-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LOv7Hc2/ElngddHan2KGwWi4DBb3wwrUTmAbCjdE+yY05WVfLIrxvaBu0dt9G0SU tzvvzd9vBnUGLShsRfdHTA== 0001162044-08-000380.txt : 20080805 0001162044-08-000380.hdr.sgml : 20080805 20080805155123 ACCESSION NUMBER: 0001162044-08-000380 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20080531 FILED AS OF DATE: 20080805 DATE AS OF CHANGE: 20080805 EFFECTIVENESS DATE: 20080805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRAGG CAPITAL TRUST CENTRAL INDEX KEY: 0001170611 IRS NUMBER: 566592123 FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-21073 FILM NUMBER: 08991279 BUSINESS ADDRESS: STREET 1: 100 QUEENS RD CITY: CHARLOTTE STATE: NC ZIP: 28204 BUSINESS PHONE: 7047147711 MAIL ADDRESS: STREET 1: 100 QUEENS RD CITY: CHARLOTTE STATE: NC ZIP: 28204 0001170611 S000004901 Queens Road Small Cap Value Fund C000013255 Queens Road Small Cap Value Fund QRSVX 0001170611 S000004902 Queens Road Value Fund C000013256 Queens Road Value Fund QRVLX N-CSR 1 queensncsr200808.htm UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-21073


Bragg Capital Trust

(Exact name of registrant as specified in charter)


100 Queens Road Charlotte, NC 28204

(Address of principal executive offices)(Zip code)


100 Queens Road Charlotte, NC 28204

(Name and address of agent for service)


Registrant's telephone number, including area code:  704-714-7711


Date of fiscal year end:

May 31


Date of reporting period:

May 31, 2008


Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).  The Commission may use the information provided on Form N-CSRS in its regulatory, disclosure review, inspection and policymaking roles.


A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public.  A registrant is not required to respond to the collection of information contained in Form N-CSRS unless the Form displays a currently valid Office of Management and Budget ("OMB") control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.










Item 1.  Reports to Stockholders.















ANNUAL REPORT



Queens Road Value Fund

Queens Road Small Cap Value Fund




Each a series of the

Bragg Capital Trust



May 31, 2008










Managers Commentary May 31, 2008




Dear Fellow Shareholders:


For the fiscal year ending May 31, 2008, the Queens Road Value Fund returned -6.34% and the Queens Road Small Cap Value Fund returned -7.15% (see each fund’s section below for more detailed performance information). We are always disappointed with negative returns, but we know when we invest in equities we must occasionally accept them. We are pleased that both funds outperformed their benchmarks. The risk premium which had been noticeably absent from investors’ decisions over the past several years seems to have found its way back into the market, which we believe has been a significant driver in our relative outperformance over the last twelve months. Although of course past performance does not guarantee future results, we believe our value-oriented investment philosophy should continue to provide attractive risk-adjusted performance over the long term.


Economic news over the last twelve months has been dominated by surging oil prices and an unprecedented decline in the U.S. housing market. The decline in housing prices, brought on by years of lax lending standards and the moral hazards fostered by securitization, has yet to let up. The Federal Reserve’s attempts to intervene through interest rate cuts and innovative moves to provide banks liquidity have proven ineffective, except for promoting inflation as an undesirable side effect. The housing bill currently going through Congress is designed to alleviate some of this pressure. The complexities of the 694-page bill are enormous but the main thrust of it provides $300 billion in FHA mortgage guarantees for many of the most strapped homeowners, a $7500 tax credit to many first-time buyers and an increase in the authority, oversight, access to capital and liquidity for Fannie Mae and Freddie Mac. Our belief is that it is poorly designed and will result in unintended consequences that may ultimately do more harm than good. We hope we are wrong.


Tighter credit and increased fuel costs are taking a toll on consumer spending, which represents about two-thirds of the United States GDP and is a substantial factor in overall corporate profit growth. The recent tax rebates which were designed to spur spending did help, but will probably need to be repeated to produce a significant effect. On a positive note, employment remains relatively low, which will be crucial in keeping economic growth on track.


In spite of the headwinds of a slowing economy, the drop in the stock market has created some very attractive investment opportunities. We are seeing investments available at valuations we have not seen in several years. As we make these investments, overall negative sentiment may push their values down further. If so, we will buy more. Although we are currently paying for some of the poor decisions lenders, home buyers, and policy makers made over the last ten years, the foundation of the economy remains strong and when the market turns it will probably rebound sharply, as it typically does when emerging from bear markets. We look forward to participating in the next bull market.


As always, thank you for your support.


Sincerely,


Steve Scruggs, CFA

Benton Bragg, CFA


President, Portfolio Manager

Chairman





Queens Road Value Fund


Managers Commentary May 31, 2008


The Queens Road Value Fund was down -6.43% for the fiscal year ending 5/31/2008.  We beat both our primary benchmark, the S&P500/Citi Value Index, which was down -12.02% and the S&P 500, which was down -6.70%.    


Some of our best performing investments were Apache, Covidien, and McDonalds.  Exceptionally poor performance from AIG, Maxim Integrated Products and Conseco detracted from our overall performance.


The chart below shows the fund’s performance for the fiscal year ended 5/31/2008, along with the returns for the S&P500/Citi Value Index and the Standard and Poor’s 500 Index.  We try to outperform the index through security selection, investing only in those companies we believe are trading at attractive valuations and have the best prospects for long-term performance.


 

QRVLX

S&P 500/Citi Value

S&P 500

June 2007

-0.90%

-2.05%

-1.66%

July 2007

-3.76%

-3.93%

-3.10%

August 2007

1.39%

1.35%

1.50%

September 2007

2.36%

3.10%

3.74%

October 2007

2.00%

1.05%

1.59%

November 2007

-3.63%

-4.86%

-4.18%

December 2007

-0.43%

-1.58%

-0.69%

January 2008

-4.92%

-3.49%

-6.00%

February 2008

-2.62%

-5.21%

-3.25%

March 2008

-1.17%

-0.47%

-0.43%

April 2008

4.12%

3.73%

4.87%

May 2008

1.48%

0.12%

1.30%

One Year

-6.34%

-12.02%

-6.70%




Queens Road Value Fund


Performance Illustration May 31, 2008


Cumulative Performance Comparison $10,000 Investment Since Inception*



                                                  

May 31, 2008

S&P 500/Citi Value Index  

    

    $16,513

Queens Road Value Fund

    $17,619


[queensncsr200808002.jpg]



Average Annual Total Return

For the Periods Ended May 31, 2008

 

   

  Queens Road Value Fund                      S&P 500/Citi Value Index  

1 Year                                             

 -6.34%                                                 -12.02%

Since Inception                                 

  9.89%                                                  8.71%        

Annual Operating Expense    0.96%*

*As disclosed in the Fund's Prospectus.

*Past performance is not predictive of future performance.  The value of shares will fluctuate and will be worth more or less than their original cost at the time of redemption.





Queens Road Value Fund


Graphical Illustration May 31, 2008


The following chart gives a visual breakdown of the Fund by the industry sectors the underlying securities represent as a percentage of the portfolio of investments.


[queensncsr200808004.jpg]




   

 

Queens Road Value Fund

 

 

Schedule of Investments

 

 

May 31, 2008

 

   

Shares

 

Value

   

COMMON STOCKS - 92.28%

 
   

Advertising - 0.21%

 

500

Omnicom Group, Inc.

$        24,505

   

Aerospace & Defense - 1.92%

 

1,525

Alliant Techsystems, Inc. *

165,554

160

Boeing Company

13,243

600

United Technologies Corp.

         42,624

  

221,421

Alternative Carriers - 2.13%

 

15,500

Time Warner, Inc.

246,140

   

Apparel & Accessories - 1.10%

 

800

Liz Claiborne, Inc.

13,968

1,500

V.F. Corp.

        113,550

  

127,518

Beverages - 1.19%

 

1,830

Brown Forman Corp. Class-B

137,579

   

Broadcasting & Cable TV - 2.82%

 

10,490

CBS Corp. Class B

        226,374

2,800

Dish Network Corp. Class-A

         98,308

  

324,682

Computer Storage & Peripherals - 3.45%

 

10,000

EMC Corporation *

174,400

4,600

Lexmark International Group *

169,556

2,500

Seagate Technology

         53,550

  

397,506

Data Processing Services - 0.53%

 

2,495

Electronic Data Systems Corp.

61,103

   

Electric & Other Services Combined - 0.94%

 

2,100

Integrys Energy Group, Inc.

107,835

   

Electric Utilites - 4.98%

 

10,900

Duke Energy Corp.

201,432

700

Exelon Corp.

61,600

3,000

Northeast Utilities

78,330

1,700

Progress Energy, Inc.

         72,692

4,400

Southern Co.

        159,280

  

573,334

Environmental Services - 0.64%

 

2,250

Waste Connections, Inc. *

73,868

   

Fertilizers & Agricultural Chemicals - 0.44%

 

1,800

The Scotts Miracle-Gro Co. Class-A

50,760

   

Finance Services - 1.61%

 

4,000

American Express Co.

185,400

   

Financials-Asset Management & Custody Banks - 4.23%

 

2,900

Bank of America Corp.

98,629

4,100

Legg Mason, Inc.

220,621

2,900

T. Rowe Price Associates, Inc.

        167,968

  

487,218

General Merchandise Stores - 0.62%

 

1,950

Dollar Tree Stores, Inc. *

71,955

   

Health Care Distributors & Services - 2.08%

 

4,300

Wellpoint Health Networks, Inc. *

240,026

   

Health Care Equipment - 0.66%

 

1,500

Medtronic, Inc.

76,005

   

Health Care Facilities - 2.03%

 

6,500

Community Health Systems *

234,195

   

Household Products - 1.44%

 

2,900

Clorox Co.

165,677

   

Housewares & Specialties - 2.04%

 

3,380

Fortune Brands, Inc.

234,842

   

Industrial Conglomerates - 3.33%

 

1,162

Covidien Ltd.

58,205

1,162

Tyco Electronics Ltd.

46,619

6,162

Tyco International Ltd.

        278,461

  

383,285

Industrial Instruments For Measurement, Display And Control - 0.78%

 

1,150

Danaher Corp.

89,907

   

Industrial Machinery - 1.15%

 

3,000

Ingersoll-Rand Co. Ltd.

132,120

   

Insurance Brokers - 2.23%

 

1,300

Brown & Brown, Inc.

25,311

2,300

Hartford Financial Services Group, Inc.

163,461

2,500

Marsh & Mclennan Companies, Inc.

         68,075

  

256,847

Integrated Oil & Gas - 1.31%

 

1,700

Exxon Mobil Corp.

150,892

   

Integrated Telecommunication Services - 5.76%

 

5,100

AT&T, Inc.

203,490

4,600

Century Telephone Enterprises, Inc.

162,886

22,333

Windstream Corp.

        297,922

  

664,298

Internet Software & Services - 3.05%

 

6,000

Intel Corp.

139,080

7,500

Microsoft Corp.

        212,400

  

351,480

Investment Banking & Brokerage - 0.38%

 

1,000

Merrill Lynch & Company, Inc.

         43,920

   

Leisure Products - 0.85%

 

2,700

Hasbro, Inc.

97,848

   

Life & Health Insurance - 9.10%

 

14,710

Aegon NV

224,181

4,000

Aflac, Inc.

        268,520

9,500

Conseco, Inc. *

110,865

3,035

Metlife Inc.

182,191

2,000

Prudential Financial, Inc.

149,400

1,800

Torchmark Corp.

        114,138

  

1,049,295

Movies & Entertainment - 0.85%

 

4,500

News Corp. Class-A

80,775

490

Viacom, Inc. Class B *

         17,552

  

98,327

Multi-Sector Holdings - 2.45%

 

5,200

Leucadia National Corp.

282,360

   

Multi-Line Insurance - 0.94%

 

3,000

American International Group, Inc.

108,000

   

National Commercial Banks - 1.31%

 

3,500

JP Morgan Chase & Company

150,500

   

Oil & Gas Exploration & Production - 1.40%

 

1,200

Apache Corp.

160,872

   

Oil & Gas Refining & Marketing - 0.28%

 

1,200

Spectra Energy Corp

32,424

   

Packaged Foods - 0.47%

 

1,670

Unilever NV

54,709

   

Personal Products - 1.46%

 

6,375

Alberto-Culver Co. Class B

168,491

   

Pharmaceuticals - 6.72%

 

6,000

Glaxosmithkline, PLC - ADR

267,180

3,050

Johnson & Johnson

203,557

2,820

Merck & Co., Inc.

109,867

10,000

Pfizer, Inc.

        193,600

  

774,204

Property & Casualty Insurance - 3.93%

 

11,900

Progressive Corp.

238,714

4,300

Travelers Companies, Inc.

        214,183

  

452,897

Publishing & Printing - 1.46%

 

420

Gannett Co., Inc.

12,100

3,300

John Wiley & Sons, Inc. Class-A

        155,925

  

168,025

Reginal Banks - 0.86%

 

1,700

BOK Financial Corp.

         98,991

   

Radio & TV Broadcasting & Communications Equipment - 0.18%

 

560

Echostar Corp. Class-A *

20,911

   

Reinsurance - 1.86%

 

4,100

Renaissance Re Holdings Ltd.

213,856

   

Restaurants - 1.71%

 

3,325

McDonalds Corp.

197,239

   

Semiconductors - 0.77%

 

4,000

Maxim Integrated Products, Inc.

88,400

   

Specialty Stores - 0.09%

 

1,375

Sally Beauty Holdings, Inc. *

10,368

   

Steel Pipe & Tubes - 0.33%

 

500

Allegheny Technologies, Inc.

37,500

   

Systems Software - 0.57%

 

3,000

Symantec Corp. *

65,190

   

Trading Companies & Distributors - 0.55%

 

700

W.W. Grainger, Inc.

63,882

   

Wireless Telecommunication Services - 0.82%

 

1,586

America Movil S.A.B. de C.V. Series-L ADR

94,795

   

State Commercial Banks - 0.27%

 

1,650

Fifth Third Bancorp

         30,855

   

TOTAL FOR COMMON STOCKS (Cost $9,960,708) - 92.28%

$  10,634,257

   

SHORT TERM INVESTMENTS - 7.55%

 

870,122

AIM Short Term Investment Company Prime Portfolio 2.62% ** (Cost $870,122)

        870,122

   

TOTAL INVESTMENTS (Cost $10,830,830) - 99.83%

   11,504,379

   

OTHER ASSETS LESS LIABILITIES - 0.17%

         19,502

   

NET ASSETS - 100.00%

$  11,523,881

   

* Non-income producing securities during the period.

 

ADR - American Depository Receipt

 

** Variable rate security; the coupon rate shown represents the yield at May 31, 2008.

 

The accompanying notes are an integral part of these financial statements.

 




   

 

Queens Road Value Fund

 

 

Statement of Assets and Liabilities

 

 

May 31, 2008

 

   

Assets:

  

       Investments, at Value (Cost $10,830,830)

$  11,504,379

       Receivables:

 

               Dividends and Interest

         28,494

                     Total Assets

   11,532,873

Liabilities:

  

        Accrued Management Fees

           8,992

                     Total Liabilities

           8,992

Net Assets

 

$  11,523,881

   

Net Assets Consist of:

 

    Paid In Capital

10,932,677

    Accumulated Undistributed Net Investment Income

74,849

    Accumulated Undistributed Realized (Loss) on Investments

     (157,194)

    Unrealized Appreciation in Value of Investments

        673,549

Net Assets, for 761,713 Shares Outstanding (Unlimited number

 

   of shares authorized without par value)

$  11,523,881

   

Net Asset Value Per Share ($11,523,881/761,713)

$         15.13

   

The accompanying notes are an integral part of these financial statements.




   

 

Queens Road Value Fund

 

 

Statement of Operations

 

 

For the year ended May 31, 2008

 

   
   

Investment Income:

 

       Dividends (net of foreign witholding taxes of $536)

$      200,920

       Interest

 

         78,608

            Total Investment Income

        279,528

   

Expenses:

  

       Advisory Fees (Note 3)

         98,259

            Total Expenses

         98,259

   

Net Investment Income

        181,269

   

Realized and Unrealized Loss on Investments:

 

   Realized Loss on Investments

         (7,521)

   Net Change in Unrealized Depreciation on Investments

     (782,193)

Net Realized and Unrealized Loss on Investments

     (789,714)

   

Net Decrease in Net Assets Resulting from Operations

 $  (608,445)

   
   
   

The accompanying notes are an integral part of these financial statements.

 




    

Queens Road Value Fund

Statements of Changes in Net Assets

 

 

 

 

    
    
   
  

Years Ended

  

5/31/2008

5/31/2007

Increase (Decrease) in Net Assets From Operations:

  

    Net Investment Income

$      181,269

$      153,843

    Net Realized Gain (Loss) on Investments

         (7,521)

         32,220

    Unrealized Appreciation (Depreciation) on Investments

     (782,193)

     1,161,293

    Net Increase (Decrease) in Net Assets Resulting from Operations

     (608,445)

     1,347,356

    

Distributions to Shareholders From:

  

    Net Investment Income

     (174,900)

     (103,682)

    Realized Gains

     (141,843)

       (47,519)

    Net Change in Net Assets from Distributions

     (316,743)

     (151,201)

    

Capital Share Transactions:

  

    Proceeds from Sale of Shares

     3,025,830

     3,854,300

    Shares Issued on Reinvestment of Dividends

        137,805

         60,840

    Cost of Shares Redeemed

     (444,730)

     (326,882)

    Net Increase in Net Assets from Shareholder Activity

     2,718,905

     3,588,258

    

Net Assets:

   

    Net Increase in Net Assets

     1,793,717

     4,784,413

    Beginning of Period

     9,730,164

     4,945,751

    End of Period (Including Accumulated Undistributed Net Investment

  

         Income of $74,849 and $68,480, Respectively)

$  11,523,881

$   9,730,164

    

Share Transactions:

  

    Shares Sold

        196,504

        252,457

    Shares Issued on Reinvestment of Dividends

           8,783

           3,893

    Shares Redeemed

       (28,057)

       (21,007)

    Net Increase in Shares

        177,230

        235,343

    Outstanding at Beginning of Period

        584,483

        349,140

    Outstanding at End of Period

        761,713

        584,483

    
    

The accompanying notes are an integral part of these financial statements.

  




        

Queens Road Value Fund

Financial Highlights

Selected data for a share outstanding throughout the period.

        
        
        
  

For the Years Ended

  

5/31/2008

5/31/2007

5/31/2006

5/31/2005

 

5/31/2004

        

Net Asset Value, at Beginning of Period

$            16.65

$         14.17

$         13.00

$         12.54

 

$         10.74

        

Income From Investment Operations:

      

  Net Investment Income *

0.27

             0.33

             0.15

             0.16

 

             0.26

  Net Gain (Loss) on Securities (Realized and Unrealized)

             (1.30)

             2.46

             1.15

             1.20

 

             1.76

     Total from Investment Operations

             (1.03)

             2.79

             1.30

             1.36

 

             2.02

        

Distributions from:

      

  Net Investment Income

             (0.27)

          (0.21)

          (0.05)

          (0.26)

 

          (0.22)

  Capital Gains

             (0.22)

          (0.10)

          (0.08)

          (0.64)

 

             0.00

  

             (0.49)

          (0.31)

          (0.13)

          (0.90)

 

          (0.22)

        

Net Asset Value, at End of Period

$            15.13

$         16.65

$         14.17

$         13.00

 

$         12.54

        

Total Return **

          (6.34)%

19.83%

10.03%

10.79%

(a)

18.77%

        

Ratios/Supplemental Data:

      

  Net Assets at End of Period (Thousands)

$           11,524

$         9,730

$         4,946

$         1,388

 

$            534

  Before Reimbursement

      

     Ratio of Expenses to Average Net Assets

0.95%

0.95%

0.95%

0.95%

 

0.95%

     Ratio of Net Investment Income to Average Net Assets

1.75%

2.12%

1.05%

0.89%

 

1.22%

  After Reimbursement

      

     Ratio of Expenses to Average Net Assets

0.95%

0.95%

0.95%

0.57%

 

0.00%

     Ratio of Net Investment Income to Average Net Assets

1.75%

2.12%

1.05%

1.27%

 

2.17%

  Portfolio Turnover

14.05%

8.66%

6.54%

54.53%

 

36.79%

        
        
        

*   Net Investment Income/Loss per share amounts were calculated using the average share method.

    

** Total return in the above table represents the rate that the investor would have earned or lost on an investment in the fund assuming reinvestment of dividends and is not annualized for periods of less than one year.

(a) Total return before the waiver of related party broker commissions of $332 is 10.79% (see note 3).

    
        
        

The accompanying notes are an integral part of these financial statements.



BRAGG CAPITAL TRUST

QUEENS ROAD VALUE FUND

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2008



Note 1. Organization

 The Queens Road Value Fund (the “Fund”), a managed portfolio of the Bragg Capital Trust, is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management company.  The Fund is one of a series of Funds of the Bragg Capital Trust, which also includes the Queens Road Small Cap Value Fund.  The Fund’s investment objective is to seek growth of capital.  It invests primarily in common stocks which are believed by the Advisor to be undervalued and have good prospects for capital appreciation.  The Fund’s registration statement was declared effective on June 13, 2002 and operations began on that date.


Note 2.  Significant Accounting Policies

The following is a summary of accounting policies followed by the Fund in the preparation of its financial statements.


Security Valuation: Securities, which are traded on a national securities exchange or on the NASDAQ over-the-counter market, are valued at the last quoted sales price.  If there are no sales reported the Fund’s portfolio securities will be valued using the last reported bid price. Short-term obligations having remaining maturities of 60 days or less are valued at amortized cost. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by and under the direction of the Fund’s Board of Trustees.


Federal Income Taxes: The Fund’s policy is to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders.  Therefore, no provision for income taxes is required.  


Effective October 31, 2007, the Fund adopted Financial Accounting Standards Board (“FASB”) Interpretation No.48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, a clarification of FASB Statement No.109, Accounting for Income Taxes.  FIN 48 establishes financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return.  FIN 48 was applied to all open tax years as of the effective date.  The adoption of FIN 48 had no impact on the Fund’s net assets or results of operations.


As of and during the period ended May 31, 2008 the Fund did not have a liability for any unrecognized tax benefits.  The Fund recognizes interest and penalties, if any, related to recognized tax benefits as income tax expense on the statement of operations.  During the period, the Fund did not incur any interest or penalties.  The Fund is not subject to examination by the U.S. federal tax authorities for the tax years before 2004.


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 reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.


Other: The Fund follows industry practice and records security transactions on the trade date.  The specific identification method is used for determining gains or losses for financial statement and income tax purposes.  Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as information is available to the Fund.  Interest income is recorded on an

BRAGG CAPITAL TRUST

QUEENS ROAD VALUE FUND

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2008



accrual basis.  Discounts and premiums on securities purchased are amortized over the life of the respective securities.  


Distributions to shareholders:  Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income taxes purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes.  Any such reclassifications will have no effect on net assets, results of operations or net asset value per share of the Fund.  There were no reclassifications for the yea r ended May 31, 2008.


Fair Value Measurements: In September 2006, FASB issued Statement on Financial Accounting Standards (SFAS) No. 157 “Fair Value Measurements.” This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosure about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.  The changes to current generally accepted accounting principles from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements.  As of May 31, 2008, the Fund does not believe that the adoption of SFAS No. 157 will impact the amounts reported in the financial statements, however, additional disclosures may be required about the i nputs used to develop the measurements and the effect of certain of the measurements reported on the statements of changes in net assets for a fiscal period.


Note 3. Investment Advisory Fee and Other Transactions with Affiliates

The Fund retains Bragg Financial Advisors, Inc. (the “Advisor”) as its Investment Advisor.  Under the terms of the management agreement, the Advisor provides investment management and administrative services for the Fund. For its services as Advisor, the Fund pays a fee, computed daily and payable monthly at the annual rate of 0.95% of the Fund’s average daily net asset value. For the year ended May 31, 2008, the Advisor earned $98,259.  From these fees and its own resources the Advisor agreed to pay other operating expenses of the Fund including transfer agent fees, fund accountant fees, registration fees, custodial fees, and other ordinary expenses of the Fund.  However, the agreement does not require the Advisor to pay interest, taxes, brokerage commissions, and extraordinary expenses of the Fund.  The amount due to the Advisor at May 31, 2008 is $8,992.


Certain Trustees and officers of the Advisor are “interested persons” (as defined in the Investment Company Act of 1940) of the Trust. Each “non-interested” Trustee is entitled to receive an annual fee of $1,000 plus expenses for services relating to the Trust which is paid by the Advisor.  


Queens Road Securities (“QRS”) acts as the principal underwriter in the continuous public offering of the Fund’s shares.  Certain officers of the Trust are also officers of QRS. QRS did not receive or waive any brokerage fees on executions of purchases and sales of the Fund’s portfolio investments during the year ended May 31, 2008.




BRAGG CAPITAL TRUST

QUEENS ROAD VALUE FUND

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2008


 

Note 4. Capital Stock

At May 31, 2008, there were an unlimited number of shares authorized and 761,713 shares outstanding, each with no par value, and paid-in capital amounted to $10,932,677 for the Fund.


Note 5. Investment Transactions

For the year ended May 31, 2008, the cost of purchases and the proceeds from sales, other than short-term securities, aggregated $3,953,504 and $1,212,565 respectively.  The aggregate cost of securities for federal income tax purposes at May 31, 2008 was $10,984,961.


Note 6. Distributions to Shareholders

The tax character of distributions paid during the fiscal year ended May 31, 2008 and fiscal year ended May 31, 2007 were as follows:

Distributions paid from:

May 31, 2008

 May 31, 2007

   Ordinary Income

$174,900

$103,682

   Short-Term Capital Gain

9,614

6,105

   Long-Term Capital Gain

132,229

41,414

 

$316,743

$151,201


As of May 31, 2008 the components of distributable earnings on a tax basis were as follows:


Undistributed Ordinary income

$71,584

Undistributed long-term capital gain

202

Unrealized appreciation

519,418

          Net Total

$591,204

At May 31, 2008, the composition of unrealized appreciation (excess of value over tax cost) and depreciation (the excess of tax cost over value) on a tax basis was as follows:


Appreciation

Depreciation

Net Appreciation (Depreciation)

1,352,869

(833,451)

519,418


The difference between book-basis and tax-basis unrealized appreciation (depreciation) resulted from the deferral of Post-October losses, of $154,131.  


Note 7. Control

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under section 2 (a) (9) of the Investment Company Act of 1940.  As of May 31, 2008, Pershing, LLC., for the benefit of its customers, owned 99.03% of the Fund.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To The Shareholders and  

Board of Trustees

Queens Road Value Fund



We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Queens Road Value Fund (the “Fund”), a series of the Bragg Capital Trust as of May 31, 2008, and the related statement of operations for the year then ended and statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended.  These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.    


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2008, by correspondence with the Fund’s custodian.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Queens Road Value Fund, as of May 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.





COHEN FUND AUDIT SERVICES, LTD.

Westlake, Ohio  

July 25, 2008



    

Queens Road Value Fund

Expense Illustration

May 31, 2008

    

Expense Example

    

As a shareholder of the Queens Road Value Fund, you incur ongoing costs which typically consist of  management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

    

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, December 1, 2007 through May 31, 2008.

    

Actual Expenses

    

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by  $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

    

Hypothetical Example for Comparison Purposes

    

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in this Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

    
 

Beginning Account Value

Ending Account Value

Expenses Paid During the Period *

 

December 1, 2007

May 31, 2008

December 1,2007 to May 31,2008

    

Actual

$1,000.00

$962.58

$4.66

Hypothetical (5% Annual

   

   Return before expenses)

$1,000.00

$1,020.25

$4.80

    

* Expenses are equal to the Fund's annualized expense ratio of 0.95%, multiplied by the average account value over   the period, multiplied by 183/366 (to reflect the one-half year period).



BRAGG CAPITAL TRUST

QUEENS ROAD VALUE FUND

ADDITIONAL INFORMATION

MAY 31, 2008



Proxy Voting - A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies during the most recent 12 month period, are available without charge upon request by (1) calling the Fund at (800) 595-3088 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.


Portfolio Holdings - The Fund files a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q.  The Fund’s first and third fiscal quarters end on August 31 and February 28. The Form N-Q filing must be made within 60 days of the end of the quarter, and the Fund’s first Form N-Q was filed with the SEC on October 8, 2004. The Fund’s Forms N-Q are available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).  You may also obtain copies by calling the Fund at 1-800-595-3088.




Interested Trustees


Name (Age)




Position with Fund



Term of Office and Length of Time Served




Principal Occupations During Past Five Years

Number of Portfolios in Fund Complex Overseen By Trustee

Other Directorships Held By Trustee

Steve Scruggs, 39

Trustee, President Secretary

Unlimited;

5 years

Bragg Financial Advisors,  Portfolio Manager/CCO

(2000- present)

Reliance Insurance,  Product Manager(1999-2000)



Two



None

Benton Bragg, 40

Trustee, Chairman Treasurer

Unlimited;

5 years

Bragg Financial Advisors, President, CEO (1996-present)


Two


None


Independent Trustees

 

 

 

 

Philip Blount, 53 2

Trustee

Unlimited;

5 years

Icons, Inc., President (2001- present)

Marketing Merchandise

Halo, Inc., Vice President (1996-2001)

Marketing Merchandise




Two




None

Christopher Brady, 371,2

Trustee

Unlimited;

5 years

Brady Distributing, Vice President (1995-present)

Machinery Distribution



Two



None

 

 

 

 

 

 

Harold Smith, 422

Trustee

Unlimited;

5 years

Raftelis Financial, Vice President (1996 – present)

Public Finance Consulting



Two



None

Timothy Ignasher, 461

Trustee

Unlimited;

5 years

Colony Signature Bank, Exec.Vice President  & COO (2007 – present)

Commercial Loan Officer


Two


None


Steve Scruggs and Benton Bragg are Interested Trustees of the Funds (as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940) by reason of their affiliation with the Funds’ adviser, Bragg Financial Advisers, Inc. and their affiliation as registered principals with the Funds’ underwriter, Queens Road Securities, LLC.  Benton Bragg and Steve Scruggs are brothers-in-law.

(1) Member of the Audit Committee of the Board of Trustees, which makes  recommendations regarding the selection of the Funds’ independent public accountants and meets with representatives of the accountants to determine the scope of and review the results of each audit.

(2) Member of the Nominating Committee of the Board of Trustees, which identifies qualified candidates and recommends nominees for election as Trustees.


Queens Road Small Cap Value Fund


Managers Commentary May 31, 2008



For the twelve month period ending 5/31/2008 the total return for the Queens Road Small Cap Value Fund was -7.15%.  This compares with returns of -15.33% for the Russell 2000 Value Index and -10.53% for the Russell 2000 Index.

 

Performance was hurt by the poor performance of Oshkosh Corp, Delta Apparel, USEC and Anchor Bancorp.  The fund’s best performers for the year were energy companies Encore Acquisition, St. Mary Land and Exploration, and Vaalco Energy, and food processor Sadia, S.A.  Over the course of the year we held more cash than we would normally, this also helped our relative performance.


Below is our month-by-month performance comparison with both the Russell 2000 Value Index and the Russell 2000 Index.


 

QRSVX

Russell 2000 Value

Russell 2000

June 2007

-1.23%

-2.33

-1.46%

July 2007

-5.10%

-8.51%

-6.84%

August 2007

1.26%

2.00%

2.27%

September 2007

2.00%

0.45%

1.72%

October 2007

0.64%

1.09%

2.87%

November 2007

-6.06%

-7.49%

-7.18%

December 2007

-0.38%

-0.85%

-0.06%

January 2008

-2.67%

-4.10%

-6.82%

February 2008

-2.07%

-3.97%

-3.71%

March 2008

-0.56%

1.51%

0.42%

April 2008

3.51%

3.16%

4.19%

May 2008

3.81%

3.42%

4.59%

One Year

-7.15%

-15.33%

-10.53%




Queens Road Small Cap Value Fund


Performance Illustration May 31, 2008


Cumulative Performance Comparison $10,000 Investment Since Inception*


                                                  

May 31, 2008

Russell 2000 Value Index                  

     $17,218

Queens Road Small Cap Value

     $20,336



[queensncsr200808006.jpg]


Average Annual Total Return

For the Periods Ended May 31, 2008


 

Queens Road Small Cap Value

Russell 2000 Value Index

1 Year

-7.15%

-15.33%

Since Inception

12.55%

9.53%

Annual Operating Expenses    1.37%*

*As disclosed in the Fund's Prospectus.


*Past performance is not predictive of future performance.  The value of shares will fluctuate and will be worth more or less than their original cost at the time of redemption.


Queens Road Small Cap Value Fund


Graphical Illustration May 31, 2007


The following chart gives a visual breakdown of the Fund by the industry sectors the underlying securities represent as a percentage of the portfolio of investments.


[queensncsr200808008.jpg]







   

 

Queens Road Small Cap Value Fund

 

 

Schedule of Investments

 

 

May 31, 2008

 

   

Shares

 

Value

   

COMMON STOCKS - 95.43%

 
   

Aerospace & Defense - 0.85%

 

15,600

Allied Defense Group, Inc. *

$       110,760

   

Agricultural Products-Livestock & Animal Specialties - 2.16%

 

11,000

Sadia S.A. (Brazil) ADR

280,390

   

Aircraft Parts & Auxiliary Equiptment - 2.29%

 

9,400

Ducommun, Inc. *

297,698

   

Auto Parts & Equipment - 1.50%

 

8,700

Aftermarket Technology Corp. *

194,793

   

Close End Mutual Fund - 1.11%

 

1,200

Capital Southwest Corp.

144,588

   

Computer Storage & Peripherals - 2.40%

 

15,800

Avocent Corp. *

311,734

   

Construction & Farm Machinery - 1.07%

 

3,426

Oshkosh Truck Corp.

138,445

   

Crude Petroleum & Natural Gas - 2.16%

 

38,000

Vaalco Energy, Inc. *

279,680

   

Diversified Chemicals - 0.35%

 

1,400

Cabot Corp.

44,856

   

Electric & Other Services Combined - 0.34%

 

3,700

Florida Public Utilities Co.

44,400

   

Electric Utilites - 1.50%

 

5,650

MGE Energy, Inc.

194,078

   

Electrical Components & Equiptment - 0.03%

 

500

Deswell Industries, Inc.

3,745

   

Electronic Equipment & Instruments - 1.32%

 

18,200

PAR Technology Corp. *

171,080

   

Fire, Marine & Casulty Insurance - 1.80%

 

16,066

United America Indemnity Ltd. Class-A *

234,082

   

Food Retail - 2.47%

 

861

Arden Group, Inc. Class-A

         100,995

4,674

Village Super Market, Inc. Class-A

         218,977

  

319,972

Footwear - 2.21%

 

17,900

K-Swiss Inc. Class A

286,758

   

Gas Utilities - 3.87%

 

7,300

Piedmont Natural Gas Co., Inc.

197,319

11,300

UGI Corp.

         304,874

  

502,193

Health Care Distributors & Services - 2.57%

 

7,020

Owens & Minor, Inc.

333,310

   

Health Care Supplies - 2.01%

 

2,402

Atrion Corp.

260,617

   

Industrial Inorganic Chemicals - 1.41%

 

10,000

LSB Industries, Inc. *

182,400

   

Industrial Machinery - 2.62%

 

9,400

Hurco Companies, Inc. *

340,562

   

Information Technology, Electronic Manufacturing Services - 4.09%

 

9,100

Park Electrochemical Corp.

         268,905

17,891

TTM Technologies, Inc. *

         260,493

  

529,398

Insurance Brokers - 0.63%

 

5,000

American Safety Insurance Holdings Ltd. *

81,500

   

Life & Health Insurance - 1.41%

 

18,000

Phoenix Companies, Inc.

182,340

   

Mining & Quarrying of Nonmetallic Minerals - 2.01%

 

37,500

Usec, Inc. *

261,375

   

Multi-Line Insurance - 1.85%

 

14,700

Horace Mann Educators Corp.

239,463

   

Natural Gas Distribution - 1.73%

 

6,720

New Jersey Resources Corp.

223,843

   

Networking Equipment - 2.10%

 

3,899

Bel Fuse, Inc. Class B

102,115

23,907

Packeteer, Inc. *

         169,740

  

271,855

Office Services & Supplies - 1.10%

 

3,371

United Stationers, Inc. *

142,728

   

Oil & Gas Exploration & Production - 5.05%

 

6,000

Encore Acquisition Co. *

         400,740

5,000

Saint Mary Land & Exploration Co.

         254,800

  

655,540

Packaged Foods - 4.48%

 

6,874

Sanderson Farms, Inc.

         343,219

7,626

Smithfield Foods, Inc. *

         238,618

  

581,837

Patent Owners & Lessors - 1.66%

 

8,600

Interdigital, Inc. *

         214,914

   

Personal Products - 0.65%

 

1,875

CCA Industries, Inc.

16,462

2,700

Inter Parfums, Inc.

          67,959

  

          84,421

Property & Casualty Insurance - 3.00%

 

7,350

CNA Surety Corp. *

107,530

5,500

Proassurance Corp. *

         281,765

  

389,295

Regional Banks - 1.05%

 

5,241

First Midwest Bancorp, Inc.

136,790

   

Reinsurance - 3.06%

 

6,000

Endurance Specialty Holdings, Ltd.

         201,960

5,500

Platinum Underwriters Holdings, Ltd.

         195,085

  

397,045

Retail - Radio, TV & Consumer Electronics Stores - 2.26%

 

20,000

Radioshack Corp.

293,000

   

Semi-Conductors & Related Devices - 2.06%

 

27,900

Micrel, Inc.

267,840

   

Services - Business Services - 0.64%

 

60,500

Safeguard Scientifics, Inc. *

83,490

   

Services-Advertising - 3.06%

 

25,000

Valassis Communications, Inc. *

397,250

   

Services-Computer Processing & Data Preparation - 2.83%

 

25,000

Acxiom Corp.

366,750

   

Specialty Chemicals - 2.48%

 

19,000

American Pacific Corp. *

322,050

   

Steel - 2.21%

 

11,500

Cleco Corp.

287,270

   

Sugar & Confectionery Products - 1.72%

 

15,400

Imperial Sugar Co.

223,300

   

Surgical & Medical Instruments & Apparatus - 1.73%

 

14,494

Angiodynamics, Inc. *

224,512

   

Thrifts And Mortgage Finance - 0.98%

 

7,801

Anchor Bancorp Wisconsin, Inc.

109,448

2,012

Sterling Financial Corp.

          17,866

  

127,314

Telephone & Telegraph Apparatus - 3.20%

 

5,100

Adtran, Inc.

126,939

53,000

Tellabs, Inc. *

         288,320

  

415,259

Wholesale-Apparel, Piece Goods & Notions - 1.70%

 

37,535

Delta Apparel, Inc.

111,479

3,795

Weyco Group, Inc.

         109,182

  

220,661

State Commercial Banks - 0.65%

 

2,776

Penns Wood Bancorp, Inc.

          84,668

   
   

TOTAL FOR COMMON STOCKS (Cost $11,382,991) - 95.43%

$   12,381,849

   

SHORT TERM INVESTMENTS - 4.43%

 

574,950

AIM Short Term Investments Company Prime Portfolio 2.62% ** (Cost $574,950)

         574,950

   

TOTAL INVESTMENTS (Cost $11,957,941) - 99.86%

$   12,956,799

   

OTHER ASSETS LESS LIABILITIES - 0.14%

         17,731

   

NET ASSETS - 100.00%

$   12,974,530

   

* Non-income producing securities during the period.

 

** Variable rate security; the coupon rate shown represents the yield at May 31, 2008.

 

ADR - American Depository Receipt

 

The accompanying notes are an integral part of these financial statements.

 




   

 

Queens Road Small Cap Value Fund

 

 

Statement of Assets and Liabilities

 

 

May 31, 2008

 

   

Assets:

  

       Investments, at Value (Cost $11,957,941)

$  12,956,799

       Receivables:

 

               Dividends and Interest

           8,740

               Shareholder Subscription

         23,500

                     Total Assets

   12,989,039

Liabilities:

  

        Accrued Management Fees

         14,509

                     Total Liabilities

         14,509

Net Assets

 

$  12,974,530

   

Net Assets Consist of:

 

    Paid In Capital

$  12,322,520

    Accumulated Undistributed Net Investment Income

        20,400

    Accumulated Undistributed Realized (Loss) on Investments

     (367,248)

    Unrealized Appreciation in Value of Investments

       998,858

Net Assets, for 755,921 Shares Outstanding

$  12,974,530

   (Unlimited number of shares authorized without par value)

 

Net Asset Value Per Share ($12,974,530/755,921 shares)

$         17.16

   

The accompanying notes are an integral part of these financial statements.

 




   

 

Queens Road Small Cap Value Fund

 

 

Statement of Operations

 

 

For the year ended May 31, 2008

 

   
   

Investment Income:

 

       Dividends (net of foreign witholding taxes of $773)

$      140,749

       Interest

 

         76,103

            Total Investment Income

        216,852

   

Expenses:

  

       Advisory Fees (Note 3)

        143,261

            Total Expenses

        143,261

   

Net Investment Income

         73,591

   

Realized and Unrealized Loss on Investments:

 

   Realized Loss on Investments

       (24,199)

   Net Change in Unrealized Depreciation on Investments

     (631,526)

Net Realized and Unrealized Loss on Investments

     (655,725)

   

Net Decrease in Net Assets Resulting from Operations

 $  (582,134)

   
   
   

The accompanying notes are an integral part of these financial statements.

 




    

Queens Road Small Cap Value Fund

Statements of Changes in Net Assets

 

 

 

 

    
    
  

For the Years

  

Ended

  

5/31/2008

5/31/2007

Increase (Decrease) in Net Assets From Operations:

  

    Net Investment Income

$      73,591

$           48,858

    Net Realized Gain (Loss) on Investments

     (24,199)

           153,421

    Unrealized Appreciation (Depreciation) on Investments

    (631,526)

        1,300,972

    Net Increase (Decrease) in Net Assets Resulting from Operations

    (582,134)

        1,503,251

    

Distributions to Shareholders From:

  

    Net Investment Income

     (60,174)

          (56,414)

    Realized Gains

    (478,602)

        (331,235)

    Net Change in Net Assets from Distributions

    (538,776)

        (387,649)

    

Capital Share Transactions:

  

    Proceeds from Sale of Shares

    5,276,194

        1,946,869

    Shares Issued on Reinvestment of Dividends

      248,143

           169,042

    Cost of Shares Redeemed

 (1,263,759)

      (1,435,045)

    Net Increase in Net Assets from Shareholder Activity

    4,260,578

           680,866

    

Net Assets:

  

    Net Increase in Net Assets

    3,139,668

        1,796,468

    Beginning of Period

    9,834,862

        8,038,394

    End of Period (Including Accumulated Undistributed Net Investment

  

         Income of $20,400 and 6,983, Respectively)

$12,974,530

$      9,834,862

    

Share Transactions:

  

    Shares Sold

      308,822

           111,052

    Shares Issued on Reinvestment of Dividends

        14,674

              9,660

    Shares Redeemed

     (72,595)

          (81,087)

    Net Increase in Shares

      250,901

            39,625

    Outstanding at Beginning of Period

      505,020

           465,395

    Outstanding at End of Period

      755,921

           505,020

    
    

The accompanying notes are an integral part of these financial statements.

  




        

Queens Road Small Cap Value Fund

Financial Highlights

Selected data for a share outstanding throughout the period.

        
        
        
  

For the Years Ended

  

5/31/2008

5/31/2007

5/31/2006

5/31/2005

 

5/31/2004

        

Net Asset Value, at Beginning of Period

$          19.47

$         17.27

$         15.98

$         14.67

 

$         10.80

        

Income From Investment Operations:

      

  Net Investment Income *

             0.12

             0.10

             0.07

             0.10

 

             0.19

  Net Gain (Loss) on Securities (Realized and Unrealized)

           (1.53)

             2.90

             1.26

             2.04

 

             3.85

     Total from Investment Operations

           (1.41)

             3.00

             1.33

             2.14

 

             4.04

        

Distributions from:

      

   Net Investment Income

           (0.10)

          (0.11)

          (0.03)

          (0.09)

 

          (0.17)

   Capital Gains

           (0.80)

          (0.69)

          (0.01)

          (0.68)

 

0.00

   Return of Capital

             0.00

             0.00

             0.00

          (0.05)

 

             0.00

  Total from Distributions

           (0.90)

          (0.80)

          (0.04)

          (0.82)

 

          (0.17)

        

Net Asset Value, at End of Period

$          17.16

$         19.47

$         17.27

$         15.98

 

$         14.67

        

Total Return **

       (7.15)%

17.90%

8.31%

14.38%

(a)

37.52%

        

Ratios/Supplemental Data:

      

  Net Assets at End of Period (Thousands)

$        12,975

$         9,835

$         8,038

$         3,574

 

$            969

  Before Reimbursement

      

     Ratio of Expenses to Average Net Assets

1.35%

1.35%

1.35%

1.35%

 

1.35%

     Ratio of Net Investment Income to Average Net Assets

0.69%

0.56%

0.42%

0.14%

 

0.10%

  After Reimbursement

      

     Ratio of Expenses to Average Net Assets

1.35%

1.35%

1.35%

0.87%

 

0.00%

     Ratio of Net Investment Income to Average Net Assets

0.69%

0.56%

0.42%

0.62%

 

1.45%

  Portfolio Turnover

24.60%

64.65%

74.23%

39.74%

 

82.56%

        
        
        

*   Net Investment Income/Loss per share amounts were calculated using the average share method.

    

** Total return in the above table represents the rate that the investor would have earned or lost on an investment in the fund assuming reinvestment of dividends  and is not annualized for periods of less than one year.

(a) Total return before the waiver of related party brokerage commissions of $392 is 14.38%.

        
        

The accompanying notes are an integral part of these financial statements.




BRAGG CAPITAL TRUST

QUEENS ROAD SMALL CAP VALUE FUND

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2008


Note 1. Organization

 The Queens Road Small Cap Value Fund (the “Fund”), a managed portfolio of the Bragg Capital Trust, (the “Trust”), is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management company. The Fund is one of a series of Funds of the Bragg Capital Trust, which also includes the Queens Road Value Fund.  The Fund’s investment objective is to seek growth of capital.  It invests primarily (under normal market conditions), at least 80% of its total assets in small capitalization (less than $2 billion market cap at the time of purchase) common stocks which are believed by the Advisor to be undervalued and have good prospects for capital appreciation.  The Fund’s registration statement was declared effective on June 13, 2002 and operations began on that date.


Note 2.  Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.


Security Valuation: Securities, which are traded on a national securities exchange or on the NASDAQ over-the-counter market, are valued at the last quoted sales price.  Investments for which no sale was reported are valued at the last bid price. Short-term obligations having remaining maturities of 60 days or less, are valued at amortized cost. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by and under the direction of the Fund’s Board of Trustees.


Federal Income Taxes: The Fund’s policy is to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders.  Therefore, no provision for income taxes is required.  The Fund intends to distribute its net long-term capital gains and its net short-term capital gains at least once a year.


Effective October 31, 2007, the Fund adopted Financial Accounting Standards Board (“FASB”) Interpretation No.48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, a clarification of FASB Statement No.109, Accounting for Income Taxes.  FIN 48 establishes financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return.  FIN 48 was applied to all open tax years as of the effective date.  The adoption of FIN 48 had no impact on the Fund’s net assets or results of operations.


As of and during the period ended May 31, 2008 the Fund did not have a liability for any unrecognized tax benefits.  The Fund recognizes interest and penalties, if any, related to recognized tax benefits as income tax expense on the statement of operations.  During the period, the Fund did not incur any interest or penalties.  The Fund is not subject to examination by the U.S. federal tax authorities for the tax years before 2004.


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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.


Other: The Fund follows industry practice and records security transactions on the trade date.  The specific identification method is used for determining gains or losses for financial statement and income tax purposes.  Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as information is available to the Fund.  Interest income is recorded on an

BRAGG CAPITAL TRUST

QUEENS ROAD SMALL CAP VALUE FUND

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2008



accrual basis.  Discounts and premiums on securities purchased are amortized over the life of the respective securities.


Distributions to shareholders:  Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income taxes purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes.  Any such reclassifications will have no effect on net assets, results of operations or net asset value per share of the Fund.  There were no reclassifications for the yea r ended May 31, 2008.


Fair Value Measurements: In September 2006, FASB issued Statement on Financial Accounting Standards (SFAS) No. 157 “Fair Value Measurements.” This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosure about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.  The changes to current generally accepted accounting principles from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements.  As of May 31, 2008, the Fund does not believe that the adoption of SFAS No. 157 will impact the amounts reported in the financial statements, however, additional disclosures may be required about the i nputs used to develop the measurements and the effect of certain of the measurements reported on the statements of changes in net assets for a fiscal period.


Note 3. Investment Advisory Fee and Other Transactions with Affiliates

The Fund retains Bragg Financial Advisors, Inc. (the “Advisor”) as its Investment Advisor.  Under the terms of the management agreement, the Advisor provides investment management and administrative services for the Fund. For its services as Advisor, the Fund pays a fee, computed daily and payable monthly at the annual rate of 1.35% of the Fund’s average daily net asset value. For the year ended May 31, 2008, the Advisor earned $143,261.  From these fees and its own resources the Advisor agreed to pay other operating expenses of the Fund including transfer agent fees, fund accountant fees, registration fees, custodial fees, and other ordinary expenses of the Fund.  However the agreement does not require the Advisor to pay interest, taxes, brokerage commissions, and extraordinary expenses of the Fund.  The amount owed to the advisor at May 31, 2008 is $14,509.


Certain Trustees and officers of the Trust are “interested persons” (as defined in the Investment Company Act of 1940) of the Trust. Each “non-interested” Trustee is entitled to receive an annual fee of $1,000 plus expenses for services relating to the Trust which is paid by the advisor.


Queens Road Securities (“QRS”) acts as the principal underwriter in the continuous public offering of the fund’s shares. Certain officers of the trust are also officers of QRS. QRS did not receive or waive any brokerage fees on execution of purchases and sales of the Fund’s investments during the year ended May 31, 2008.



BRAGG CAPITAL TRUST

QUEENS ROAD SMALL CAP VALUE FUND

NOTES TO FINANCIAL STATEMENTS

MAY 31, 2008



Note 4. Capital Stock

At May 31, 2008, there were an unlimited number of shares authorized and 755,921 shares outstanding, each with no par value, and paid-in capital amounted to $12,322,520 for the Fund.


Note 5. Investment Transactions

For the year ended May 31, 2008, the cost of purchases and the proceeds from sales, other than short-term securities aggregated $6,516,467 and $2,235,869, respectively.  The aggregate cost of securities for federal income tax purposes at May 31, 2008 was $12,326,026.


Note 6. Distributions to Shareholders

The tax character of distributions paid during the fiscal year ended May 31, 2008 and fiscal year ended May 31, 2007 were as follows:

Distributions paid from:

May 31, 2008

                          May 31, 2007

  Ordinary Income

$60,174

$56,414

  Short-Term Capital Gain

109,398

72,657

  Long-Term Capital Gain

369,204

258,578

 

$538,776

$387,649


As of May 31, 2008 the components of distributable earnings on a tax basis were as follows:


Undistributed Ordinary income

$18,641

Undistributed long-term capital gain

2,596

Unrealized appreciation

630,773

           Net Total

$652,010


At May 31, 2008, the composition of unrealized appreciation (excess of value over tax cost) and depreciation (the excess of tax cost over value) on a tax basis was as follows:


Appreciation

Depreciation

Net Appreciation (Depreciation)

1,860,886

(1,230,113)

630,773


The difference between book-basis and tax-basis unrealized appreciation (depreciation) resulted from the deferral of Post-October losses, of $368,085.  


Note 7. Control

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under section 2 (a) (9) of the Investment Company Act of 1940.  As of May 31, 2008, Pershing, LLC., for the benefit of its customers, owned 83.63% of the Fund.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To The Shareholders and  

Board of Trustees

Queens Road Small Cap Value Fund



We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Queens Road Small Cap Value Fund (the “Fund”), a series of the Bragg Capital Trust as of May 31, 2008, and the related statement of operations for the year then ended and statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended.  These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.    


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2008, by correspondence with the Fund’s custodian.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Queens Road Small Cap Value Fund, as of May 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.





COHEN FUND AUDIT SERVICES, LTD.

Westlake, Ohio  

July 25, 2008



     

Queens Road Small Cap Value Fund

 

Expense Illustration

 

May 31, 2008

 
     

Expense Example

 
     

As a shareholder of the Queens Road Small Cap Value Fund, you incur ongoing costs which typically consist of  management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

     

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, December 1, 2007 through May 31, 2008.

     

Actual Expenses

 
     

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by  $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

     

Hypothetical Example for Comparison Purposes

 
     

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in this Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

     
 

Beginning Account Value

Ending Account Value

Expenses Paid During the Period*

 
 

December 1, 2007

May 31, 2008

December 1,2007 to May 31,2008

 
     

Actual

$1,000.00

$1,014.51

$6.80

 

Hypothetical

    

 (5% Annual Return before expenses)

$1,000.00

$1,018.25

$6.81

 
     

* Expenses are equal to the Fund's annualized expense ratio of 1.35%, multiplied by the average account value over the period, multiplied by  183/366 (to reflect the one-half year period).




BRAGG CAPITAL TRUST

QUEENS ROAD SMALL CAP VALUE FUND

ADDITIONAL INFORMATION

MAY 31, 2008


Proxy Voting - A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies during the most recent 12 month period, are available without charge upon request by (1) calling the Fund at (800) 595-3088 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.


Portfolio Holdings - The Fund files a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q.  The Fund’s first and third fiscal quarters end on August 31 and February 28. The Form N-Q filing must be made within 60 days of the end of the quarter, and the Fund’s first Form N-Q was filed with the SEC on October 8, 2004. The Fund’s Forms N-Q are available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).  You may also obtain copies by calling the Fund at 1-800-595-3088.




Interested Trustees


Name (Age)




Position with Fund



Term of Office and Length of Time Served




Principal Occupations During Past Five Years

Number of Portfolios in Fund Complex Overseen By Trustee

Other Directorships Held By Trustee

Steve Scruggs, 39

Trustee, President Secretary

Unlimited;

5 years

Bragg Financial Advisors,  Portfolio Manager/CCO

(2000- present)

Reliance Insurance,  Product Manager(1999-2000)



Two



None

Benton Bragg, 40

Trustee, Chairman Treasurer

Unlimited;

5 years

Bragg Financial Advisors, President, CEO (1996-present)


Two


None


Independent Trustees

 

 

 

 

Philip Blount, 53 2

Trustee

Unlimited;

5 years

Icons, Inc., President (2001- present)

Marketing Merchandise

Halo, Inc., Vice President (1996-2001)

Marketing Merchandise




Two




None

Christopher Brady, 371,2

Trustee

Unlimited;

5 years

Brady Distributing, Vice President (1995-present)

Machinery Distribution



Two



None

 

 

 

 

 

 

Harold Smith, 422

Trustee

Unlimited;

5 years

Raftelis Financial, Vice President (1996 – present)

Public Finance Consulting



Two



None

Timothy Ignasher, 461

Trustee

Unlimited;

5 years

Colony Signature Bank, Exec.Vice President  & COO (2007 – present)

Commercial Loan Officer


Two


None


Steve Scruggs and Benton Bragg are Interested Trustees of the Funds (as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940) by reason of their affiliation with the Funds’ adviser, Bragg Financial Advisers, Inc. and their affiliation as registered principals with the Funds’ underwriter, Queens Road Securities, LLC.  Benton Bragg and Steve Scruggs are brothers-in-law.

(1) Member of the Audit Committee of the Board of Trustees, which makes  recommendations regarding the selection of the Funds’ independent public accountants and meets with representatives of the accountants to determine the scope of and review the results of each audit.

(2) Member of the Nominating Committee of the Board of Trustees, which identifies qualified candidates and recommends nominees for election as Trustees.








Board of Trustees

Benton Bragg

Steve Scruggs

Phil Blount

Tim Ignasher

Chris Brady

Harold Smith



Investment Adviser

Bragg Financial Advisors, Inc.

100 Queens Road

Charlotte, NC 28204


Dividend Paying Agent,

Shareholders’ Servicing Agent,

Transfer Agent

Mutual Shareholder Services

8869 Brecksville Rd, Suite C

Brecksville, Ohio 44141


Custodian

US Bank, NA

425 Walnut Street

P.O. Box 1118

Cincinnati, OH  45201


Independent Auditors

Cohen Fund Audit Services Ltd

826 Westpoint Parkway Suite 1250

Westlake, Ohio 44145



Shares of the Queens Road Value and Queens Road Small Cap Value Fund are distributed by Queens Road Securities, L.L.C, an affiliate of the Investment Adviser. This report has been prepared for the general information of the shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.  The Funds’ prospectus contains more complete information about the objectives, policies, expenses and risks of the Funds.  The Funds are not bank deposits, not FDIC insured and may lose value.  Please read the prospectus carefully before investing or sending money.



This report contains certain forward looking statements which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.  Forward looking statements generally include words such as “believes”, “expects”, “anticipates” and other words of similar import.  Such risks and uncertainties include, among other things, the Risk Factors noted in the Funds’ filings with the Securities and Exchange Commission.  The Funds undertake no obligation to update any forward looking statement.









Item 2. Code of Ethics.



(a)

As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.


(b)

For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:


(1)

Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2)

Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;

(3)

Compliance with applicable governmental laws, rules, and regulations;

(4)

The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

(5)

Accountability for adherence to the code.


(c)

Amendments:


During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.





A copy of registrant's code of ethics will be provided to any person without charge, upon request.  Please send requests to:  

Bragg Capital Trust

100 Queens Road

Charlotte, NC 28204




(d)

Waivers:


During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.


Item 3. Audit Committee Financial Expert.



(a)

The registrant’s board of trustees has determined that the registrant does not have an audit committee financial expert.  This is because no one on the board of trustees is deemed to be a financial expert.




Item 4. Principal Accountant Fees and Services.


(a)


Audit Fees


FY 2007

$ 17,990

FY 2008

$ 19,500


(b)

Audit-Related Fees


Registrant


FY 2007

$ 0

FY 2008

$ 0

Nature of the fees:

Not applicable.


(c)

Tax Fees


Registrant


FY 2007

$ 2,585

FY 2008

$ 2,000

Nature of the fees:

For Excise Tax Return


(d)

All Other Fees


Registrant


FY 2007

$ 0

FY 2008

$ 0

Nature of the fees:

N/A


(e)

(1) Audit Committee’s Pre-Approval Policies


The Audit Committee reviews the auditor engagement letter and recommends to the Board of Trustees whether or not to adopt the engagement letter and appoint the independent auditor to perform the services described in the engagement letter.



(2) Percentages of Services Approved by the Audit Committee


Registrant


Audit-Related Fees:

100  %

 

Tax Fees:

100  %

 

All Other Fees:

0  %

 



(f)

During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.


(g)

The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:


Registrant


FY2007

$ 0

 

FY2008

$ 0

 


(h)

The registrant's audit committee has considered whether the provision of non-audit services to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence.


Item 5. Audit Committee of Listed Companies.  


Not applicable.


Item 6.  Schedule of Investments.


Not applicable – schedule filed with Item 1.


Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.  


Not applicable.


Item 8.  Portfolio Managers of Closed-End Funds.  


Not applicable.


Item 9.  Purchases of Equity Securities by Closed-End Funds.  


Not applicable.


Item 10.  Submission of Matters to a Vote of Security Holders.  


The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant's board of trustees.


Item 11.  Controls and Procedures.  


(a)

Based on an evaluation of the registrant’s disclosure controls and procedures as of May 15, 2008, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis.


(b)

There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.


Item 12.  Exhibits.  


(a)(1)

EX-99.CODE ETH.  See Item 2.


(a)(2)

EX-99.CERT.  Filed herewith.


(a)(3)

Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.  Not applicable.


(b)

EX-99.906CERT.  Filed herewith.


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Bragg Capital Trust


By /s/Steven H. Scruggs, President

*  Steven H Scruggs, President


Date August 5, 2008


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By /s/Benton S. Bragg, Treasurer

*  Benton S Bragg,  Treasurer


Date August 5, 2008


By /s/Steven H Scruggs, President

*  Steven H Scruggs, President


Date August 5, 2008


* Print the name and title of each signing officer under his or her signature.


EX-99.CERT 2 queensncsrcert200808.htm I, Gabriel B

I, Steven H. Scruggs, certify that:


1. I have reviewed this report on Form N-CSR of Bragg Capital Trust ;


2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;


4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:


(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and


(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and


(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 5, 2008

/s/ Steven H. Scruggs

Steven H. Scruggs

President

 





I, Benton S. Bragg, certify that:


1. I have reviewed this report on Form N-CSR of Bragg Capital Trust ;


2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;


4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:


(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and


(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and


(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 5, 2008

/s/ Benton S. Bragg

Benton S. Bragg

Treasurer






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EX-99.906CERT



CERTIFICATION

Steven H. Scruggs, Chief Executive Officer, and Benton S. Bragg, Chief Financial Officer of the Bragg Capital Trust(the “Registrant”), each certify to the best of his or her knowledge that:

1.

The Registrant’s periodic report on Form N-CSR for the period ended May 31, 2008 (the “Form N-CSR”) fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and

2.

The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Chief Executive Officer

Chief Financial Officer

Bragg Capital Trust

Bragg Capital Trust



/s/Steven H. Scruggs

/s/Benton S. Bragg

Steven H Scruggs

Benton S Bragg

Date: August 5, 2008

Date: August 5, 2008



A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Bragg Capital Trust and will be retained by the Trust and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.


This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR filed with the Commission.



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