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: 811-05506

College and University Facility Loan Trust Two

(Exact name of registrant as specified in charter)

c/o U.S. Bank One Federal Street Boston, MA 02110

(Address of principal executive offices) (Zip code)

Laura S Cawley

U.S. Bank Corporate Trust Services

One Federal Street

Boston, MA 02110

(Name and address of agent for service)

Registrant’s telephone number, including area code: (617) 603-6452

Date of fiscal year end: November 30

Date of reporting period: December 1, 2012 – May 31, 2013

ITEM 1. REPORT TO STOCKHOLDERS

College and University Facility Loan Trust Two

Financial Statements (Unaudited)

As of and for the Six Months Ended May 31, 2013

College and University Facility Loan Trust Two

Contents

Financial statements:

Statement of Assets and Liabilities (Unaudited)	3
Statement of Operations (Unaudited)	4
Statement of Changes in Net Assets	5
Statement of Cash Flows (Unaudited)	6
Statement of Financial Highlights	7
Notes to financial statements	8-18
Schedule of Investments (Unaudited)	19-21

2

College and University Facility Loan Trust Two

Statement of Assets and Liabilities

(Unaudited)

May 31,	2013
Assets:
Investments, at amortized cost, net of allowance for loan losses of $160,000	$	19,910,257
Cash		50,000
Interest Receivable		178,906
Prepaid Expenses		13,750
Deferred Bond Issuance Costs		23,663
Total Assets		20,176,576
Liabilities:
Bonds Payable, net of unamortized discount		12,209,742
Bond Interest Payable		280,989
Accrued Expenses and Other Liabilities		299,330
Distributions Payable to Class B Certificateholders		683,748
Total Liabilities		13,473,809
Net Assets:
Class B Certificates, par value $1 - authorized, issued and outstanding - 1,763,800 certificates		1,763,800
Additional Paid-In Capital		5,098,967
Distributions in Excess of Tax Earnings		(160,000	)
Net Assets	$	6,702,767
Net Asset Value per Class B Certificate (based on 1,763,800 certificates outstanding)	$	3.80

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

3

College and University Facility Loan Trust Two

Statement of Operations

(Unaudited)

Six months ended May 31,	2013
Investment Income:
Interest income	$	1,086,294
Expenses:
Interest expense		610,781
Professional fees		281,796
Trustee fees		15,839
Servicer fees		9,281
Other trust and bond administration expenses		7,445
Total Expenses		925,142
Net Investment Income		161,152
Decrease in Allowance for Loan Losses		40,000
Net Increase in Net Assets Resulting From Operations	$	201,152

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

4

College and University Facility Loan Trust Two

Statements of Changes in Net Assets

	Six Months Ended May 31, 2013 (Unaudited)			Year Ended November 30, 2012
Increase (Decrease) From Operations:
Net investment income	$	161,152		$	859,102
Decrease (increase) in allowance for loan losses		40,000			167,000
Net increase in net assets resulting from operations		201,152			1,026,102
Distributions to Class B Certificateholders From:
Tax return of capital (Note 5)		(683,748	)		(1,483,531	)
Net Decrease in Net Assets		(482,596	)		(457,429	)
Net Assets:
Beginning of period/year		7,185,363			7,642,792
End of period/year	$	6,702,767		$	7,185,363

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

5

College and University Facility Loan Trust Two

Statement of Cash Flows

(Unaudited)

Six months ended May 31,	2013
Cash Flows From Operating Activities:
Reconciliation of net increase in net assets resulting from operations to net cash provided by operating activities:
Net increase in net assets resulting from operations	$	201,152
Accretion of purchase discount on Loans		(650,225	)
Amortization of original issue discount on Bonds		326,730
Amortization of deferred bond issuance costs		3,062
Decrease in allowance for loan losses		(40,000	)
Payments on loan principal balance		2,671,542
Decrease in investment agreements		2,591,596
Decrease in interest receivable		41,846
Increase in prepaid expenses		(13,750	)
Decrease in bond interest payable		(81,424	)
Decrease in accrued expenses and other liabilities		(12,068	)
Net cash provided by operating activities		5,038,461
Cash Flows From Financing Activities:
Principal repayments on Bonds		(4,071,202	)
Distribution to Class B certificateholders		(1,044,744	)
Net cash used in financing activities		(5,115,946	)
Net Decrease in Cash		(77,485	)
Cash, beginning of period		127,485
Cash, end of period	$	50,000
Supplemental Cash Flow Information:
Cash paid for interest on Bonds	$	362,413

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

6

College and University Facility Loan Trust Two

Financial Highlights

	Six Months Ended May 31, 2013			Years Ended November 30,
	(Unaudited)			2012			2011 (e)			2010 (e)			2009 (e)			2008 (e)
Net asset value, beginning of period/year	$	4.07		$	4.33		$	5.14		$	4.70		$	4.88		$	5.17
Income from investment operations:
Net investment income		.09			.49			.39			.53			.34			.41
Decrease in allowance for loan losses		.03			.09			.02			.16			.09			—
Net increase from operations		.12			.58			.41			.69			.43			.41
Distributions to Class B certificateholders from tax return of capital		(.39	)		(.84	)		(1.22	)		(.25	)		(.61	)		(.70	)
Net asset value, end of period/year (c)	$	3.80		$	4.07		$	4.33		$	5.14		$	4.70		$	4.88
Total investment return(a)		N/A			N/A			N/A			N/A			N/A			N/A
Net assets applicable to Class B certificates, end of period/year	$	6,702,767		$	7,185,365		$	7,642,792		$	9,070,470		$	8,281,770		$	8,599,316
Ratios and Supplemental Data:
Ratio of operating expenses to average net assets applicable to Class B certificates		13.32	%(b)(d)		29.22	%(b)		31.42	%(b)		36.25	%(b)		43.60	%(b)		45.82	%(b)
Ratio of net investment income to average net assets applicable to Class B certificates		2.32	%(d)		11.59	%		8.37	%		10.96	%		7.12	%		8.03	%
Number of Class B certificates outstanding, end of year		1,763,800			1,763,800			1,763,800			1,763,800			1,763,800			1,763,800

(a) The Trust’s investments are recorded at amortized cost as discussed in Note 2. Accordingly, the financial statements do not reflect the fair value of such investments. For this reason, management believes that no meaningful information can be provided regarding “Total investment return” and has not included information under that heading. The Trust is prohibited, by the terms of its Indenture, from selling or purchasing any investments. As the Trust did not purchase or sell investments during the periods presented, “portfolio turnover” is 0% for all periods presented.

(b) Excluding interest expense, the ratio of operating expenses to average net assets was 4.53%^(d), 6.82%^(e), 5.30%^(e), 5.07%^(e), 5.72%^(e) and 4.28%^(e) in 2013, 2012, 2011, 2010, 2009 and 2008, respectively.

(c) The Trust is prohibited, by the terms of its Indenture, from issuing new or redeeming existing Certificates. As such, market value is not presented.

(d) Not Annualized.

(e) Subsequent to the issuance of the November 30, 2011 financial statements, management of the Trust determined the net assets of the Trust were understated in prior years as a result of misstatements in the amortization of original issue discount on the Bonds. As a result, the financial highlights for the years ended November 30, 2011, 2010, 2009 and 2008 have been restated to correct for such misstatements, which also impacted interest expense, net investment income and the net increase in net assets from operations. These changes impacted the per Class B certificate holder amounts and the ratios, and had no effect on the distributions to the Class B certificate holders for the same periods presented.

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

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College and University Facility Loan Trust Two

Notes to Financial Statements

1. Organization and Business

College and University Facility Loan Trust Two (the Trust) was formed on March 11, 1988 as a business trust under the laws of the Commonwealth of Massachusetts by a declaration of trust by Bank of Boston (the Owner Trustee), succeeded by State Street Bank and Trust Company, succeeded by U.S. Bank National Association (successor Owner Trustee), not in its individual capacity, but solely as Owner Trustee. The Trust is registered under the Investment Company Act of 1940 (as amended) as a diversified, closed-end, management investment company.

The Trust was formed for the sole purpose of raising funds through the issuance and sale of bonds (the Bonds). The Trust commenced operations on May 12, 1988 (the Closing Date) and issued Bonds in four tranches in the aggregate principal amount (at maturity) of $450,922,000. The Bonds constitute full recourse obligations of the Trust. The collateral securing the Bonds consists primarily of a pool of loans made to college and university facilities (the Loans) and certain other funds held under the Indenture (the Indenture) and the investment agreements. The Loans were originated by, or previously assigned to, the United States Department of Education (ED) under the College Housing Loan Program or the Academic Facilities Loan Program. The Loans, which have been assigned to The Bank of New York Mellon Trust Company, National Association, as successor in interest to J.P. Morgan Trust Company, National Association, as successor in interest to Bank One Trust Company, NA, formerly The First National Bank of Chicago (the Bond Trustee), are secured by various types of collateral, including mortgages on real estate, general recourse obligations of the borrowers, pledges of securities and pledges of revenues. As of the Closing Date, the Loans had a weighted average stated interest rate of approximately 3.18% and a weighted average remaining term to maturity of approximately 18.8 years. Payments on the Loans are managed by the Bond Trustee in various fund accounts and are invested under investment agreements (see Note 2) as specified in the Indenture. The Trust is prohibited, by the terms of its Indenture, from selling or purchasing any Loan investments.

All payments on the Loans and earnings under the investment agreements and any required transfers from the Expense Fund and Liquidity Fund are deposited to the credit of the Revenue Fund held by the Bond Trustee, as defined within, and in accordance with the Indenture. On each bond payment date, amounts on deposit in the Revenue Fund, in accordance with the Indenture, are applied in the following order of priority: to pay amounts due on the Bonds, to pay administrative expenses not previously paid from the Expense Fund, to fund the Expense Fund to the Expense Fund Requirement and to fund the Liquidity Fund to the Liquidity Fund Requirement. Any funds remaining in the Revenue Fund on such payment date will be used to further pay down the Bonds to the extent of the Maximum Principal Distribution Amount, as defined in the Indenture, after which any residual amounts are paid to the certificateholders, as discussed in Note 5. See Note 8 for balances in the respective funds.

Berkadia Commercial Mortgage LLC (“Servicer” or “Berkadia”); formerly Capmark Finance, Inc., is the administrator for the Loan portfolio. Berkadia serves as the Master Servicer and Special Servicer under Master Servicing and Special Service Agreements. Berkadia handles the custodial bank accounts and performs the loan recordkeeping and monitoring.

8

College and University Facility Loan Trust Two

Notes to Financial Statements

2. Summary of Significant Accounting Policies

(a) College and University Facility Loans

The Loans were purchased by the Trust at amounts below the par value of the Loans “purchase discount”.

Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurement, (“ASC 820”), requires that the Loans be accounted for at fair value. However, management believes that the amortized cost method of accounting, net of any allowance for loan losses, best serves the informational needs of the users of the Trust’s financial statements.

Pursuant to a “no-action letter” that the Trust received from the Securities and Exchange Commission, the Loans were recorded at the discounted value and are being accounted for under the amortized cost method of accounting, net of any allowance for loan losses. Under the amortized cost method, the difference between the cost of each Loan to the Trust and the scheduled principal and interest payments is amortized to par value, assuming no prepayments of principal, and included in the Trust’s interest income by applying the Loan’s effective interest rate to the amortized cost of that Loan over the duration of the Loan. Upon a Loan prepayment, remaining discount is recognized as interest income. The remaining balance of the purchase discount on the Loans as of May 31, 2013 was approximately $4,038,000. For the six months ended May 31, 2013, the Trust recognized approximately $650,000 of accretion from the amortization of the purchase discount. As a result of prepayments of Loans during the six months ended May 31, 2013, approximately $94,000 from the remaining purchase discount on such Loans is included in the $650,000 of accretion.

The Trust records an allowance for loan losses based on the Trust’s evaluation of collectability of the Loans within the portfolio. The Loans are classified into three separate pools based on risk and collection performance. The pools are then assigned a reserve percentage based on risk and other factors and a reserve is systematically calculated for the pools:

(1) General – Loans are performing on a timely basis and where there is no information that leads the Trust to reclassify to a different risk pool.

(2) Substandard – Loans are generally classified into this category resulting from either historical collection issues or administrative issues with receiving collection that have been on-going. Loans in this pool are not considered uncollectible but due to collection issues, a higher reserve percentage is applied due to the risk profile of this pool.

(3) Doubtful – A Loan is considered doubtful when, based on current information and events, it is probable that the Trust will be unable to collect all amounts due in accordance with the contractual terms of the Loan agreement. Loans in this category are generally assigned a 100% reserve unless facts and circumstances provide evidence that some level of collectability exists. At May 31, 2013, there were no recorded investments in Loans that are considered to be doubtful.

As credit quality for an individual Loan changes, the Loan is evaluated for reclassification to a different risk pool as described above. Risk ratings to the existing pools may be adjusted based on qualitative factors including, among others, general economic and business conditions, credit quality trends, and specific industry conditions. Berkadia monitors credit quality primarily

9

College and University Facility Loan Trust Two

Notes to Financial Statements

through two trigger points, receipt of financial information that upon review raises credit quality concerns and delinquent payments which then require investigation as to causes of the delinquency. Historically, write-offs have been immaterial and the current macro economic environment for the industry has been robust.

The Trust views all amounts over 30 days past due as delinquent. The Trust is currently accruing interest on all amounts past due.

There are inherent uncertainties with respect to the final outcome of Loans and as such, actual losses may differ from the amounts reflected in the financial statements and could be material.

(b) Interest Income

The Trust records interest, including amortization of Loan Purchase discount, on the Loans as earned. The Loans generally require interest payments on a semi-annual basis with rates of interest ranging from 3% to 4%. The Trust recognizes the amortization of Loan purchase discount as interest income on the effective interest method.

The Trust’s policy is to generally discontinue the accrual of interest on Loans for which payment of principal or interest is 180 days or more past due or for other such Loans if management believes the collection of interest and principal is doubtful. Due to the nature of the Loan investments in the Trust, there are instances where payment of the Loans and related interest may not be received by the Trust due to documentation issues that require time for the Trust to resolve. In those circumstances, where the past due loan is greater than 180 days but the Trust has concluded it is not a credit issue, the accrual of interest or the accretion of interest discount may continue to be recorded as the Trust believes the payment amounts to be collectable. When a Loan is placed on nonaccrual status, all previously accrued, but uncollected interest is reversed against the current period’s interest income. Subsequently, interest income is generally recognized when received. Payments are generally applied to interest first, with the balance, if any, applied to principal. At May 31, 2013, no Loans have been placed on nonaccrual status. The Trust is currently accruing interest on all delinquent loans. The principal amount past due and the amount past due more than 90 days is approximately $537,000 and $28,000, respectively, as of May 31, 2013.

(c) Other Investments

Other investments, which are included in investments in the accompanying statement of assets and liabilities, consist of two investment agreements issued by JP Morgan Chase Bank bearing fixed rates of interest of 7.05% and 7.75%. These investment agreements are carried at amortized cost. See Note 8 for discussion of fair value measurement of these investments.

ASC 820 requires that the investments be accounted for under the fair value method of accounting. However, management believes that the amortized cost method of accounting best serves the informational needs of the users of the Trust’s financial statements because the Trust cannot sell or dispose of the investment agreements prior to the earlier of June 1, 2018 or the date on which the Bonds are paid-in-full.

10

College and University Facility Loan Trust Two

Notes to Financial Statements

(d) Deferred Bond Issuance Costs

Deferred bond issuance costs are being amortized using the effective interest rate method over the estimated life of the Bonds, which are based on the scheduled payments of the Loans and are included as a component of interest expense. When Loan prepayments occur, an additional portion of the deferred issuance costs is expensed in the year the prepayment occurred, so that the future effective interest rate remains unchanged.

(e) Federal Income Taxes

It is the Trust’s policy to comply with the requirements applicable to a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and to distribute substantially all of its investment company taxable income to its certificateholders each year. Accordingly, no federal or state income tax provision is required.

For tax purposes, the Loans were transferred to the Trust at their face values. Accordingly, the amortization of the purchase discount creates a permanent book-tax difference.

As of May 31, 2013, the Trust had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Trust is additionally not aware of any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months.

The Trust’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

(f) Distributable earnings and profits

Capital accounts and distributions are presented and disclosed in accordance with ASC Topic 946 Investment Company, (“ASC 946”). ASC 946 requires the Trust to report distributions that are in excess of tax-basis earnings and profits as a tax return of capital and to present the capital accounts on a basis that approximates the amounts that are available for future distributions on a tax basis. A distribution of $683,748 was declared on May 30, 2013 and paid to certificateholders of record on June 3, 2013. The distribution of $683,748 for the period ended May 31, 2013, and the distribution of $1,483,531 for the year ended November 30, 2012 are return of capital for tax purposes.

The Trust’s primary permanent differences between Generally Accepted Accounting Principles (GAAP) and tax accounting are related to:

(a) The amortization of the loan purchase discounts for under GAAP. For the period ended May 31, 2013 and the year ended November 30, 2012, the Trust recorded $650,225 and $1,969,368, respectively, of interest income related to the amortization. At November 30, 2012 the Trust had accumulated amortization of the purchase discounts of $214,661,535.

(b) Non-deductible tax interest expense under the Internal Revenue Code.

As required under ASC 946, the Trust reclassifies the accumulated value of the permanent differences discussed above from distributions in excess of net investment income to paid-in-capital. The total reclassification decreased Additional Paid in Capital by $522,596 as of May 31, 2013. This reclassification has no impact on the net assets of the Trust.

11

College and University Facility Loan Trust Two

Notes to Financial Statements

(g) Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Trust to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. On an on-going basis, the Trust evaluates the estimates used, including those related to the allowance for loan losses. The Trust bases its estimates on considerations such as historical experience, current conditions and various other assumptions that the Trust believes to be reasonable under the circumstances. These conditions form the basis for making judgments about the carrying values of assets and liabilities and are not readily apparent from other sources. These conditions are also used to assist the Trust in the identification and assessment of the accounting treatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

(h) Statement of Cash Flows

The cash amount shown in the Statement of Cash Flows of the Trust is the amount included in the Trust’s Statement of Assets and Liabilities and represents the cash on hand and does not include any short-term investments.

(i) Risk Factors

The Trust’s investments are subject to the following:

Credit Risk

The Trust is subject to credit risk from its counterparties to any of its investments if the counterparties fail to perform pursuant to the terms of their agreements with the Trust.

The Trust’s investment agreements are held in escrow by the Bond Trustee. The Bond Trustee has custody of the Trust’s investment agreements. The Trust is subject to counterparty risk to the extent that the Bond Trustee may be unable to fulfill its obligations to the Trust.

Loan payments made to the Trust are received and processed by the Servicer. The Trust is subject to counterparty risk to the extent that the borrowers and the Servicer may be unable to fulfill their obligations to the Trust.

12

College and University Facility Loan Trust Two

Notes to Financial Statements

Prepayment Risk

Most of the Loans held by the Trust allow for prepayment of principal without penalty. As such, the Trust is subject to prepayment risk, which could negatively impact future earnings.

(j) Indemnification

Under the Trust’s organizational documents, its Owner Trustee and Bond Trustee may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Trust, and certificateholders are indemnified against personal liability for the obligations of the Trust. Additionally, in the normal course of business, the Trust may enter into agreements with service providers that may contain indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred.

3. Bonds

The Bonds outstanding at May 31, 2013 consist of the following:

Interest Rate	Stated Maturity		Outstanding Principal (000’s)		Unamortized Discount (000’s)			Carrying Amount (000’s)
4.0%		June 1, 2018	$	14,049	$	(1,839	)	$	12,210

Interest on the Bonds is payable semi-annually. On June 3, 2013, the Trust made a principal payment of $1,807,851 on the Bonds. The average amount of bond principal outstanding for the period ended May 31, 2013 was approximately $12,210,000.

Principal payments on the Bonds are made prior to the stated maturity on each bond payment date in an amount equal to the lesser of either (1) amounts available in the Revenue Fund after certain required payments of interest and principal (at the stated maturity of the Bonds) and administrative expenses after required transfers to the Expense Fund and the Liquidity Fund (such that the amounts on deposit are equal to the Expense Fund Requirement and the Liquidity Fund Requirement, respectively), or (2) the Maximum Principal Distribution Amount, as defined within the Indenture.

13

College and University Facility Loan Trust Two

Notes to Financial Statements

The estimated remaining aggregate principal payments on the Bonds at May 31, 2013, after taking into consideration actual Loan prepayments and the Maximum Principal Distribution Amount, are as follows:

Fiscal Year	Amount (000’s)
2013	$	1,808
2014		3,156
2015		2,637
2016		2,288
2017		2,203
Thereafter		1,957
Total	$	14,049

Actual Bond principal payments may differ from estimated payments because borrowers may prepay or default on their obligations. The Bonds are not subject to optional redemption by either the Trust or the bondholders.

In the event the Trust realizes negative cash flows, a Liquidity Fund has been established and maintained such that, on or before such payment date, the Liquidity Fund may be used by the Bond Trustee to make any required payments on the Bonds and to pay operating expenses of the Trust. See Note 8 for balance in the Liquidity Fund. The original issue discount is being amortized using the effective interest rate method over the estimated life of the Bonds, which are based on the scheduled payments of the Loans. Accordingly, Loan prepayments have the effect of accelerating Bond payments. When Bond payments occur sooner than estimated payments, a portion of the original issue discount is expensed in the year of prepayment, so that the future effective interest rate on the Bonds remains unchanged. Amortization of original issue discount is included as a component of interest expense.

4. Administrative Agreements

(a) Servicer

As compensation for the services provided under the servicing agreement, Berkadia, receives a servicing fee. The fee is earned on each date of payment for each Loan and is equal to 0.075 of 1% of the outstanding principal balance of such Loans divided by the number of payments of principal and interest in a calendar year. For the six months ended May 31, 2013, this fee totaled $8,882. Additionally, per the servicing agreement, the Servicer is reimbursed for certain expenditures incurred related to inspection of mortgaged property. For the six months ended May 31, 2013, the Servicer was reimbursed $399. There are no amounts due to the Servicer as of May 31, 2013.

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College and University Facility Loan Trust Two

Notes to Financial Statements

(b) Trustees

As compensation for services provided, the Owner and Bond Trustees are entitled under the Declaration of Trust and the Indenture to receive the following fees:

The Owner Trustee, in its capacities as manager of the Trust and as Owner Trustee is entitled to annual fees of $15,000 and $12,500, respectively, under the Declaration of Trust agreement. In addition the Owner Trustee is paid an annual registration fee of $1,000. The expected future minimum payments to the Owner Trustee under such agreement will be $28,500 in fiscal years 2013, 2014, 2015, 2016, 2017 and 2018 will total $142,500 thereafter. For the period ended May 31, 2013, the Owner Trustee incurred no out-of-pocket expenses.

The Bond Trustee is entitled to an annual fee equal to 0.015 of 1% of the aggregate outstanding principal of the Bonds on the bond payment date immediately preceding the date of payment of such fee. The Bond Trustee is also reimbursed for out-of-pocket expenses. In addition, the Bond Trustee is reimbursed for other agreed-upon related expenses such as transaction costs. For the six months ended May 31, 2013, total Bond Trustee fees and related expenses amounted to $2,089.

5. Certificates

The holders of the Class B certificates may receive semi-annual distributions declared in May and November of each year, calculated in accordance with the Trust Indenture, from amounts collected by the Trust, on a pro rata basis. While the Bonds remain outstanding, the distributions are paid on the second business day in each June and December and, after the Bonds are paid in full, on the first business day of each month. The certificate holders of the Class B Certificates are entitled to one vote per certificate. At May 31, 2013, the distributions declared on May 30, 2013, of $683,748, which was paid on June 3, 2013, was recorded as distributions payable.

6. Allowance for Loan Losses

An analysis of the allowance for loan losses for the six months ended May 31, 2013 is summarized as follows:

Balance, beginning of period	$	200,000
Decrease (increase) in allowance for loan losses		(40,000	)
Charge-offs		—
Recoveries		—
Balance, end of period	$	160,000

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College and University Facility Loan Trust Two

Notes to Financial Statements

Loan classification by credit risk profile as of May 31, 2013 is as follows:

	Amortized Cost (000’s)		Reserve Amount (000’s)			Total (000’s)
General	$	15,912	$	(160	)	$	15,752
Substandard		—		—			—
Doubtful		—		—			—
Total	$	15,912	$	(160	)	$	15,752

7. Loans

Scheduled principal and interest payments on the Loans as of May 31, 2013 are as follows:

Fiscal Year	Principal Payments (000’s)		Interest Payments (000’s)		Total (000’s)
2013	$	1,669	$	287	$	1,956
2014		3,601		559		4,160
2015		2,954		450		3,404
2016		2,728		359		3,087
2017		2,382		276		2,658
Thereafter		6,616		472		7,088
Total	$	19,950	$	2,403	$	22,353

Expected payments may differ from contractual payments because borrowers may prepay or default on their obligations. Accordingly, actual principal and interest payments on the Loans may vary significantly from the scheduled payments. Prepayments made during the six months ended May 31, 2013 total $831,000.

The ability of a borrower to meet future debt service payments on a Loan will depend on a number of factors relevant to the financial condition of such borrower, including, among others, the size and diversity of the borrower’s sources of revenues; enrollment trends; reputation; management expertise; the availability and restrictions on the use of endowments and other funds; the quality and maintenance costs of the borrower’s facilities and, in the case of some Loans to public institutions, which are obligations of a State, the financial condition of the relevant State or other governmental entity and its policies with respect to education. The ability of a borrower to maintain enrollment levels will depend on such factors as tuition costs, geographical location, geographic diversity, quality of the student body, quality of the faculty and diversity of program offerings.

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College and University Facility Loan Trust Two

Notes to Financial Statements

The Trust’s aging of outstanding principal amounts as of May 31, 2013 is as follows (in thousands):

Current	30-59 Days Delinquent		60-89 Days Delinquent		Greater Than 90 Days Delinquent		Total Delinquent		Total
$19,916		2		4		28		34	$	19,950

The collateral for Loans that are secured by a mortgage on real estate generally consists of special purpose facilities, such as dormitories, dining halls and gymnasiums, which are integral components of the overall educational setting. As a result, in the event of borrower default on a Loan, the Trust’s ability to realize the outstanding balance of the Loan through the sale of the underlying collateral may be negatively impacted by the special purpose nature and location of such collateral.

8. Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments (“ASC 825”), requires that entities disclose the estimated fair value for financial instruments, where they are accounted for on a basis other than Fair Value. ASC 825 allows for the use of a wide range of valuation techniques; therefore, it may be difficult to compare the Trust’s fair value information to independent markets or to other fair value information.

ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs are inputs that reflect the Trust’s assumptions about the factors market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Valuation adjustments and block discounts are not applied to Level 1 instruments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Current market prices are not available for most of the Trust’s financial instruments since an active market generally does not exist for such instruments. In accordance with the terms of the Indenture, the Trust is required to hold all of the Loans to maturity and to use the cash flows therefrom to retire the Bonds. Accordingly, the Trust has estimated the fair values of its Loans and Bonds using a discounted cash flow methodology. This methodology is similar to the approach used at the formation of the Trust to determine the carrying amounts of these instruments for financial reporting purposes. In applying the methodology, the calculations have been adjusted

17

College and University Facility Loan Trust Two

Notes to Financial Statements

for the change in the relevant market rates of interest, the estimated duration of the instruments and an internally developed credit risk rating of the instruments. All calculations are based on the scheduled principal and interest payments on the Loans excluding any potential prepayments as it is not possible to estimate such prepayments, and scheduled payments on the Bonds.

The fair values of the long-term fixed-maturity investments are determined by adding a market rate adjustment to the carrying value of the investments. This market rate adjustment is calculated using the net present value of the difference between future interest income to the Trust at the issue rate and the future interest income at the current market rate through the maturity of the investment. The current market rate at May 31, 2013, is based upon bonds with similar characteristics and maturity dates of the investment agreements.

The estimated fair value of the Trust’s financial instruments, which all are deemed to be Level 3 fair value measurements, and the carrying value presented in the accompanying statement of assets and liabilities as of May 31, 2013 is as follows:

	Carrying Value (000’s)			Fair Value (000’s)
Loans	$	15,752	*	$	20,321
Investment Agreements:
Reserve Fund		3,642			3,836
Liquidity Fund		516			656
Total Investment Agreements		4,158			4,492
Total Investments	$	19,910		$	24,813
Bonds Payable	$	12,210		$	15,315

* Net of allowance for loan losses of $160,000.

9. Subsequent Events

The Trust has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date of issuance of these financial statements. Except for the subsequent distributions disclosed in Notes 3 and 5, the evaluation did not identify any subsequent events that necessitated disclosures and/or adjustments to these financial statements.

18

College and University Facility Loan Trust Two

Schedule Of Investments (Unaudited)

May 31, 2013

(Dollar amounts in thousands)

Outstanding Principal Balance		Description	Stated Interest Rate %			Maturity Date	Effective yield to Maturity % (A)			Amortized Cost (Notes 1 and 2)
		COLLEGE AND UNIVERSITY LOANS (237%)
		ALABAMA (17%)
$	565	Alabama Agricultural and Mechanical University		3.000	%	05/01/2018		10.27	%	$	468
	790	Auburn University		3.000		12/01/2018		9.16			640
											1,108
		CALIFORNIA (24%)
	33	Azusa Pacific University		3.750		04/01/2015		10.88			30
	105	California State University		3.000		11/01/2013		8.93			102
	1,078	California State University		3.000		11/01/2019		8.99			888
	179	Lassen Junior College District		3.000		04/01/2020		10.27			138
	570	University Student Co-Operative Association		3.000		04/01/2019		10.70			445
											1,603
		DELAWARE (<1%)
	2	Wesley College		3.375		05/01/2013		10.88			2
											2
		DISTRICT OF COLUMBIA (55%)
	1,276	Georgetown University		3.000		11/01/2020		10.36			981
	3,405	Georgetown University		4.000		11/01/2020		10.52			2,704
											3,685
		FLORIDA (5%)
	355	University of Florida		3.000		07/01/2014		10.15			328
											328
		GEORGIA (4%)
	40	Mercer University		3.000		05/01/2014		10.58			37
	260	Paine College		3.000		10/01/2016		10.45			225
											262
		INDIANA (23%)
	2,060	Vincennes University		3.000		06/01/2023		9.02			1,525
											1,525
		IOWA (1%)
	90	Simpson College		3.000		07/01/2016		10.58			77
											77
		MARYLAND (4%)
	39	Hood College		3.625		11/01/2014		10.54			37
	270	Morgan State University		3.000		11/01/2014		10.56			251
											288
		MASSACHUSETTS (2%)
	17	Hampshire College		3.000		07/01/2013		10.75			16
	116	Hampshire College		3.000		02/01/2014		10.70			108
											124
		MISSISSIPPI (11%)
	280	Millsaps College		3.000		11/01/2021		10.34			209
	690	Mississippi State University		3.000		12/01/2020		9.64			522
											731
		MISSOURI (1%)
	38	Drury College		3.000		04/01/2015		10.63			35
											35

19

College and University Facility Loan Trust Two

Schedule Of Investments (Unaudited)

May 31, 2013

(Dollar amounts in thousands) Continued

Outstanding Principal Balance		Description	Stated Interest Rate %		Maturity Date		Effective yield to Maturity % (A)		Amortized Cost (Notes 1 and 2)
		NEW HAMPSHIRE (<1%)
	34	New England College		3.000		04/01/2016		10.77		29
										29
		NEW JERSEY (11%)
	550	Fairleigh Dickinson University		3.000		11/01/2017		10.39		462
	55	Newark Beth Israel Hospital		3.625		01/01/2014		11.06		50
	160	Rider College		3.625		11/01/2013		10.42		154
	117	Rider College		3.000		05/01/2017		10.70		98
										764
		NEW Mexico (3%)
	211	College of Santa Fe		3.000		10/01/2018		10.43		174
										174
		NEW YORK (3%)
	135	Daemen College		3.000		04/01/2016		10.77		116
	115	Long Island University		3.625		06/01/2014		10.49		108
										224
		NORTH CAROLINA (4%)
	125	Elizabeth City State University		3.000		10/01/2017		10.02		106
	175	Saint Mary’s College		3.000		06/01/2020		10.14		134
										240
		OHIO (3%)
	120	Wittenberg University		3.000		05/01/2015		10.76		107
	78	Wittenberg University		3.000		11/01/2017		10.39		66
										173
		OREGON (3%)
	264	George Fox College		3.000		07/01/2018		10.64		216
										216
		PENNSYLVANIA (20%)
	69	Drexel University		3.500		05/01/2014		10.53		65
	20	Lycoming College		3.625		05/01/2014		10.64		19
	50	Lycoming College		3.750		05/01/2015		10.62		45
	1,158	Philadelphia College of Art		3.000		01/01/2022		10.62		834
	55	Seton Hill College		3.625		11/01/2014		10.53		51
	425	Villanova University		3.000		04/01/2019		10.70		332
										1,346
		PUERTO RICO (8%)
	614	Inter American University of Puerto Rico		3.000		01/01/2017		10.94		523
										523
		SOUTH CAROLINA (9%)
	816	Benedict College		3.000		11/01/2020		10.36		626
										626
		TENNESSEE (1%)
	70	Hiwassee College		3.000		09/15/2018		10.58		56
										56
		TEXAS (3%)
	270	University of Saint Thomas		3.000		10/01/2019		10.41		213
										213

20

College and University Facility Loan Trust Two

Schedule Of Investments (Unaudited)

May 31, 2013

(Dollar amounts in thousands) Continued

Outstanding Principal Balance		Description	Stated Interest Rate %		Maturity Date			Effective yield to Maturity % (A)			Amortized Cost (Notes 1 and 2)
		VERMONT (<1%)
	7	Champlain College		3.000		12/01/2013			10.19			6
												6
		VIRGINIA (20%)
	58	Lynchburg College		3.750		05/01/2015			10.64			53
	195	Lynchburg College		3.000		05/01/2018			10.68			159
	135	Marymount University		3.000		05/01/2016			10.52			117
	1,366	Norfolk State University		3.000		12/01/2021			9.77			1,015
												1,344
		WEST VIRGINIA (1%)
	95	Bethany College		3.000		11/01/2017			10.40			80
												80
		WISCONSIN (2%)
	150	Marian College		3.000		10/01/2016			10.45			130
												130
		TOTAL COLLEGE AND UNIVERSITY LOANS (237%)										15,912
		Allowance for Loan Losses (-2%)										(160	)
		Loans, net of allowances for loan losses (235%)										15,752
		INVESTMENT AGREEMENTS (62%)
	516	JPMorgan Chase Bank - Liquidity Fund		7.750		06/01/2018	(C)		7.750			516
	3,642	JPMorgan Chase Bank - Revenue Fund		7.050		06/01/2018	(C)		7.050			3,642
		TOTAL INVESTMENT AGREEMENTS										4,158
		Total Investments (297%)								(B)	$	19,910
		OTHER ASSETS, LESS LIABILITIES (-197%)										(13,207	)
		NET ASSETS (100.0%)									$	6,703

(A) Represents the rate of return earned by the Trust based on the purchase discount and the accretion to maturity.

(B) The tax basis in all investments is approximately $24,108.

(C) Terminates at the earlier of December 1, 2018 or the date on which the Bonds are paid-in-full (Note 2).

21

ITEM 2. CODE OF ETHICS

Not applicable to the registrant.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable to the registrant.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

(a) Audit Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2012 - $192,000

Fiscal year ended 2011 - $144,000

(b) Audit-Related Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2012 - $0

Fiscal year ended 2011 - $0

(c) Tax Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2012 - $0

Fiscal year ended 2011 - $0

(d) All Other Fees billed to the registrant for the two most recent fiscal years:

Fiscal year ended 2012 - $57,500

-$41,500 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to comply with the requirements of section 4.7 (c) of the Trust’s Indenture.

-$12,000 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to relating to the Trust’s Servicing Agreement.

-$4,000 out of pocket expenses.

Fiscal year ended 2011 - $62,000

-$46,000 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to comply with the requirements of section 4.7 (c) of the Trust’s Indenture.

-$12,000 in connection with Accountants’ Report on Applying Agreed-Upon Procedures to relating to the Trust’s Servicing Agreement.

-$4,000 out of pocket expenses.

(e)

(1) Audit Committee Policies regarding Pre-approval of Services.

Not applicable to the registrant.

(2) Percentage of services identified in items 4(b) through 4(d) that were approved by the registrants audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:

Not applicable to the registrant.

(f) Not applicable to the registrant.

(g) Not applicable to the registrant.

(h) Not applicable to the registrant.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable to the registrant.

ITEM 6. SCHEDULE OF INVESTMENTS

Schedule is included as part of the report to shareholders filed under Item 1.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable to the registrant.

ITEM 8. PORTFOLIO MANAGER OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable to the registrant.

ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS

Not applicable to the registrant.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable to the registrant.

ITEM 11. CONTROLS AND PROCEDURES

(a) Not applicable to the registrant.

(b) Not applicable to the registrant.

ITEM 12. EXHIBITS

The following exhibits are attached to this Form N-CSR:

(a)

(1) Code of ethics or amendments: not applicable to the registrant.

(2) Certification by the registrant’s Owner Trustee, as required by Rule 30a-2(a) under the Investment Company Act of 1940, is attached.

(3) Annual Compliance Statement of the Servicer, Berkadia Commercial Mortgage LLC, is attached.

(4) Report on Compliance with minimum Master Servicing Standards is attached.

(5) Berkadia Commercial Mortgage LLC reports pursuant to section 1301, 1302, 1303, 1304, 1306 and 1307 of the servicer agreement.

(b) Certification by the registrant’s Owner Trustee, as required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached.

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.

(Registrant) College and University Facility Loan Trust Two                                                                                       

By (Signature and Title) /s/ Laura S Cawley, Vice President            

Date August 06, 2013

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 (Signature and Title) /s/ Bryan Calder, Executive Vice President            

Date August 06, 2013