Year ended
September 30, March 31, March 31, March 31, March 31,
2000 (a) 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $ 9.84 $ 10.30 $ 10.31 $ 9.98 $ 10.11
Income from investment operations
Net investment income .................... 0.31 0.60 0.62 0.64 0.65
Net realized and unrealized gain (loss)
on investments ...................... 0.08 (0.46) (0.01) 0.33 (0.13)
----------- ----------- ----------- ----------- -----------
Total from investment operations .... 0.39 0.14 0.61 0.97 0.52
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income .................... (0.30) (0.60) (0.62) (0.64) (0.65)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ...................... $ 9.93 $ 9.84 $ 10.30 $ 10.31 $ 9.98
=========== =========== =========== =========== ===========
Total return ........................................ 3.93% 1.47% 5.97% 9.91% 5.38%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ..................... $ 6,766,633 $ 8,193,248 $11,466,770 $13,899,229 $11,227,141
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.72% (b) 1.57% 1.22% 1.10% 1.20%
After expense reimbursements and waived fees 0.90% (b) 0.90% 0.90% 0.90% 0.90%
Ratio of net investment income to average net assets
Before expense reimbursements and waived fees 5.35% (b) 5.26% 5.53% 6.01% 6.07%
After expense reimbursements and waived fees 6.16% (b) 5.93% 5.85% 6.21% 6.37%
Portfolio turnover rate ....................... 7.13% 15.41% 50.90% 38.46% 32.94%
(a) Unaudited.
(b) Annualized. See accompanying notes to financial statements
</TABLE>
<PAGE>
EARNEST Partners Fixed Income Trust
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The EARNEST Partners Fixed Income Trust (the "Fund"), formerly known as
Investek Fixed Income Trust prior to June 9, 2000, 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 25, 1990 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940, as amended. The
investment objective of the Fund is to 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
$4,579,024 (67.67% 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>
EARNEST Partners Fixed Income Trust
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(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, EARNEST Partners Limited,
LLC. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 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 $18,100 ($0.02 per share) and
reimbursed expenses totaling $14,680 for the period ended September 30,
2000.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to a fund accounting and compliance agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% 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>
EARNEST Partners Fixed Income Trust
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 3 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $549,797 and $1,095,953, respectively, for the period ended
September 30, 2000.
<PAGE>
________________________________________________________________________________
EARNEST PARTNERS FIXED
INCOME TRUST
________________________________________________________________________________
a 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.
