-----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, OfzGM5xBOKZiU9n6gV+0AMq6GFE79aNKDF0nLJyIyxRelnRAh9McAOYiui2EzkEI Xntu3gWIcdmDTFqlJ0JkkA== 0000916641-96-000355.txt : 19960515 0000916641-96-000355.hdr.sgml : 19960515 ACCESSION NUMBER: 0000916641-96-000355 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOTTINGHAM INVESTMENT TRUST/ CENTRAL INDEX KEY: 0000891522 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 566331601 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07160 FILM NUMBER: 96562301 BUSINESS ADDRESS: STREET 1: 105 N WASHINGTON ST PO BOX 69 STREET 2: C/O NOTTINGHAM CO CITY: ROCKY MOUNT STATE: NC ZIP: 27802-0069 BUSINESS PHONE: 3133347300 MAIL ADDRESS: STREET 1: C/O NOTTINGHAM CO STREET 2: 105 N WASHINGTON ST P O BOX 69 CITY: ROCKY MOUNT STATE: NC ZIP: 27802-0069 FORMER COMPANY: FORMER CONFORMED NAME: EARHART AMELIA EAGLE INVESTMENTS DATE OF NAME CHANGE: 19930714 N-30D 1 NIT LEGACY EQUITY FUND N-30D [The Nottingham Investment Trust Letterhead] LEGACY EQUITY FUND COMMENTARY QUARTER ENDED FEBRUARY 29, 1996 In its first full fiscal year ended February 29, 1996, the Legacy Equity Fund provided a satisfactory return of 26.47%, but lagged the S&P 500 which provided a 31.40% total return during the same fiscal year. The Fund experienced a slow start in the first quarter, did well overall in the second and third quarters, but sharply underperformed in the last couple of months of 1995 when the technology sector began to underperform and the focus of the market became very narrow in the last quarter of 1995. Feeling that corporate profit growth would slow considerably for most corporations in the first half of 1996, we have maintained the heaviest exposure to industries which would continue to show the best relative earnings gains in this environment, i.e., financial services, health care and consumer staples. The easing actions by the Federal Reserve in late 1995 and early 1996 should help the economy begin to improve in the second half of 1996 and into 1997. Therefore, selected economically sensitive issues such as autos, retailers, industrial equipment and depressed technology stocks have been purchased to give the portfolio more balance in what will probably be a very volatile transition from a slow stumbling period of economic activity to a time of better economic comparisons. The impending economic weakness and subsequent earnings difficulties will lead to the long anticipated correction. However, the magnitude should be confined to rolling industry-by-industry adjustments, and not a significant sell-off due to the enormous amounts of cash that corporations and individuals have available to put into the equity markets. LEGACY EQUITY FUND Performance Update - $10,000 Investment For the period from January 2, 1995 (commencement of operations) to February 29, 1996 [GRAPH APPEARS HERE] LEGACY EQUITY FUND S&P 500 03-Jan-95 9700 9700 28-Feb-95 10048 10298 31-May-95 11012 11270 31-Aug-95 11650 11871 30-Nov-95 12203 12790 29-Feb-96 12708 13531 THIS GRAPH DEPICTS THE PERFORMANCE OF THE LEGACY EQUITY FUND VERSUS THE S&P 500 INDEX. IT IS IMPORTANT TO NOTE THAT THE LEGACY EQUITY FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE INDEX IS NOT AVAILABLE FOR INVESTMENT AND IS UNMANAGED. THE COMPARISON IS SHOWN FOR ILLUSTRATIVE PURPOSES ONLY. ANNUALIZED TOTAL RETURN Commencement One Year ended of operations 2/29/96 through 2/29/96 Maximum 3% Sales Load 23.03% 22.60% No Sales Load 26.31% 26.47% (bullet) The graph assumes an initial $10,000 investment at January 2, 1995 ($9,700 after maximum sales load of 3%). All dividends and distributions are reinvested. (bullet) At February 29, 1996, the Fund would have grown to $12,708 - total investment return of 27.08% since January 2, 1995. Without the deduction of the 3% maximum sales load, the Fund would have grown to $13,101 - total investment return of 31.01% since January 2, 1995. The sales load may be reduced or eliminated for larger purchases. (bullet) At February 29, 1996, a similar investment in the S&P 500 Index (after maximum sales load of 3%) would have grown to $13,531 - total investment return of 35.31% since January 2, 1995. (bullet) Past performance is not a guarantee of future results. A mutual fund's share price and investment return will vary with market conditions, and the principal value of shares, when redeemed, may be worth more or less than the original cost. Average annual returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends.
LEGACY EQUITY FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996 NUMBER OF VALUE SHARES (NOTE 1) ------------- ------------- COMMON STOCKS - 91.94% AUTO & TRUCKS - 2.71% Ford Motor Company 1,400 $43,750 ------------- BEVERAGES - 6.85% Coca-Cola Enterprises, Inc. 2,000 56,750 PepsiCo, Inc. 850 53,763 ------------- 110,513 ------------- CHEMICALS - 4.97% Mallinckrodt Group, Inc. 1,100 43,175 PPG Industries, Inc. 800 37,100 ------------- 80,275 ------------- COMPUTER SOFTWARE & SERVICES - 4.79% General Motors Corporation Class E 750 42,844 (a) Microsoft Corporation 350 34,541 ------------- 77,385 ------------- COMPUTERS - 2.67% (a) Compaq Computer Corporation 850 43,031 ------------- ELECTRONICS - 4.70% General Electric Company 500 37,750 Motorola, Inc. 700 38,062 ------------- 75,812 ------------- ELECTRONICS - SEMICONDUCTOR - 2.19% Intel Corporation 600 35,288 ------------- FINANCIAL - BANKS, COMMERCIAL - 2.43% Banc One Corporation 1,100 39,188 ------------- FINANCIAL SERVICES - 9.11% Federal National Mortgage Association 1,400 44,275 Protective Life Corporation 1,300 45,662 Sunamerica, Inc. 1,050 57,225 ------------- 147,162 ------------- FOOD - PROCESSING - 2.57% CPC International, Inc. 600 41,550 ------------- HOLDING COMPANIES - DIVERSIFIED - 2.93% Textron, Inc. 600 47,250 ------------- HOUSEHOLD PRODUCTS & HOUSEWARES - 2.67% Colgate-Palmolive Company 550 43,038 -------------
(CONTINUED)
LEGACY EQUITY FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996 NUMBER OF VALUE SHARES (NOTE 1) ------------- ------------- COMMON STOCKS (CONTINUED) INSURANCE - MULTILINE - 4.59% Aetna Life and Casualty Company 500 $37,812 American International Group, Inc. 375 36,234 ------------- 74,046 ------------- MEDICAL - HOSPITAL MANAGEMENT & SERVICE - 2.54% Columbia/HCA Healthcare Corporation 750 41,062 ------------- MEDICAL SUPPLIES - 2.69% Baxter International, Inc. 950 43,462 ------------- METAL FABRICATION & HARDWARE - 3.01% Kennametal, Inc. 1,500 48,563 ------------- MISCELLANEOUS - DISTRIBUTION & WHOLESALE - 3.25% (a) ProNet, Inc. 2,000 52,500 ------------- OIL & GAS - INTERNATIONAL - 2.58% Chevron Corporation 750 41,719 ------------- PHARMACEUTICALS - 11.18% Johnson & Johnson 450 42,075 Merck & Company, Inc. 700 46,375 Mylan Laboratories 2,400 46,800 Schering-Plough Corporation 800 45,400 ------------- 180,650 ------------- RESTAURANTS & FOOD SERVICE - 2.25% Wendy's International, Inc. 2,000 36,250 ------------- TEXTILES - 2.27% Pillowtex 3,300 36,712 ------------- TRANSPORTATION - AIR - 2.29% Southwest Airlines Company 1,200 36,900 ------------- TRUCKING & LEASING - 1.90% (a) Celadon Group Inc. 3,000 30,750 -------------
(CONTINUED) LEGACY EQUITY FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996 NUMBER OF VALUE SHARES (NOTE 1) ------------- ------------- COMMON STOCKS (CONTINUED) UTILITIES - TELECOMMUNICATIONS - 4.80% A T & T Corporation 600 $38,175 U S West, Inc. 1,200 39,300 ------------- 77,475 ------------- TOTAL COMMON STOCKS (COST $1,261,443) 1,484,331 ------------- PRINCIPAL AMOUNT ------------- REPURCHASE AGREEMENT (B) - 13.46% Wachovia Bank 5.32%, due March 1, 1996 $217,295 217,295 (COST $217,295) ------------- TOTAL VALUE OF INVESTMENTS (COST $1,478,738 (C)) 105.40% 1,701,626 Liabilities In Excess of Other Assets (5.40)% (87,147) ------------- ------------- NET ASSETS 100.00% $1,614,479 ============= =============
(a) Non-income producing investment. (b) Joint repurchase agreement entered into February 29, 1996, with a maturity value of $68,302,116 collateralized by $71,660,000 U.S. Treasury Bills, due September 19, 1996. The aggregate market value of the collateral at February 29, 1996 was $69,697,130. The Fund's pro rata interest in the market value of the collateral at February 29, 1996 was $221,776. The Fund's pro rata interest in the joint repurchase agreement collateral is taken into possession by the Fund's custodian upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value is at least 102 percent of the sales price of the repurchase agreement. (c) Aggregate cost for federal income tax purposes is the same as for financial reporting purposes. Unrealized appreciation (depreciation) of investments for financial reporting and federal income tax purposes is as follows: Unrealized appreciation $253,135 Unrealized depreciation (30,247) ------------- NET UNREALIZED APPRECIATION $222,888 ============= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS LEGACY EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES February 29, 1996 ASSETS Investments in common stocks at value (cost $1,261,443) $1,484,331 Repurchase agreement 217,295 Cash 400 Dividends receivable 1,911 Interest receivable 409 Due from advisor (note 2) 23,406 Other assets 252 ------------- Total assets 1,728,004 ------------- LIABILITIES Accrued expenses 16,160 Payable for investment purchases 97,365 ------------- Total liabilities 113,525 ------------- NET ASSETS (applicable to 126,045 shares outstanding; unlimited shares of no par value beneficial interest authorized) $1,614,479 ============= NET ASSET VALUE AND REPURCHASE PRICE PER SHARE ($1,614,479 net assets / 126,045 shares) $12.81 ============= OFFERING PRICE PER SHARE (100 / 97 of $12.81) $13.21 ============= NET ASSETS CONSIST OF: Paid-in capital $1,388,077 Undistributed net investment income 113 Undistributed net realized gain on investments 3,401 Net unrealized appreciation on investments 222,888 ------------- $1,614,479 =============
See accompanying notes to financial statements
LEGACY EQUITY FUND STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 29, 1996 INVESTMENT INCOME INCOME Dividends $17,521 Interest 3,240 ------------ TOTAL INCOME 20,761 ------------ EXPENSES Fund accounting fees (note 2) 24,000 Professional fees 11,920 Investment advisory fees (note 2) 10,328 Fund administration fees (note 2) 9,115 Distribution and service fees (note 3) 5,164 Custody fees 3,889 Registration and filing administration fees 2,821 Securities pricing fees 2,290 Shareholder recordkeeping fees 64 Trustee fees and meeting expenses 7,236 Registration and filing expenses 3,958 Shareholder servicing expenses 3,459 Printing expenses 312 Other operating expenses 4,066 ------------ TOTAL EXPENSES 88,622 ------------ Less: Expense reimbursements (note 2) (73,223) Investment advisory fees waived (note 2) (10,328) Distribution and service fees waived (note 3) (5,071) ------------ NET EXPENSES 0 ------------ NET INVESTMENT INCOME 20,761 ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investment transactions 5,857 Increase in unrealized appreciation on investments 209,288 ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 215,145 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $235,906 ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
LEGACY EQUITY FUND STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD FROM JANUARY 2, 1995 (COMMENCEMENT YEAR ENDED OF OPERATIONS) TO FEBRUARY 29, FEBRUARY 28, 1996 1995 ------------- --------------- INCREASE IN NET ASSETS OPERATIONS Net investment income $20,761 $621 Net realized gain (loss) from investment transactions 5,857 (2,456) Increase in unrealized appreciation on investments 209,288 13,600 ------------- --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 235,906 11,765 ------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income (21,269) 0 ------------- --------------- CAPITAL SHARE TRANSACTIONS Increase in net assets resulting from capital share transactions (a) 778,274 609,803 ------------- --------------- TOTAL INCREASE IN NET ASSETS 992,911 621,568 NET ASSETS Beginning of period 621,568 0 ------------- --------------- End of period (including undistributed net investment income of $113 in 1996) $1,614,479 $621,568 ============= ===============
(a) A summary of capital share activity follows: FOR THE PERIOD FROM JANUARY 2, 1995 YEAR ENDED (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 29, 1996 FEBRUARY 28, 1995 SHARES VALUE SHARES VALUE ----------------------------------------------------------------- Shares sold 114,039 $1,388,319 60,001 $609,803 Shares issued for reinvestment of distributions 1,743 21,269 0 0 ------------- ------------- ------------- --------------- 115,782 1,409,588 60,001 609,803 Shares redeemed (49,738) (631,314) 0 0 ------------- ------------- ------------- --------------- Net increase 66,044 $778,274 60,001 $609,803 ============= ============= ============= ===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
LEGACY EQUITY FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) FOR THE PERIOD FROM JANUARY 2, 1995 (COMMENCEMENT YEAR ENDED OF OPERATIONS) TO FEBRUARY 29, FEBRUARY 28, 1996 1995 ------------- ------------------- NET ASSET VALUE, BEGINNING OF PERIOD $10.36 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.28 0.01 Net realized and unrealized gain on investments 2.46 0.35 ------------- ------------ TOTAL FROM INVESTMENT OPERATIONS 2.74 0.36 ------------- ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income (0.29) 0.00 ------------- ------------ NET ASSET VALUE, END OF PERIOD $12.81 $10.36 ============= ============ TOTAL RETURN (a) 26.47% 3.60% (b) ============= ============ RATIOS/SUPPLEMENTAL DATA NET ASSETS, END OF PERIOD $1,614,479 $621,568 ============= ============ RATIO OF EXPENSES TO AVERAGE NET ASSETS Before expense reimbursements and waived fees 8.60% 19.58% (c) After expense reimbursements and waived fees 0.00% 1.47% (c) RATIO OF NET INVESTMENT INCOME(LOSS) TO AVERAGE NET ASSETS Before expense reimbursements and waived fees (6.59)% (17.14)% (c) After expense reimbursements and waived fees 2.02% 0.98% (c) PORTFOLIO TURNOVER RATE 43.22% 8.53%
(a) Total return does not reflect payment of a sales charge. (b) Annualized total return was 23.05%. (c) Annualized. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS LEGACY EQUITY FUND NOTES TO FINANCIAL STATEMENTS February 29, 1996 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION Legacy Equity Fund (the "Fund") is a diversified series of shares of beneficial interest of The Nottingham Investment Trust (the "Trust"). The Trust, an open-end investment company, was organized on August 12, 1992 as a Massachusetts Business Trust and is registered under the Investment Company Act of 1940. The Fund began operations on January 2, 1995. The following is a summary of significant accounting policies followed by the Fund. A. Security Valuation - The Fund's investments in securities are carried at value. Securities listed on an exchange or quoted on a national market system are valued at 4:00 p.m., New York time, on the day of valuation. Other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the most recent bid price. Securities for which market quotations are not readily available, if any, are valued by an independent pricing service or by following procedures approved by the Board of Trustees. Short- term investments are valued at cost which approximates value. B. Federal Income Taxes - The Fund is considered a personal holding company as defined under Section 542 of the Internal Revenue Code since 50% of the value of the Fund's shares were owned directly or indirectly by five or fewer individuals at certain times during the last half of the year. As a personal holding company the Fund is subject to federal income taxes on undistributed personal holding company income at the maximum individual income tax rate. No provision has been made for federal income taxes since all taxable income has been distributed to shareholders. It is the policy of the Fund to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to make sufficient distributions of taxable income to relieve it from all federal income taxes. C. Investment Transactions - Investment transactions are recorded on the trade date. Realized gains and losses are determined using the specific identification cost method. Interest income is recorded daily on the accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. D. Distributions to Shareholders - The Fund may declare dividends quarterly, payable in March, June, September and December, on a date selected by the Trust's Trustees. In addition, distributions may be made annually in December out of net realized gains through October 31 of that year. The Fund may make a supplemental distribution subsequent to the end of its fiscal year ending February 29th. E. Use of Estimates - Management makes a number of estimates in the preparation of the Fund's financial statements. Actual results could differ significantly from those estimates. NOTE 2 - INVESTMENT ADVISORY FEE, RELATED PARTY AND OTHER TRANSACTIONS Pursuant to an investment advisory agreement, Legacy Advisors, Inc. (the "Advisor") provides the Fund with a continuous program of supervision of the Fund's assets, including the composition of its portfolio, and furnishes advice and recommendations with respect to investments, investment policies, and the purchase and sale of securities. As compensation for its services, the Investment Advisor receives a fee at the annual rate of 1.00% of the Fund's average daily net assets. (Continued) LEGACY EQUITY FUND NOTES TO FINANCIAL STATEMENTS February 29, 1996 The Advisor has voluntarily agreed to waive all or a portion of its fee and reimburse expenses of the Fund to limit total Fund operating expenses, exclusive of interest, taxes, brokerage commissions, sales charges and extraordinary expenses, to a maximum of 2.00% of the Fund's average daily net assets for any fiscal year, or the limits set by applicable state securities laws or other applicable laws if such limits are lower. Currently, the Fund does not offer its shares for sale in states which require limitations to be placed on its expenses. The Advisor has voluntarily waived its fee amounting to $10,328 ($0.12 per share) and agreed to reimburse $73,223 of the Fund's operating expenses for the year ended February 29, 1996. There can be no assurance that the foregoing voluntary fee waiver or expense reimbursements will continue. The Nottingham Company (the "Administrator") provides administrative services to and is generally responsible for the overall management and day-to-day operations of the Fund pursuant to an accounting and administrative agreement with the Trust. As compensation for its services, the Administrator receives a fee at the annual rate of 0.20% of the Fund's first $50 million of average daily net assets, 0.175% of the next $50 million of average daily net assets, and 0.15% of average daily net assets over $100 million. The Administrator also receives a monthly fee of $2,000 for accounting and recordkeeping services. Additionally, the Administrator charges the Fund for servicing of shareholder accounts and registration of the Fund's shares. The contract with the Administrator provides that the aggregate fees for the aforementioned administration, accounting and recordkeeping services shall not be less than $3,000 per month. The Administrator also charges the Fund for certain expenses involved with the daily valuation of portfolio securities. At February 29, 1996 the Advisor and its officers held 36,021 shares or 29% of the Fund shares outstanding. Another shareholder held 47,085 shares or 37% of the Fund shares outstanding. Capital Investment Group, Inc. (the "Distributor") serves as the Fund's principal underwriter and distributor. The Distributor receives any sales charges imposed on purchases of shares and re-allocates a portion of such charges to dealers through whom the sale was made, if any. For the year ended February 29, 1996, the Distributor retained sales charges in the amount of $96. Certain Trustees and officers of the Trust are also officers or directors of the Advisor or the Administrator. NOTE 3 - DISTRIBUTION AND SERVICE FEES The Board of Trustees, including a majority of the Trustees who are not "interested persons" of the Trust as defined in the Investment Company Act of 1940 (the "Act"), adopted a distribution plan pursuant to Rule 12b-1 of the Act (the "Plan"). Rule 12b-1 regulates the manner in which a regulated investment company may assume costs of distributing and promoting the sales of its shares and servicing of its shareholder accounts. The Plan provides that the Fund may incur certain costs, which may not exceed 0.50% per annum of the Fund's average daily net assets for each year elapsed subsequent to adoption of the Plan, for payment to the Distributor for items such as advertising expenses, selling expenses, commissions, travel, or other expenses reasonably intended to result in sales of shares of the Fund or support servicing of shareholder accounts. Expenditures paid as service fees to any person who sells Fund shares may not exceed 0.25% per annum of the Fund's average daily net assets. The Fund incurred $5,164 in distribution and service fees for the year ended February 29, 1996, of which $5,071 ($0.06 per share) has been voluntarily waived by the Distributor. NOTE 4 - PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments, other than short-term investments, aggregated $1,096,465 and $421,166, respectively, for the year ended February 29, 1996. [KPMG PEAT MARWICK LLP LETTERHEAD] Independent Auditors' Report To the Board of Trustees and Shareholders The Nottingham Investment Trust: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Legacy Equity Fund (the "Fund"), a series of The Nottingham Investment Trust, as of February 29, 1996, the related statement of operations for the year then ended, and the statements of changes in net assets and financial highlights for the year ended February 29, 1996 and the period from January 2, 1995 (commencement of operations) to February 28, 1995. 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 generally accepted auditing standards. Those standards require that we plan and perform the audit 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 February 29, 1996 by correspondence with the custodian and brokers. 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 the Legacy Equity Fund as of February 29, 1996, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for the year ended February 29, 1996 and the period from January 2, 1995 (commencement of operations) to February 28, 1995 in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP Richmond, Virginia April 5, 1996 -----END PRIVACY-ENHANCED MESSAGE-----