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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 | 811-05685 |
Williamsburg Investment Trust |
(Exact name of registrant as specified in charter) |
225 Pictoria Drive, Suite 450 Cincinnati, Ohio | 45246 |
(Address of principal executive offices) | (Zip code) |
John Chilton, Esq.
Sullivan & Worcester LLP 1666 K Street, NW Washington, D.C. 20006 |
(Name and address of agent for service) |
Registrant's telephone number, including area code: | (513) 587-3400 |
Date of fiscal year end: | March 31 | |
Date of reporting period: | September 30, 2018 |
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-CSR 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-CSR 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 the 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.
SEMI-ANNUAL REPORT
September 30, 2018 |
THE DAVENPORT FUNDS | November 1, 2018 |
Dear Shareholders,
Equity markets enjoyed surprisingly strong returns in the third quarter. The S&P 500 Index gained 7.71% and posted its best quarter in nearly five years. Year-to-date the S&P 500 Index finished the quarter up 10.56%. On another bullish note, the Nasdaq Composite Index gained 7.41% and was up for the ninth consecutive quarter.
Such impressive results flew in the face of many negative headlines. Indeed, there was plenty to worry investors in the third quarter. Trade war fears lingered alongside President Trump’s protectionist talk. Monetary policy continued to tighten as the Fed again raised interest rates. And, areas of the economy, such as autos and housing, showed evidence of slowing. Next up, we will have to contend with a midterm election cycle that is sure to be contentious and may result in the balance of power shifting in Congress.
Still, equities once again managed to climb the proverbial “wall of worry”. So what gives? Perhaps most perceive Trump’s trade barbs with China as bombast meant to secure a more favorable negotiating position. Recent agreements with Mexico and Canada do indeed suggest a resolution with China is more possible than headlines portray. Maybe rising interest rates are manageable given they remain low by historical standards and increases are accompanied by strong economic growth. And, maybe once the elections are over we will see the chicanery of partisan politics cool a bit (this one is doubtful but who knows). Interestingly, Barron’s recently noted the S&P 500 Index has not declined in the 12 months following midterm elections since 1946.
Above and beyond these considerations, however, is the health of the U.S. economy. GDP growth seems poised to reach almost 3% for 2018 versus 2.2% last year and only 1.6% in 2016. Meanwhile, unemployment sits near a record low at 3.9%, wage growth is strong and consumer confidence surged to nearly an 18-year high in August. This should bode well for consumer spending and make for robust holiday retail sales. One can certainly argue this economic expansion is long in the tooth and certain industries are showing signs of weakening. However, the consumer certainly appears healthy enough to power further gains.
We came into the year expecting more modest returns than what we witnessed from 2013-2017. Thus far, we have been pleasantly surprised by the market’s ongoing momentum. At 17.3x forward earnings estimates for the S&P 500 Index (just slightly above the 25 year average of 16.5x), we would continue to characterize the market as being fairly valued (i.e., not overvalued or undervalued). Robust economic growth is a plus but offset in part by the specter of rising interest rates. We continue to find attractive investment opportunities in our Funds, but still encourage investors to expect more moderate returns in the coming years.
Please see our Fund letters for discussion of specific ideas and investment themes. Thank you for your trust.
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Davenport Core Fund (DAVPX)
The Core Fund posted strong performance during the quarter, returning 6.25%, and modestly lagged the S&P 500 Index’s 7.71% advance. The Core Fund is now up 8.03% year-to-date, versus the S&P 500 Index’s 10.56% advance. Industrials concerns Southwest Airlines (LUV) and Union Pacific (UNP) had great quarters for us, as did Marathon Petroleum (MPC), Visa (V) and Starbucks (SBUX). On the other side of the ledger, our aggregates companies Martin Marietta (MLM) and Vulcan (VMC) weighed on performance, as did brewer Anheuser-Busch InBev (BUD). While not quite keeping up with the S&P 500 Index’s torrid ascent, we are pleased the Fund was able to participate and capture the bulk of the market’s gains this quarter.
We added to MPC early in the quarter, when the shares had pulled back amidst general macro anxieties. The add proved timely, as MPC reported standout Q2 results and progressed on its merger with Andeavor, which was completed October 1 of this year. We are positive on this $30 billion deal as it gives MPC exposure to cheaper crude feedstocks from the Permian Basin and provides $1 billion+ of annual synergies. In addition to the deal, we think MPC is well positioned to benefit from new sulfur regulations on shipping fuel that are set to take effect in 2020. Finally, the company is fully integrating two refineries across the street from each other on the Gulf Coast, which should result in a world-class refining complex and a nice boost to earnings in 2021.
We sold our position in Glencore (GLNCY) during the quarter. While we remain attracted to the electric vehicle theme and appreciate the company’s cash generative asset base, this position did not work out for us. Shortly after our purchase, GLNCY ran into political difficulties in one of its key mining geographies, the Democratic Republic of the Congo. Onerous new taxes will bite into GLNCY’s new projects in the country. Even more importantly, the slowdown in the Chinese economy linked to ratcheting U.S. tariffs has taken the starch out of commodity prices. We retain meaningful exposure to global trade in the Fund and elected to part ways with GLNCY, in case the geopolitical situation worsens.
We initiated a new position in Electronic Arts (EA), a company closer to home. EA is the industry leader in the sports video games genre, offering games licensed from the NFL, NHL, FIFA, etc. Additionally, EA produces other successful franchises including Star Wars Battlefront, Battlefield, Titanfall, and The Sims. Many of the company’s gamers elect to purchase the new installment of FIFA or Madden every year, generating visibility into revenue. New products provide an opportunity to grow on top. In addition, the company is benefitting from a mix shift as more consumers download games directly from EA, cutting out the retailer and increasing margins. In-game purchases are another high-margin revenue opportunity. With the shares down off their highs and trading at a discount to peers, we liked adding exposure towards this long-term trend of increased gaming.
In sum, the Core Fund generated strong absolute performance in Q3, capturing the bulk of the S&P 500 Index’s gains. While we would not count on many quarters being this strong, we remain excited about the prospects for our Fund companies, including the new positions discussed above.
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The following chart represents Davenport Core Fund (DAVPX) performance and the performance of the S&P 500 Index, the Core Fund’s primary benchmark, for the periods ended September 30, 2018.
| Q3 | YTD | 1 Year | 3 Years* | 5 Years* | 10 Years* | Since |
Core Fund (DAVPX) | 6.25% | 8.03% | 13.32% | 13.80% | 11.40% | 10.78% | 7.08% |
S&P 500 Index** | 7.71% | 10.56% | 17.91% | 17.31% | 13.95% | 11.97% | 7.57% |
30-Day SEC Yield: 0.35%; Expense Ratio in current prospectus: 0.90%
Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance data, current to the most recent month-end, may be obtained by calling 1-800-281-3217.
* | Returns greater than one year are annualized. |
** | The S&P 500 Index is comprised of 500 U.S. stocks and is an indicator of the performance of the overall U.S. stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. |
Recent Purchases
Electronic Arts, Inc. (EA) – Headquartered in Redwood City, CA, EA is a leading video game publisher and boasts a large array of owned and licensed console, mobile and PC games. We initiated a position in the company following a recent sell-off in the shares, which we attributed to a lack of forward-looking guidance from management.
Marathon Petroleum Corp. (MPC) – We took the opportunity to add to our position during the quarter, encouraged by a number of positive drivers which should enhance their base business, strong asset footprint and consistent execution.
Starbucks Corp. (SBUX) – We elected to add to the shares on weakness, as we remain attracted to this highly profitable, durable consumer franchise which has taken on a number of new sales initiatives.
Recent Sales
Glencore plc (GLNCY) – Given the amount of negative news flow in such a short period of time and GLNCY’s vulnerability to “trade wars,” we elected to exit the position.
Liberty SiriusXM Group (LSXMK) – Given the recent strong performance in the shares, increasing competitive pressures from streaming services and current valuation, we decided to take some profits and deploy the proceeds into names with greater growth prospects.
Davenport Value & Income Fund (DVIPX)
The Value & Income Fund enjoyed a strong third quarter, increasing 5.45% and bringing the year-to-date gain to 1.80%. The Fund was close to its benchmark in the quarter with the Russell 1000 Value Index increasing 5.70% (3.92% year-to-date). The S&P 500 Index increased 7.71% in the third quarter and is up 10.56% year-to-date.
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For the quarter, our industrial stocks were the big winners as strong economic growth continued and raw material costs declined. Shares of Eaton (ETN), Delta Airlines (DAL), and Boeing (BA) were among our top contributors. CVS Health (CVS) was another standout performer as investors warmed to the company’s planned combination with Aetna (AET). Key detractors during the quarter included Anheuser-Busch InBev (BUD) and Synchrony Financial (SFY), the latter of which we sold. In the case of BUD, the strong U.S. dollar took a bite out of earnings as international markets represent nearly three-quarters of the business. Additionally, the currency headwind slowed the pace of debt paydown, raising additional concerns in the market. We continue to have a positive view on the stock as global beer volumes remain robust and significant synergies from the 2016 acquisition of SABMiller continue to be realized. While currency headwinds can impact near-term results, we believe these are transitory and that BUD has ample liquidity. We continue to think that BUD can grow earnings at a double-digit rate, which should drive solid capital appreciation in the shares along with a 3.8% dividend yield.
We initiated two new positions during the quarter in DXC Technology (DXC) and Las Vegas Sands (LVS). DXC is an information technology (IT) consulting firm with operations around the world. The company was formed in 2017 from a merger between Computer Sciences Corp. and HP’s Enterprise Consulting business. CEO Mike Lawrie turned around Computer Sciences (improving operating margins by 500 basis points) and presided over a 5x increase in the stock price. We expect him to repeat the playbook at DXC. The company is midway through a $2.3 billion cost-cutting program, which we think can drive earnings per share (EPS) to $10 in 2020. The stock currently trades at 10x earnings compared to peers at 14-15x. As DXC cuts costs and improves revenue growth, we think the stock can re-rate towards peers. DXC has a solid balance sheet with strong cash flow, and we expect the company to return meaningful cash to shareholders once the current restructuring program concludes.
LVS is a global casino operator and is a name we have owned in the past. The shares are down 25% from their highs as investors fear that macro factors negatively impacting China will weigh on LVS’s profits (60% of EBITDA is generated in Macau). We believe the stock is discounting a great deal of future uncertainty as it is currently trading at 10.5x EV/EBITDA, towards the low end of its historical trading range of 10-14x. LVS should be a beneficiary from long-term structural factors such as a rising middle class in China and shifting consumer preferences toward travel. The company generates significant cash flow, which allows it to pay a strong dividend (4.9% yield) and repurchase stock. We also think there are potential opportunities in new markets such as Japan, which formally legalized casino gambling this summer.
In summary, we were pleased with the strong results in the third quarter, especially with the continued outperformance of growth vs. value stocks. While we don’t know when this phenomenon will reverse, we expect it eventually will and have continued to take advantage of areas of the market where we see favorable risk/reward dynamics.
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The following chart represents Davenport Value & Income Fund (DVIPX) performance and the performance of the Russell 1000® Value Index, the Fund’s primary benchmark, and the S&P 500 and Lipper Equity Income Indices for the periods ended September 30, 2018.
| Q3 | YTD | 1 Year | 3 Years* | 5 Years* | Since |
Value & Income Fund (DVIPX) | 5.45% | 1.80% | 8.50% | 12.91% | 10.54% | 12.29% |
Russell 1000® Value Index** | 5.70% | 3.92% | 9.45% | 13.55% | 10.72% | 11.75% |
S&P 500 Index** | 7.71% | 10.56% | 17.91% | 17.31% | 13.95% | 13.82% |
Lipper Equity Income Index** | 5.54% | 4.67% | 10.45% | 13.62% | 10.27% | 11.02% |
30-Day SEC Yield: 1.73%; Expense Ratio in the current prospectus: 0.89%
Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance data, current to the most recent month-end, may be obtained by calling 1-800-281-3217.
* | Returns greater than one year are annualized. |
** | The Russell 1000® Value Index measures the performance of the Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. The S&P 500 Index is comprised of 500 U.S. stocks and is an indicator of the performance of the overall U.S. stock market. The Lipper Equity Income Index is an unmanaged index of the 30 largest funds in the Lipper Equity Income fund category. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. |
Recent Purchases
Brookfield Asset Management, Inc. (BAM) – We added to this position during the quarter, believing the current share price offers an attractive entry point given the company’s fundraising momentum, NAV disconnect, and the hedge-like characteristics the shares offer in the event of a downturn.
Carnival Corp. (CCL) – We added to CCL during the quarter, as concerns around industry overcapacity, rising fuel costs and the approaching hurricane season weighed on the shares. We feel those concerns could be overblown and remain attracted to longer-term favorable demand demographics (aging baby boomers, increased travel and increasing demand from emerging markets).
Dominion Energy, Inc. (D) – While our sector exposure to utilities remains underweight, we elected to add to our position in D, seeing attractive total return potential if recent issues surrounding DM, the Atlantic Coast Pipeline and pending Scana deal are resolved.
DowDuPont, Inc. (DWDP) – We added to the position during the quarter, as the company continues to track toward its planned breakup in 2019 and shares remain significantly undervalued on a sum-of-the-parts basis.
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DXC Technology Co. (DXC) – We initiated a position in DXC, who offers IT consulting, outsourcing, and support services across infrastructure, applications, and business processes. We view DXC as a value stock with the ability to implement a meaningful dividend after the current restructuring program concludes.
Fidelity National Financial, Inc. (FNF) – With the stock struggling year-to-date, we added to the shares during the quarter, believing the company should continue to benefit from a generally constructive backdrop in housing, its leverage to purchase transactions and several company-specific drivers.
Las Vegas Sands Corp. (LVS) – We initiated a position in this global casino operator during the quarter, attracted to long-term structural factors such as a rising middle class in China, increased domestic consumption, shifting consumer preferences toward travel and the recent legalization of casino gambling in Japan. Recent macro concerns surrounding emerging markets provided an attractive entry point in the shares.
Recent Sales
General Motors Co. (GM) – Despite improving profitability at GM and a nice dividend, we elected to sell our position, as we believe the overhang of declining global auto production will likely continue to weigh on the stock.
iShares MSCI European Financials ETF (EUFN) - As growth in Europe has slowed a bit, and several unforeseen events have increased the risk profile, we have decided to redeploy the capital into more timely situations.
Synchrony Financial (SYF) – Due to the recent loss of business with Walmart, Inc. and increasing concerns around other large accounts that are up for renewal over the next several years, we believe the risk profile of the stock has increased and elected to sell our position.
Davenport Equity Opportunities Fund (DEOPX)
The Equity Opportunities Fund enjoyed a gain of 4.99% during the third quarter, roughly matching the 5.00% advance of the Russell Mid Cap Index. Year-to-date, the Fund is up 4.70% relative to the 7.46% gain for the Russell Mid Cap Index.
For the second quarter in a row, auto parts retailer O’Reilly Automotive (ORLY) was a lead contributor to results. This stock has continued to charge higher amid strong same-store sales growth, expanding margins and aggressive buybacks. Recently, we elected to trim the position back with the valuation looking more reasonable. Another key contributor was Sherwin Williams (SHW), where company-specific factors such as strong organic growth, synergies from the Valspar deal and the prospect for more aggressive capital return have allowed the shares to set new highs despite negative investor sentiment related to the housing/construction cycle. Two names that have failed to escape housing/construction related woes included American Woodmark (AMWD) and Martin Marietta Materials (MLM). The former responded to a slowdown in housing data surrounding mortgage applications and existing home sales over the summer months. While we acknowledge signs of slowing home purchases, we believe these issues are primarily related to a lack of inventory and that demand concerns seem overblown. In fact, we note that housing starts are up mid-single-digits year-to-date and that company guidance for core revenue growth has
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actually increased this year. As such, we added to the position and remain confident in the health of the company’s core business and its opportunity to unlock significant earnings power from its recent acquisition of RSI Home Products.
We added to our position in Brookfield Asset Management (BAM), a proven capital allocator that currently seems overlooked. BAM is a leading global alternative asset manager, and one of the largest investors in what the company refers to as “real assets.” BAM’s primary areas of focus include real estate, infrastructure, renewable power, and private equity. The company invests in these areas through listed issuers (BPY, BIP, BEP, and BBU), private funds and parent company capital. With a contrarian mindset and intense focus on shareholder returns, CEO Bruce Flatt and his team have grown AUM from $14 billion to $287 billion over the last 20 years, and the share price has compounded at an annualized clip of 19% (including dividends) over that same period. Despite strong momentum in third-party fundraising efforts, an inflection in the cash generation of the asset management franchise and record levels of liquidity, the stock is down modestly this year. We feel this has resulted in a significant disconnect between the price of the stock and the intrinsic value of the business.
More recently, we attended BAM’s investor day in New York. While the long-term framework for value creation has not changed, we came away with a better appreciation of the impending cash generation of the asset management franchise. CEO Bruce Flatt conveyed the company’s belief that its current structure is sufficient to facilitate its strategic plan for the next decade (i.e., no need for expansion into new asset classes, geographies or business structures). Essentially, the company has spent the last several decades laying the groundwork for cash generation and is now ready to reap the rewards. Whereas we find the nearly $2 billion in free cash the franchise plans to generate this year to be compelling, management sees that more than doubling over the next five years. Furthermore, the company anticipates roughly $60 billion in cumulative cash generation over the next 10 years, which is more than the market cap today. While the company’s target of $118 per share in 2023 equity value (a ~24% compounded annual return) will require investors to value fee stream from the private funds business more favorably than they have in the past, we still believe the numbers are compelling even if management falls a little short of the long-term target.
To sum it all up, we feel good about both the timeliness and quality of the Fund. Further, we feel our emphasis on solid franchises run by proven capital allocators could work well in a world where rising interest rates may make capital a bit more scarce.
The following chart represents Davenport Equity Opportunities Fund (DEOPX) performance and the performance of the Russell Midcap® Index, the Fund’s primary benchmark, and the S&P 500 Index for the periods ended September 30, 2018.
| Q3 | YTD | 1 Year | 3 Years* | 5 Years* | Since |
Equity Opportunities Fund (DEOPX) | 4.99% | 4.70% | 8.55% | 11.07% | 9.58% | 12.24% |
Russell Midcap® Index** | 5.00% | 7.46% | 13.98% | 14.52% | 11.65% | 12.50% |
S&P 500 Index** | 7.71% | 10.56% | 17.91% | 17.31% | 13.95% | 13.82% |
Expense Ratio in the current prospectus: 0.92%
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Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance data, current to the most recent month-end, may be obtained by calling 1-800-281-3217.
* | Returns greater than one year are annualized. |
** | The Russell Midcap® Index measures the performance of the 800 smallest companies in the Russell 1000, which represent approximately 25% of the total market capitalization of the Russell 1000®. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. The S&P 500 Index is comprised of 500 U.S. stocks and is an indicator of the performance of the overall U.S. stock market. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. |
Recent Purchases
American Woodmark Corp. (AMWD) – We elected to add to our position on weakness during the quarter, as shares of AMWD continue to fight negative sentiment surrounding housing. With the RSI integration well underway, core growth acceleration, margin expansion and continued delevering of the balance sheet, we believe patience will be rewarded in this high-quality growth stock.
Brookfield Asset Management, Inc. (BAM) – After a period of shares trading sideways, we believe BAM should be poised for another leg of upside, and thus added to our position during the quarter. We believe BAM could be differentiated in a weaker market environment and its liquidity position enhances the company’s ability to take advantage of investment opportunities.
Liberty Broadband Corp. (LBRDK) – We added to the stock on weakness during the quarter, as the market seemed to overreact to disappointing subscriber numbers from cable concern Charter Communications Inc., a trend that should abate over the next year as the integration of Time Warner Cable and Brighthouse progresses.
Recent Sales
Live Nation Entertainment, Inc. (LYV) – While we remain encouraged by the health of the core concert business and overall momentum, we chipped our position following strong quarterly earnings and positive movement in the stock, deploying proceeds into a situation we feel has a better risk/reward profile.
O’Reilly Automotive, Inc. (ORLY) – We decided to chip our position in ORLY on two occasions during the quarter, as shares have rallied strongly from our purchase last year. While we like the combination of strong same-store sales growth, expanding margins and aggressive buybacks, we believe these positives are becoming more accurately reflected in the stock.
Davenport Small Cap Focus Fund (DSCPX)
The Davenport Small Cap Focus Fund was up 0.37% for the third quarter versus the 3.58% gain for the Russell 2000 Index. For the year, the Fund is up 2.62%, relative to the 11.51% gain for the index.
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Unfortunately, trends that plagued prior quarters’ relative results continued in the third quarter. Industrial/housing related names, as well as holdings in the transportation sector, continued to struggle amid fears of peaking cyclical conditions. These headwinds, coupled with an underweight stance in more momentum-oriented sectors such as Technology and Health Care, combined to weigh on relative returns. Fortunately, we did benefit from the solid performance of a few names that we added to during periods of weakness. The best example of this is Cable One (CABO), which was the strategy’s top performer during the period. As a reminder, we were adding to this position earlier in the year when the sector was extremely out of favor. Since then, the stock has gone on to make new highs, and we have elected to trim the position. Billboard company Lamar Advertising (LAMR) is another example of a down and out stock we added to earlier in the year that has gone on to make new highs.
More recently, we have been adding to our position in Diamond Hill Asset Management (DHIL). We’ve made DHIL a top position after a meaningful decline for the stock. As a reminder, DHIL manages $25 billion and has a market cap of $580 million. At the end of the quarter, the stock traded for less than 10x what we think the company can earn this year. This looks even cheaper when considering that the company has no debt and roughly $60/share of cash and investments. Insiders own nearly 20% of the company and the Board recently approved a $50 million buyback that should support the stock. Furthermore, the company is likely to pay a meaningful special dividend before year-end, which combined with the buyback could result in cash returned to shareholders representing nearly 15% of the current market cap. While we can’t say when investors will wake up to this sleepy value story (the stock has no analyst coverage), we feel the shares are extremely cheap at current levels.
We initiated a new position in WW, Inc. (WTW) during the quarter. Formerly known as Weight Watchers International, WTW is a global wellness company with the world’s leading weight management program. We are excited for the long-term growth prospects of this company as it continues to add subscribers and evolve its offering towards everyday wellness as opposed to just weight management. With Oprah Winfrey as a top shareholder and leading spokesperson, we expect the company to achieve its goal of 5 million subscribers in 2020 (up from 3.2 million at the end of 2017) while also driving retention and engagement through further adoption of its mobile app. The powerful combination of more users, longer retention and a scalable mobile platform should result in above-average earnings growth and improving returns on capital through the end of the decade.
In sum, we believe the strategy is timely and remain confident that recent actions continue to plant the seeds for future returns. While our value bias has been a headwind, we think market dynamics will change at some point. As always, we thank you for your trust and patience and look forward to reporting back to you at year end.
The following chart represents Davenport Small Cap Focus Fund (DSCPX) performance and the performance of the Russell 2000® Index, the Small Cap Focus Fund’s primary benchmark, for the periods ended September 30, 2018.
| Q3 | YTD | 1 Year | 3 Years* | Since |
Small Cap Focus Fund (DSCPX) | 0.37% | 2.62% | 8.56% | 15.96% | 9.75% |
Russell 2000® Index** | 3.58% | 11.51% | 15.24% | 17.12% | 11.08% |
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30-Day SEC Yield: 0.06%; Expense Ratio in the current prospectus: 1.06%
Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance data, current to the most recent month-end, may be obtained by calling 1-800-281-3217.
* | Returns greater than one year are annualized. |
** | The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. |
Davenport Balanced Income Fund (DBALX)
The Davenport Balanced Income Fund increased 3.64% in the third quarter, lagging the 5.70% increase for the Russell 1000 Value Index and the 7.71% increase for the S&P 500 Index. The Fund outpaced the return of the blended 60% Russell 1000 Value Index/ 40% Bloomberg Barclays Intermediate Government Credit Index of 3.49% during the quarter. Year-to-date DBALX is trailing all three benchmarks at 0.32% compared to 3.92% for the Russell 1000 Value Index, 10.56% for the S&P 500 Index and 2.10% for the blended 60/40 Index.
Health Care was our top contributing sector in the third quarter as investors rewarded the stocks following stronger than expected earnings. CVS Health Corp. (CVS), Johnson & Johnson (JNJ), and Merck & Co. (MRK) were three of the top four contributors to overall performance. Anheuser-Busch InBev (BUD) was our biggest detractor, as U.S. results disappointed and increased volatility in international markets pressured earnings.
During the quarter, we initiated a position in DXC Technology (DXC), a provider of global IT services. We believe DXC offers a compelling value story lead by CEO Mike Lawrie, a CEO with a history of simplifying operations and increasing efficiencies. The company returns ample cash to shareholders through buybacks and is expected to grow its dividend meaningfully over the next several years. The stock currently trades at 10x earnings compared to peers at 14-15x. We also added to our position in Brookfield Asset Management (BAM), a global alternative asset manager with a focus on real estate, renewable power, infrastructure, and private equity. With limited future investment needed to grow the scale and scope of the franchise, we look forward to a period of significant cash generation for the company’s asset management business. In fact, management expects free cash flow to more than double over the next five years as the asset class grows and its private funds business scales. We feel the shares fail to reflect this inflection and note that management has recently initiated a meaningful share repurchase program in response to the discrepancy in the share price relative to their view of intrinsic value.
The fixed income market continued to stabilize in Q3 slowly eating away at the losses incurred earlier in the year. The yield on the 2-year Treasury rose 29bps, while rates on the 10-year Treasury and the 30-year Treasury rose 20bps (3.06%) and 22bps (3.20%) respectively. Even in the face of continually rising Treasury yields, the income component of the market was able to eke out a positive return on the quarter. The Bloomberg Barclays Intermediate Government/
10
Credit Bond Index returned 0.21% in Q3 bringing its year-to-date return to -0.76%. Floating rate notes continue to be a bright spot in the market, as the Bloomberg Barclays US FRN <5yr Index returned 0.77% in Q3 and 1.97% year-to-date.
The bond allocation of the Balanced Fund consists of 39 high-quality bonds across nine sectors with the top allocations to Consumer Discretionary at 29%, Financials at 18% and Energy at 16%. The credit quality of the portfolio remains high (A-/A3) and has an effective maturity of 3.63 years and a duration of 2.62 years. Similar to the first half of 2018, we continue to be defensive by trading up in credit quality and decreasing our duration. During the quarter, we exited our Ford position due to deteriorating credit fundamentals and sold Apple as its spread had tightened substantially. With these proceeds, we increased our positions in Goldman Sachs and Morgan Stanley floaters. As rates have risen this quarter, we started opportunistically buying fixed and floating rate U.S. Treasuries up to 7% of the bond allocation. We also increased our floating rate exposure to 38.5%. Floaters continue to be our top performing positions year-to-date and quarter-to-date. The income levels for the floating rate notes change quarterly based on the level of 3 month LIBOR (London Inter-bank Offered Rate). This rate ended Q3 at 2.32%, and we still feel comfortable with this trade, as LIBOR should increase as the Fed continues to raise the Fed Funds rate.
We are very pleased with our performance during the quarter relative to the blended benchmark and continue to see value in a balanced approach in a market with many negative headlines surrounding trade negotiations, rising interest rates, and mid-term elections. We believe our allocation to value-based equities and defensive positioning in fixed income may provide a volatility buffer in the near future while focusing on current income and long-term capital appreciation.
The following chart represents Davenport Balanced Income Fund (DBALX) performance and performance of the Fund’s primary benchmark, the Russell 1000® Value Index, along with the Morningstar US OE Allocation 50-70% Index and the blended 60% Russell 1000® Value Index / 40% Bloomberg Barclays Intermediate Government /Credit Bond Index for the period ended September 30, 2018.
| Q3 | YTD | 1 Year | Since |
Balanced Income Fund (DBALX) | 3.64% | 0.32% | 4.21% | 7.39% |
Russell 1000® Value** | 5.70% | 3.92% | 9.45% | 12.60% |
Morningstar US OE Allocation 50-70% Equity** | 3.16% | 3.03% | 6.53% | 8.54% |
60% Russell 1000® Value/40% BBIGC | 3.49% | 2.10% | 5.26% | 8.04% |
30-Day SEC Yield: 1.68% Expense Ratio in the current prospectus: 1.13%
Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance data, current to the most recent month-end, may be obtained by calling 1-800-281-3217.
11
* | Returns greater than one year are annualized. |
** | The Russell 1000® Value Index measures the performance of the Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Morningstar US OE Allocation 50-70% Equity Index is composed of funds which seek to provide both income and capital appreciation by investing in multiple asset classes, including stocks, bonds, and cash. These portfolios are dominated by domestic holdings and have equity exposure between 50% and 70%. The blended 60% Russell 1000 Value/40% Bloomberg Barclay’s Intermediate Government/Credit (BBIGC) Index is included as an additional comparative index because it is representative of a balanced portfolio consisting of 60% equity and 40% fixed income securities. The BBIGC measures the non-securitized component of the U.S. Aggregate Index. It includes investment grade, U.S. dollar-denominated, fixed-rate Treasuries, government-related and corporate rate securities. Intermediate maturity bonds include bonds with maturities of 1 to 9.999 years. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment. |
12
DAVENPORT CORE FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in
Davenport Core Fund and the Standard & Poor’s 500® Index
Average Annual Total Returns | ||||
1 Year | 5 Years | 10 Years | ||
Davenport Core Fund(a) | 13.32% | 11.40% | 10.78% | |
Standard & Poor’s 500® Index | 17.91% | 13.95% | 11.97% |
(a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
13
DAVENPORT VALUE & INCOME FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in
Davenport Value & Income Fund, the Russell 1000® Value Index
and the Lipper Equity Income Index
Average Annual Total Returns | ||||
1 Year | 5 Years | Since | ||
Davenport Value & Income Fund(a) | 8.50% | 10.54% | 12.29% | |
Russell 1000® Value Index | 9.45% | 10.72% | 11.75% | |
Lipper Equity Income Index | 10.45% | 10.27% | 11.02% |
(a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Commencement of operations was December 31, 2010. |
14
DAVENPORT EQUITY OPPORTUNITIES FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in
Davenport Equity Opportunities Fund and the Russell Midcap® Index
Average Annual Total Returns | ||||
1 Year | 5 Years | Since | ||
Davenport Equity Opportunities Fund(a) | 8.55% | 9.58% | 12.24% | |
Russell Midcap® Index | 13.98% | 11.65% | 12.50% |
(a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Commencement of operations was December 31, 2010. |
15
DAVENPORT SMALL CAP FOCUS FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in
Davenport Small Cap Focus Fund and the Russell 2000® Index
Average Annual Total Returns | ||||
1 Year | 3 Years | Since | ||
Davenport Small Cap Focus Fund(a) | 8.56% | 15.96% | 9.75% | |
Russell 2000® Index | 15.24% | 17.12% | 11.08% |
(a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Commencement of operations was December 31, 2014. |
16
DAVENPORT BALANCED INCOME FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in Davenport Balanced
Income Fund, the Russell 1000® Value Index, a Blended 60% Russell 1000® Value
Index / 40% Bloomberg Barclays Intermediate Government/Credit Bond Index
and the Morningstar US OE Allocation — 50% to 70% Equity
Average Annual Total Returns | |||
1 Year | Since Inception(b) | ||
Davenport Balanced Income Fund(a) | 4.21% | 7.39% | |
Russell 1000® Value Index | 9.45% | 12.60% | |
Blended 60% Russell 1000® Value Index / 40% Bloomberg Barclays Intermediate Government/Credit Bond Index | 5.26% | 8.04% | |
Morningstar US OE Allocation - 50% to 70% Equity | 6.53% | 8.54% |
(a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Commencement of operations was December 31, 2015. |
17
DAVENPORT CORE FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Sector Allocation vs. the Standard & Poor’s 500® Index
Top Ten Equity Holdings
Security Description | % of Net Assets |
Visa, Inc. - Class A | 3.5% |
Markel Corporation | 3.4% |
Berkshire Hathaway, Inc. - Class B | 3.3% |
Adobe Systems, Inc. | 3.2% |
Brookfield Asset Management, Inc. - Class A | 3.1% |
Accenture plc - Class A | 2.9% |
American Tower Corporation | 2.8% |
Danaher Corporation | 2.7% |
Capital One Financial Corporation | 2.6% |
Johnson & Johnson | 2.6% |
18
DAVENPORT VALUE & INCOME FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Sector Allocation vs. the Russell 1000® Value Index
Top Ten Equity Holdings
Security Description | % of Net Assets |
JPMorgan Chase & Company | 3.1% |
Fidelity National Financial, Inc. | 3.1% |
Johnson & Johnson | 3.0% |
Brookfield Asset Management, Inc. - Class A | 3.0% |
Markel Corporation | 2.9% |
Microsoft Corporation | 2.9% |
Royal Dutch Shell plc - Class B - ADR | 2.7% |
CVS Health Corporation | 2.7% |
Citigroup, Inc. | 2.6% |
Cisco Systems, Inc. | 2.6% |
19
DAVENPORT EQUITY OPPORTUNITIES FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Sector Allocation vs. the Russell Midcap® Index
Top Ten Equity Holdings
Security Description | % of Net Assets |
Brookfield Asset Management, Inc. - Class A | 6.4% |
American Tower Corporation | 5.6% |
WABCO Holdings, Inc. | 5.4% |
CarMax, Inc. | 5.0% |
Sherwin-Williams Company (The) | 4.9% |
Live Nation Entertainment, Inc. | 4.8% |
Autodesk, Inc. | 4.6% |
Markel Corporation | 4.5% |
DISH Network Corporation - Class A | 4.4% |
Capital One Financial Corporation | 4.3% |
20
DAVENPORT SMALL CAP FOCUS FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Sector Allocation vs. the Russell 2000® Index
Top Ten Equity Holdings
Security Description | % of Net Assets |
American Woodmark Corporation | 4.3% |
Diamond Hill Investment Group, Inc. | 3.5% |
Knight-Swift Transportation Holdings, Inc. | 3.4% |
Trupanion, Inc. | 3.2% |
Kinsale Capital Group, Inc. | 3.2% |
WABCO Holdings, Inc. | 3.1% |
Eldorado Resorts, Inc. | 3.1% |
Lamar Advertising Company - Class A | 3.0% |
Monarch Casino & Resort, Inc. | 2.9% |
Black Knight, Inc. | 2.8% |
21
DAVENPORT BALANCED INCOME FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Asset Allocation (% of Net Assets) |
Ten Largest Equity Holdings | % of Net Assets |
JPMorgan Chase & Company | 1.7% |
Johnson & Johnson | 1.7% |
Brookfield Asset Management, Inc. - Class A | 1.7% |
Fidelity National Financial, Inc. | 1.7% |
Markel Corporation | 1.6% |
Microsoft Corporation | 1.6% |
Royal Dutch Shell plc - Class B - ADR | 1.5% |
Citigroup, Inc. | 1.4% |
CVS Health Corporation | 1.4% |
Cisco Systems, Inc. | 1.4% |
Equity Sector Concentration vs. the Russell 1000 Value Index (60.1% of Net Assets) |
Bond Portfolio (36.4% of Net Assets) | |
Number of Fixed-Income Securities | 39 |
Average Quality | A3 |
Effective Maturity (years) | 3.6 |
Average Effective Duration (years) | 2.6 |
Credit Quality | Composite Quality |
AAA | 7.3% |
AA | 3.2% |
A | 48.9% |
BBB | 37.2% |
Ba | 3.4% |
Sector Breakdown | % of |
Consumer Discretionary | 4.4% |
Consumer Staples | 17.4% |
Energy | 12.5% |
Financials | 25.3% |
Health Care | 10.8% |
Industrials | 8.1% |
Information Technology | 4.3% |
Materials | 2.5% |
Telecommunication Services | 4.2% |
Utilities | 3.2% |
U.S. Treasury | 7.3% |
22
DAVENPORT CORE FUND | ||||||||
COMMON STOCKS — 95.1% | Shares | Value | ||||||
Consumer Discretionary — 11.5% | ||||||||
Amazon.com, Inc. (a) | 5,958 | $ | 11,933,874 | |||||
CarMax, Inc. (a) | 148,968 | 11,123,441 | ||||||
Home Depot, Inc. (The) | 39,686 | 8,220,955 | ||||||
Liberty Broadband Corporation - Series C (a) | 99,725 | 8,406,817 | ||||||
NIKE, Inc. - Class B | 115,837 | 9,813,711 | ||||||
Starbucks Corporation | 173,060 | 9,836,730 | ||||||
59,335,528 | ||||||||
Consumer Staples — 7.4% | ||||||||
Anheuser-Busch InBev S.A./N.V. - ADR | 77,649 | 6,799,723 | ||||||
Mondelēz International, Inc. - Class A | 146,710 | 6,302,662 | ||||||
Monster Beverage Corporation (a) | 144,825 | 8,440,401 | ||||||
Nestlé S.A. - ADR | 117,457 | 9,772,422 | ||||||
PepsiCo, Inc. | 58,966 | 6,592,399 | ||||||
37,907,607 | ||||||||
Energy — 5.3% | ||||||||
Chevron Corporation | 66,037 | 8,075,004 | ||||||
Marathon Petroleum Corporation | 143,498 | 11,475,535 | ||||||
Schlumberger Ltd. | 123,015 | 7,494,074 | ||||||
27,044,613 | ||||||||
Financials — 18.5% | ||||||||
Berkshire Hathaway, Inc. - Class B (a) | 78,192 | 16,741,689 | ||||||
Brookfield Asset Management, Inc. - Class A | 354,654 | 15,792,743 | ||||||
Capital One Financial Corporation | 143,229 | 13,596,729 | ||||||
Citigroup, Inc. | 182,362 | 13,082,650 | ||||||
CME Group, Inc. | 49,857 | 8,486,160 | ||||||
JPMorgan Chase & Company | 88,652 | 10,003,492 | ||||||
Markel Corporation (a) | 14,638 | 17,397,116 | ||||||
95,100,579 | ||||||||
Health Care — 8.6% | ||||||||
Becton, Dickinson and Company | 31,810 | 8,302,410 | ||||||
Danaher Corporation | 128,757 | 13,990,735 | ||||||
Johnson & Johnson | 94,987 | 13,124,354 | ||||||
Merck & Company, Inc. | 123,720 | 8,776,697 | ||||||
44,194,196 | ||||||||
Industrials — 10.0% | ||||||||
FedEx Corporation | 53,698 | 12,929,941 | ||||||
General Dynamics Corporation | 39,439 | 8,073,952 | ||||||
Honeywell International, Inc. | 47,637 | 7,926,797 | ||||||
Southwest Airlines Company | 153,531 | 9,588,011 | ||||||
Union Pacific Corporation | 79,079 | 12,876,434 | ||||||
51,395,135 |
23
DAVENPORT CORE FUND | ||||||||
COMMON STOCKS — 95.1% (Continued) | Shares | Value | ||||||
Information Technology — 24.4% | ||||||||
Accenture plc - Class A | 88,461 | $ | 15,056,062 | |||||
Adobe Systems, Inc. (a) | 61,279 | 16,542,266 | ||||||
Alibaba Group Holding Ltd. - ADR (a) | 38,627 | 6,364,185 | ||||||
Alphabet, Inc. - Class A (a) | 7,625 | 9,203,985 | ||||||
Alphabet, Inc. - Class C (a) | 6,677 | 7,968,799 | ||||||
Apple, Inc. | 40,822 | 9,215,158 | ||||||
Broadcom, Inc. | 28,036 | 6,917,322 | ||||||
Electronic Arts, Inc. (a) | 59,280 | 7,142,647 | ||||||
Facebook, Inc. - Class A (a) | 49,977 | 8,219,218 | ||||||
Mastercard, Inc. - Class A | 55,275 | 12,304,768 | ||||||
Microsoft Corporation | 72,892 | 8,336,658 | ||||||
Visa, Inc. - Class A | 120,858 | 18,139,577 | ||||||
125,410,645 | ||||||||
Materials — 6.6% | ||||||||
Ecolab, Inc. | 62,069 | 9,731,178 | ||||||
Martin Marietta Materials, Inc. | 38,301 | 6,968,867 | ||||||
Sherwin-Williams Company (The) | 24,691 | 11,239,590 | ||||||
Vulcan Materials Company | 56,195 | 6,248,884 | ||||||
34,188,519 | ||||||||
Real Estate — 2.8% | ||||||||
American Tower Corporation | 100,937 | 14,666,146 | ||||||
Total Common Stocks (Cost $303,865,419) | $ | 489,242,968 |
| ||||||||
EXCHANGE-TRADED FUNDS — 1.3% | Shares | Value | ||||||
iShares U.S. Home Construction ETF (Cost $5,566,529) | 195,909 | $ | 6,923,424 |
24
DAVENPORT CORE FUND | ||||||||
MONEY MARKET FUNDS — 1.5% | Shares | Value | ||||||
First American Treasury Obligations Fund - Class Z, 1.96% (b) (Cost $7,526,819) | 7,526,819 | $ | 7,526,819 | |||||
Total Investments at Value — 97.9% (Cost $316,958,767) | $ | 503,693,211 | ||||||
Other Assets in Excess of Liabilities — 2.1% | 10,705,654 | |||||||
Net Assets — 100.0% | $ | 514,398,865 |
ADR - American Depositary Receipt.
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements.
25
DAVENPORT VALUE & INCOME FUND | ||||||||
COMMON STOCKS — 96.4% | Shares | Value | ||||||
Consumer Discretionary — 4.3% | ||||||||
Carnival Corporation | 205,680 | $ | 13,116,214 | |||||
Comcast Corporation - Class A | 269,125 | 9,529,716 | ||||||
Las Vegas Sands Corporation | 111,115 | 6,592,453 | ||||||
29,238,383 | ||||||||
Consumer Staples — 9.4% | ||||||||
Altria Group, Inc. | 120,541 | 7,269,828 | ||||||
Anheuser-Busch InBev S.A./N.V. - ADR | 157,460 | 13,788,772 | ||||||
Diageo plc - ADR | 90,780 | 12,860,803 | ||||||
Mondelēz International, Inc. - Class A | 246,890 | 10,606,394 | ||||||
PepsiCo, Inc. | 96,805 | 10,822,799 | ||||||
Philip Morris International, Inc. | 111,620 | 9,101,495 | ||||||
64,450,091 | ||||||||
Energy — 10.8% | ||||||||
Chevron Corporation | 68,366 | 8,359,794 | ||||||
Enbridge, Inc. | 301,622 | 9,739,374 | ||||||
Exxon Mobil Corporation | 85,975 | 7,309,595 | ||||||
Marathon Petroleum Corporation | 169,430 | 13,549,317 | ||||||
Occidental Petroleum Corporation | 204,105 | 16,771,308 | ||||||
Royal Dutch Shell plc - Class B - ADR | 260,545 | 18,480,457 | ||||||
74,209,845 | ||||||||
Financials — 20.3% | ||||||||
Brookfield Asset Management, Inc. - Class A | 467,865 | 20,834,029 | ||||||
Capital One Financial Corporation | 180,355 | 17,121,100 | ||||||
Citigroup, Inc. | 252,780 | 18,134,437 | ||||||
Fairfax Financial Holdings Ltd. | 26,755 | 14,528,401 | ||||||
Fidelity National Financial, Inc. | 532,110 | 20,938,529 | ||||||
Invesco Ltd. | 300,250 | 6,869,720 | ||||||
JPMorgan Chase & Company | 186,385 | 21,031,683 | ||||||
Markel Corporation (a) | 16,890 | 20,073,596 | ||||||
139,531,495 | ||||||||
Health Care — 12.4% | ||||||||
Bristol-Myers Squibb Company | 288,780 | 17,927,462 | ||||||
CVS Health Corporation | 232,380 | 18,292,954 | ||||||
Johnson & Johnson | 151,165 | 20,886,468 | ||||||
Medtronic plc | 122,070 | 12,008,026 | ||||||
Merck & Company, Inc. | 227,735 | 16,155,521 | ||||||
85,270,431 | ||||||||
Industrials — 12.7% | ||||||||
3M Company | 43,445 | 9,154,296 | ||||||
Boeing Company (The) | 36,075 | 13,416,293 | ||||||
Delta Air Lines, Inc. | 248,415 | 14,365,839 | ||||||
Eaton Corporation plc | 171,192 | 14,847,482 | ||||||
Illinois Tool Works, Inc. | 60,510 | 8,539,171 |
26
DAVENPORT VALUE & INCOME FUND | ||||||||
COMMON STOCKS — 96.4% (Continued) | Shares | Value | ||||||
Industrials — 12.7% (Continued) | ||||||||
United Parcel Service, Inc. - Class B | 93,520 | $ | 10,918,460 | |||||
Watsco, Inc. | 87,250 | 15,539,225 | ||||||
86,780,766 | ||||||||
Information Technology — 9.0% | ||||||||
Cisco Systems, Inc. | 369,930 | 17,997,095 | ||||||
DXC Technology Company | 116,345 | 10,880,584 | ||||||
Microsoft Corporation | 172,493 | 19,728,024 | ||||||
TE Connectivity Ltd. | 145,775 | 12,817,996 | ||||||
61,423,699 | ||||||||
Materials — 5.6% | ||||||||
DowDuPont, Inc. | 198,370 | 12,757,175 | ||||||
Nutrien Ltd. | 206,776 | 11,930,975 | ||||||
PPG Industries, Inc. | 122,945 | 13,416,988 | ||||||
38,105,138 | ||||||||
Real Estate — 8.2% | ||||||||
Crown Castle International Corporation | 94,335 | 10,502,315 | ||||||
Equity LifeStyle Properties, Inc. | 101,180 | 9,758,811 | ||||||
Gaming and Leisure Properties, Inc. | 269,164 | 9,488,031 | ||||||
Lamar Advertising Company - Class A | 189,120 | 14,713,536 | ||||||
W.P. Carey, Inc. | 181,794 | 11,691,172 | ||||||
56,153,865 | ||||||||
Telecommunication Services — 1.4% | ||||||||
Verizon Communications, Inc. | 183,215 | 9,781,849 | ||||||
Utilities — 2.3% | ||||||||
Dominion Energy, Inc. | 225,465 | 15,845,680 | ||||||
Total Common Stocks (Cost $521,446,873) | $ | 660,791,242 |
| ||||||||
MONEY MARKET FUNDS — 3.5% | Shares | Value | ||||||
First American Treasury Obligations Fund - Class Z, 1.96% (b) (Cost $24,111,719) | 24,111,719 | $ | 24,111,719 | |||||
Total Investments at Value — 99.9% (Cost $545,558,592) | $ | 684,902,961 | ||||||
Other Assets in Excess of Liabilities — 0.1% | 620,179 | |||||||
Net Assets — 100.0% | $ | 685,523,140 |
ADR - American Depositary Receipt.
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements.
27
DAVENPORT EQUITY OPPORTUNITIES FUND | ||||||||
COMMON STOCKS — 99.2% | Shares | Value | ||||||
Consumer Discretionary — 23.9% | ||||||||
CarMax, Inc. (a) | 273,120 | $ | 20,393,870 | |||||
DISH Network Corporation - Class A (a) | 505,910 | 18,091,342 | ||||||
Dollar Tree, Inc. (a) | 161,681 | 13,185,085 | ||||||
Liberty Broadband Corporation - Series C (a) | 175,550 | 14,798,865 | ||||||
Live Nation Entertainment, Inc. (a) | 357,529 | 19,474,605 | ||||||
O'Reilly Automotive, Inc. (a) | 33,006 | 11,463,644 | ||||||
97,407,411 | ||||||||
Consumer Staples — 2.2% | ||||||||
Church & Dwight Company, Inc. | 148,120 | 8,793,884 | ||||||
Financials — 23.2% | ||||||||
Brookfield Asset Management, Inc. - Class A | 581,227 | 25,882,038 | ||||||
Capital One Financial Corporation | 185,179 | 17,579,043 | ||||||
Cboe Global Markets, Inc. | 69,925 | 6,710,003 | ||||||
Fairfax Financial Holdings Ltd. | 27,928 | 15,165,359 | ||||||
Fidelity National Financial, Inc. | 272,035 | 10,704,577 | ||||||
Markel Corporation (a) | 15,482 | 18,400,202 | ||||||
94,441,222 | ||||||||
Health Care — 3.6% | ||||||||
Zoetis, Inc. | 160,105 | 14,659,214 | ||||||
Industrials — 18.0% | ||||||||
American Woodmark Corporation (a) | 144,420 | 11,329,749 | ||||||
Colfax Corporation (a) | 285,101 | 10,280,742 | ||||||
Genesee & Wyoming, Inc. - Class A (a) | 105,560 | 9,604,905 | ||||||
WABCO Holdings, Inc. (a) | 187,700 | 22,137,338 | ||||||
Watsco, Inc. | 50,820 | 9,051,042 | ||||||
Xylem, Inc. | 134,960 | 10,779,255 | ||||||
73,183,031 | ||||||||
Information Technology — 13.5% | ||||||||
Autodesk, Inc. (a) | 120,535 | 18,816,719 | ||||||
Black Knight, Inc. (a) | 210,005 | 10,909,760 | ||||||
Intuit, Inc. | 64,599 | 14,689,813 | ||||||
MercadoLibre, Inc. | 31,056 | 10,573,636 | ||||||
54,989,928 | ||||||||
Materials — 9.2% | ||||||||
Martin Marietta Materials, Inc. | 94,887 | 17,264,690 | ||||||
Sherwin-Williams Company (The) | 44,090 | 20,070,209 | ||||||
37,334,899 | ||||||||
Real Estate — 5.6% | ||||||||
American Tower Corporation | 158,260 | 22,995,178 | ||||||
Total Common Stocks (Cost $305,488,672) | $ | 403,804,767 |
28
DAVENPORT EQUITY OPPORTUNITIES FUND | ||||||||
MONEY MARKET FUNDS — 0.9% | Shares | Value | ||||||
First American Treasury Obligations Fund - Class Z, 1.96% (b) (Cost $3,654,480) | 3,654,480 | $ | 3,654,480 | |||||
Total Investments at Value — 100.1% (Cost $309,143,152) | $ | 407,459,247 | ||||||
Liabilities in Excess of Other Assets — (0.1%) | (431,920 | ) | ||||||
Net Assets — 100.0% | $ | 407,027,327 |
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements.
29
DAVENPORT SMALL CAP FOCUS FUND | ||||||||
COMMON STOCKS — 94.0% | Shares | Value | ||||||
Consumer Discretionary — 17.6% | ||||||||
Cable One, Inc. | 5,038 | $ | 4,451,627 | |||||
Drive Shack, Inc. (a) | 317,437 | 1,891,925 | ||||||
Eldorado Resorts, Inc. (a) | 102,889 | 5,000,405 | ||||||
Live Nation Entertainment, Inc. (a) | 66,859 | 3,641,810 | ||||||
Monarch Casino & Resort, Inc. (a) | 103,993 | 4,726,482 | ||||||
Pool Corporation | 20,461 | 3,414,532 | ||||||
Red Rock Resorts, Inc. - Class A | 121,090 | 3,227,048 | ||||||
Weight Watchers International, Inc. (a) | 30,000 | 2,159,700 | ||||||
28,513,529 | ||||||||
Consumer Staples — 2.2% | ||||||||
Seaboard Corporation | 968 | 3,591,319 | ||||||
Energy — 1.7% | ||||||||
Alliance Resource Partners, L.P. | 57,309 | 1,169,104 | ||||||
CONSOL Coal Resources, L.P. | 90,800 | 1,629,860 | ||||||
2,798,964 | ||||||||
Financials — 12.0% | ||||||||
Cohen & Steers, Inc. | 103,350 | 4,197,043 | ||||||
Diamond Hill Investment Group, Inc. | 34,394 | 5,688,424 | ||||||
Kinsale Capital Group, Inc. | 81,151 | 5,182,303 | ||||||
TowneBank | 140,268 | 4,327,268 | ||||||
19,395,038 | ||||||||
Health Care — 10.3% | ||||||||
Aratana Therapeutics, Inc. (a) | 634,038 | 3,702,782 | ||||||
Heska Corporation (a) | 39,483 | 4,473,819 | ||||||
Teladoc Health, Inc. (a) | 38,273 | 3,304,873 | ||||||
Trupanion, Inc. (a) | 145,562 | 5,200,930 | ||||||
16,682,404 | ||||||||
Industrials — 28.0% | ||||||||
American Woodmark Corporation (a) | 89,091 | 6,989,189 | ||||||
Builders FirstSource, Inc. (a) | 300,886 | 4,417,007 | ||||||
Casella Waste Systems, Inc. - Class A (a) | 129,921 | 4,035,346 | ||||||
Evoqua Water Technologies Corporation (a) | 227,641 | �� | 4,047,457 | |||||
Genesee & Wyoming, Inc. - Class A (a) | 37,504 | 3,412,489 | ||||||
Knight-Swift Transportation Holdings, Inc. | 160,975 | 5,550,418 | ||||||
Marten Transport Ltd. | 193,736 | 4,078,143 | ||||||
SiteOne Landscape Supply, Inc. (a) | 52,842 | 3,981,116 | ||||||
WABCO Holdings, Inc. (a) | 42,611 | 5,025,541 | ||||||
Watsco, Inc. | 20,593 | 3,667,613 | ||||||
45,204,319 | ||||||||
Information Technology — 7.3% | ||||||||
Black Knight, Inc. (a) | 88,267 | 4,585,471 | ||||||
Etsy, Inc. (a) | 64,369 | 3,307,279 |
30
DAVENPORT SMALL CAP FOCUS FUND | ||||||||
COMMON STOCKS — 94.0% (Continued) | Shares | Value | ||||||
Information Technology — 7.3% (Continued) | ||||||||
QIWI plc - ADR (a) | 147,891 | $ | 1,947,724 | |||||
Silicon Motion Technology Corporation - ADR | 37,118 | 1,993,237 | ||||||
11,833,711 | ||||||||
Materials — 5.5% | ||||||||
MAG Silver Corporation (a) | 429,950 | 3,486,895 | ||||||
NewMarket Corporation | 8,641 | 3,504,012 | ||||||
Summit Materials, Inc. - Class A (a) | 102,595 | 1,865,177 | ||||||
8,856,084 | ||||||||
Real Estate — 7.1% | ||||||||
Brookfield Property Partners, L.P. | 139,133 | 2,906,488 | ||||||
Brookfield Property REIT, Inc. - Class A | 20,000 | 418,600 | ||||||
FRP Holdings, Inc. (a) | 50,556 | 3,139,528 | ||||||
Lamar Advertising Company - Class A | 63,300 | 4,924,740 | ||||||
11,389,356 | ||||||||
Telecommunication Services — 2.3% | ||||||||
Shenandoah Telecommunications Company | 94,790 | 3,673,112 | ||||||
Total Common Stocks (Cost $133,288,311) | $ | 151,937,836 |
| ||||||||
MONEY MARKET FUNDS — 6.0% | Shares | Value | ||||||
First American Treasury Obligations Fund - Class Z, 1.96% (b) (Cost $9,639,358) | 9,639,358 | $ | 9,639,358 | |||||
Total Investments at Value — 100.0% (Cost $142,927,669) | $ | 161,577,194 | ||||||
Liabilities in Excess of Other Assets — (0.0%) (c) | (3,603 | ) | ||||||
Net Assets — 100.0% | $ | 161,573,591 |
ADR - American Depositary Receipt.
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
(c) | Percentage rounds to less than 0.1%. |
See accompanying notes to financial statements.
31
DAVENPORT BALANCED INCOME FUND | ||||||||
COMMON STOCKS — 60.1% | Shares | Value | ||||||
Consumer Discretionary — 2.3% | ||||||||
Carnival Corporation | 22,600 | $ | 1,441,202 | |||||
Comcast Corporation - Class A | 30,145 | 1,067,434 | ||||||
Las Vegas Sands Corporation | 12,390 | 735,099 | ||||||
3,243,735 | ||||||||
Consumer Staples — 5.8% | ||||||||
Altria Group, Inc. | 13,535 | 816,296 | ||||||
Anheuser-Busch InBev S.A./N.V. - ADR | 17,635 | 1,544,297 | ||||||
Diageo plc - ADR | 10,165 | 1,440,076 | ||||||
Mondelēz International, Inc. - Class A | 27,740 | 1,191,710 | ||||||
PepsiCo, Inc. | 10,855 | 1,213,589 | ||||||
Philip Morris International, Inc. | 12,505 | 1,019,658 | ||||||
Universal Corporation | 13,900 | 903,500 | ||||||
8,129,126 | ||||||||
Energy — 6.6% | ||||||||
Chevron Corporation | 7,660 | 936,665 | ||||||
Enbridge, Inc. | 33,748 | 1,089,723 | ||||||
Exxon Mobil Corporation | 9,655 | 820,868 | ||||||
Marathon Petroleum Corporation | 19,005 | 1,519,830 | ||||||
MPLX, L.P. | 29,600 | 1,026,528 | ||||||
Occidental Petroleum Corporation | 22,885 | 1,880,460 | ||||||
Royal Dutch Shell plc - Class B - ADR | 29,225 | 2,072,929 | ||||||
9,347,003 | ||||||||
Financials — 13.9% | ||||||||
Blackstone Group, L.P. (The) | 38,315 | 1,459,035 | ||||||
Brookfield Asset Management, Inc. - Class A | 52,500 | 2,337,825 | ||||||
Capital One Financial Corporation | 20,175 | 1,915,213 | ||||||
Citigroup, Inc. | 28,355 | 2,034,188 | ||||||
Cohen & Steers, Inc. | 27,700 | 1,124,897 | ||||||
Fairfax Financial Holdings Ltd. | 2,975 | 1,615,473 | ||||||
Fidelity National Financial, Inc. | 59,125 | 2,326,569 | ||||||
Invesco Ltd. | 39,230 | 897,582 | ||||||
JPMorgan Chase & Company | 20,920 | 2,360,613 | ||||||
Markel Corporation (a) | 1,897 | 2,254,566 | ||||||
MetLife, Inc. | 27,170 | 1,269,382 | ||||||
19,595,343 | ||||||||
Health Care — 6.7% | ||||||||
Bristol-Myers Squibb Company | 31,695 | 1,967,626 | ||||||
CVS Health Corporation | 25,770 | 2,028,614 | ||||||
Johnson & Johnson | 16,965 | 2,344,054 | ||||||
Medtronic plc | 13,690 | 1,346,685 | ||||||
Merck & Company, Inc. | 25,535 | 1,811,453 | ||||||
9,498,432 |
32
DAVENPORT BALANCED INCOME FUND | ||||||||
COMMON STOCKS — 60.1% (Continued) | Shares | Value | ||||||
Industrials — 6.9% | ||||||||
3M Company | 4,875 | $ | 1,027,211 | |||||
Boeing Company (The) | 4,050 | 1,506,195 | ||||||
Delta Air Lines, Inc. | 27,840 | 1,609,987 | ||||||
Eaton Corporation plc | 19,150 | 1,660,879 | ||||||
Illinois Tool Works, Inc. | 6,780 | 956,794 | ||||||
United Parcel Service, Inc. - Class B | 10,460 | 1,221,205 | ||||||
Watsco, Inc. | 9,685 | 1,724,899 | ||||||
9,707,170 | ||||||||
Information Technology — 4.9% | ||||||||
Cisco Systems, Inc. | 41,495 | 2,018,732 | ||||||
DXC Technology Company | 12,900 | 1,206,408 | ||||||
Microsoft Corporation | 19,350 | 2,213,060 | ||||||
TE Connectivity Ltd. | 16,110 | 1,416,552 | ||||||
6,854,752 | ||||||||
Materials — 3.0% | ||||||||
DowDuPont, Inc. | 21,740 | 1,398,099 | ||||||
Nutrien Ltd. | 23,197 | 1,338,467 | ||||||
PPG Industries, Inc. | 13,785 | 1,504,357 | ||||||
4,240,923 | ||||||||
Real Estate — 6.2% | ||||||||
Brookfield Property Partners, L.P. | 61,170 | 1,277,841 | ||||||
Crown Castle International Corporation | 10,460 | 1,164,512 | ||||||
Equity LifeStyle Properties, Inc. | 11,340 | 1,093,743 | ||||||
Gaming and Leisure Properties, Inc. | 30,190 | 1,064,198 | ||||||
Lamar Advertising Company - Class A | 21,220 | 1,650,916 | ||||||
Tanger Factory Outlet Centers, Inc. | 54,585 | 1,248,905 | ||||||
W.P. Carey, Inc. | 20,400 | 1,311,924 | ||||||
8,812,039 | ||||||||
Telecommunication Services — 0.8% | ||||||||
Verizon Communications, Inc. | 20,560 | 1,097,698 | ||||||
Utilities — 3.0% | ||||||||
Brookfield Infrastructure Partners, L.P. | 29,840 | 1,190,019 | ||||||
Brookfield Renewable Partners, L.P. | 36,650 | 1,108,296 | ||||||
Dominion Energy, Inc. | 26,770 | 1,881,396 | ||||||
4,179,711 | ||||||||
Total Common Stocks (Cost $75,156,397) | $ | 84,705,932 |
33
DAVENPORT BALANCED INCOME FUND | ||||||||
FIXED RATE CORPORATE BONDS — 20.6% | Par Value | Value | ||||||
Consumer Discretionary — 1.6% | ||||||||
Amazon.com, Inc., 3.30%, due 12/05/2021 | $ | 1,750,000 | $ | 1,754,368 | ||||
Home Depot, Inc. (The), 4.40%, due 04/01/2021 | 500,000 | 514,421 | ||||||
2,268,789 | ||||||||
Consumer Staples — 5.4% | ||||||||
Altria Group, Inc., 4.75%, due 05/05/2021 | 1,500,000 | 1,550,637 | ||||||
Anheuser-Busch InBev S.A./N.V., 3.30%, due 02/01/2023 | 1,750,000 | 1,730,162 | ||||||
J.M. Smucker Company (The), 3.50%, due 10/15/2021 | 1,500,000 | 1,508,355 | ||||||
PepsiCo, Inc., 2.75%, due 03/05/2022 | 1,200,000 | 1,182,797 | ||||||
Sysco Corporation, 2.60%, due 10/01/2020 | 1,700,000 | 1,678,821 | ||||||
7,650,772 | ||||||||
Energy — 3.3% | ||||||||
Boardwalk Pipelines, L.P., 4.45%, due 07/15/2027 | 1,250,000 | 1,200,696 | ||||||
MPLX, L.P., 4.125%, due 03/01/2027 | 1,750,000 | 1,704,523 | ||||||
Occidental Petroleum Corporation — 3.50%, due 06/15/2025 | 1,750,000 | 1,736,462 | ||||||
4,641,681 | ||||||||
Financials — 2.1% | ||||||||
BlackRock, Inc., 3.50%, due 03/18/2024 | 1,150,000 | 1,152,639 | ||||||
General Motors Financial Company, 5.25%, due 03/01/2026 | 1,750,000 | 1,793,252 | ||||||
2,945,891 | ||||||||
Health Care — 2.1% | ||||||||
AbbVie, Inc., 2.50%, due 05/14/2020 | 1,300,000 | 1,285,431 | ||||||
Becton Dickinson & Company, 3.25%, due 11/12/2020 | 1,750,000 | 1,744,110 | ||||||
3,029,541 | ||||||||
Industrials — 2.9% | ||||||||
Deere & Company, 4.375%, due 10/16/2019 | 500,000 | 507,658 | ||||||
General Dynamics Corporation, 3.375%, due 05/15/2023 | 1,750,000 | 1,749,626 | ||||||
General Electric Capital Corporation, 4.65%, due 10/17/2021 | 1,000,000 | 1,032,581 | ||||||
United Technologies Corporation, 4.50%, due 04/15/2020 | 850,000 | 867,109 | ||||||
4,156,974 | ||||||||
Information Technology — 1.1% | ||||||||
Oracle Corporation, 3.625%, due 07/15/2023 | 1,500,000 | 1,516,587 | ||||||
Telecommunication Services — 0.9% | ||||||||
Verizon Communications, Inc., | ||||||||
3.00%, due 11/1/2021 | 500,000 | 495,039 | ||||||
3.50%, due 11/1/2021 | 700,000 | 702,551 | ||||||
1,197,590 | ||||||||
Utilities — 1.2% | ||||||||
Southern Company (The), 3.25%, due 07/01/2026 | 1,750,000 | 1,632,141 | ||||||
Total Fixed Rate Corporate Bonds (Cost $29,915,179) | $ | 29,039,966 |
34
DAVENPORT BALANCED INCOME FUND | ||||||||
VARIABLE RATE CORPORATE BONDS (b) — 13.1% | Par Value | Value | ||||||
Consumer Staples — 0.9% | ||||||||
Campbell Soup Company, 2.964% (3MO LIBOR + 63), due 03/15/2021 | $ | 1,250,000 | $ | 1,249,941 | ||||
Energy — 1.2% | ||||||||
ConocoPhillips Company, 3.214% (3MO LIBOR + 90), due 05/15/2022 | 1,750,000 | 1,783,599 | ||||||
Financials — 7.1% | ||||||||
American Express Credit Corporation, 3.121% (3MO LIBOR + 78), due 11/05/2018 | 1,250,000 | 1,250,368 | ||||||
BP Capital Markets plc, 2.989% (3MO LIBOR + 65), due 09/19/2022 | 1,750,000 | 1,777,195 | ||||||
Goldman Sachs Group, Inc., 3.484% (3MO LIBOR + 117), due 11/15/2021 | 2,000,000 | 2,022,850 | ||||||
JPMorgan Chase & Company, 3.801% (3MO LIBOR + 148), due 03/01/2021 | 1,500,000 | 1,539,805 | ||||||
Morgan Stanley, 3.119% (3MO LIBOR + 80), due 02/14/2020 | 2,000,000 | 2,004,719 | ||||||
Toronto-Dominion Bank (The), 3.187% (3MO LIBOR + 84), due 01/22/2019 | 500,000 | 501,276 | ||||||
Wells Fargo & Company, 3.327% (3MO LIBOR + 101), due 12/07/2020 | 929,000 | 942,307 | ||||||
10,038,520 | ||||||||
Health Care — 1.8% | ||||||||
Amgen, Inc., 2.910% (3MO LIBOR + 60), due 05/22/2019 | 1,500,000 | 1,505,107 | ||||||
CVS Health Corporation, 2.957% (3MO LIBOR + 63), due 03/09/2020 | 1,015,000 | 1,020,225 | ||||||
2,525,332 | ||||||||
Information Technology — 0.5% | ||||||||
Cisco Systems, Inc., 2.678% (3MO LIBOR + 34), due 09/20/2019 | 670,000 | 671,956 | ||||||
Materials — 0.9% | ||||||||
Vulcan Materials Company, 2.971% (3MO LIBOR + 65), due 03/01/2021 | 1,275,000 | 1,279,699 | ||||||
Telecommunication Services — 0.7% | ||||||||
AT&T, Inc., 3.316% (3MO LIBOR + 93), due 06/30/2020 | 950,000 | 959,465 | ||||||
Total Variable Rate Corporate Bonds (Cost $18,466,055) | $ | 18,508,512 |
35
DAVENPORT BALANCED INCOME FUND | ||||||||
U.S. TREASURY OBLIGATIONS — 2.7% | Par Value | Value | ||||||
U.S. Treasury Notes | ||||||||
2.192% (3MO TMMR), due 1/31/2020 (b) | $ | 1,250,000 | $ | 1,249,950 | ||||
2.75%, due 6/30/2025 | 1,250,000 | 1,229,932 | ||||||
2.875%, due 8/15/2028 | 1,285,000 | 1,265,223 | ||||||
Total U.S. Treasury Obligations (Cost $3,769,946) | $ | 3,745,105 |
| ||||||||
MONEY MARKET FUNDS — 3.1% | Shares | Value | ||||||
First American Treasury Obligations Fund - Class Z, 1.96% (c) (Cost $4,405,652) | 4,405,652 | $ | 4,405,652 | |||||
Total Investments at Value — 99.6% (Cost $131,713,229) | $ | 140,405,167 | ||||||
Other Assets in Excess of Liabilities — 0.4% | 522,274 | |||||||
Net Assets — 100.0% | $ | 140,927,441 |
ADR - American Depositary Receipt.
LIBOR - London Interbank Offered Rate.
TMMR - U.S. Treasury Bill Rate.
(a) | Non-income producing security. |
(b) | Variable rate securities. Interest rate resets periodically. The rate shown is the effective rate as of September 30, 2018. The reference rate and spread (in basis points) are indicated parenthetically. |
(c) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements.
36
THE DAVENPORT FUNDS | ||||||||||||
| Davenport | Davenport | Davenport | |||||||||
ASSETS | ||||||||||||
Investments in securities: | ||||||||||||
At cost | $ | 316,958,767 | $ | 545,558,592 | $ | 309,143,152 | ||||||
At value (Note 2) | $ | 503,693,211 | $ | 684,902,961 | $ | 407,459,247 | ||||||
Cash | 10,649,671 | — | — | |||||||||
Receivable for capital shares sold | 92,465 | 142,501 | 28,665 | |||||||||
Dividends receivable | 407,085 | 1,292,316 | 205,461 | |||||||||
Other assets | 21,742 | 24,677 | 21,451 | |||||||||
TOTAL ASSETS | 514,864,174 | 686,362,455 | 407,714,824 | |||||||||
LIABILITIES | ||||||||||||
Payable for capital shares redeemed | 92,201 | 347,130 | 385,154 | |||||||||
Accrued investment advisory fees (Note 4) | 316,257 | 423,102 | 253,923 | |||||||||
Payable to administrator (Note 4) | 47,750 | 58,200 | 41,800 | |||||||||
Other accrued expenses | 9,101 | 10,883 | 6,620 | |||||||||
TOTAL LIABILITIES | 465,309 | 839,315 | 687,497 | |||||||||
NET ASSETS | $ | 514,398,865 | $ | 685,523,140 | $ | 407,027,327 | ||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 324,580,253 | $ | 540,134,937 | $ | 298,112,172 | ||||||
Accumulated earnings | 189,818,612 | 145,388,203 | 108,915,155 | |||||||||
Net assets | $ | 514,398,865 | $ | 685,523,140 | $ | 407,027,327 | ||||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, $0.01 par value) | 21,274,037 | 39,828,662 | 21,509,598 | |||||||||
Net asset value, offering price and redemption price per share (Note 2) | $ | 24.18 | $ | 17.21 | $ | 18.92 |
See accompanying notes to financial statements.
37
THE DAVENPORT FUNDS | ||||||||
| Davenport | Davenport | ||||||
ASSETS | ||||||||
Investments in securities: | ||||||||
At cost | $ | 142,927,669 | $ | 131,713,229 | ||||
At value (Note 2) | $ | 161,577,194 | $ | 140,405,167 | ||||
Cash | — | 13,683 | ||||||
Receivable for capital shares sold | 61,797 | 99,252 | ||||||
Receivable for investment securities sold | 24,930 | — | ||||||
Dividends and interest receivable | 91,853 | 568,506 | ||||||
Other assets | 17,222 | 18,088 | ||||||
TOTAL ASSETS | 161,772,996 | 141,104,696 | ||||||
| ||||||||
LIABILITIES | ||||||||
Payable for capital shares redeemed | 72,947 | 69,718 | ||||||
Accrued investment advisory fees (Note 4) | 100,177 | 86,575 | ||||||
Payable to administrator (Note 4) | 18,600 | 15,700 | ||||||
Other accrued expenses | 7,681 | 5,262 | ||||||
TOTAL LIABILITIES | 199,405 | 177,255 | ||||||
NET ASSETS | $ | 161,573,591 | $ | 140,927,441 | ||||
Net assets consist of: | ||||||||
Paid-in capital | $ | 140,536,485 | $ | 132,349,674 | ||||
Accumulated earnings | 21,037,106 | 8,577,767 | ||||||
Net assets | $ | 161,573,591 | $ | 140,927,441 | ||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, $0.01 par value) | 11,851,101 | 12,237,024 | ||||||
Net asset value, offering price and redemption price per share (Note 2) | $ | 13.63 | $ | 11.52 |
See accompanying notes to financial statements.
38
THE DAVENPORT FUNDS | ||||||||||||
| Davenport | Davenport | Davenport | |||||||||
INVESTMENT INCOME | ||||||||||||
Dividends | $ | 3,642,785 | $ | 10,449,153 | $ | 1,504,054 | ||||||
Foreign withholding taxes on dividends | (157,894 | ) | (110,955 | ) | (24,949 | ) | ||||||
TOTAL INVESTMENT INCOME | 3,484,891 | 10,338,198 | 1,479,105 | |||||||||
EXPENSES | ||||||||||||
Investment advisory fees (Note 4) | 1,839,654 | 2,499,960 | 1,524,034 | |||||||||
Administration fees (Note 4) | 267,024 | 329,447 | 240,128 | |||||||||
Registration and filing fees | 18,289 | 17,800 | 15,375 | |||||||||
Custodian and bank service fees | 15,692 | 21,086 | 13,842 | |||||||||
Compliance service fees (Note 4) | 13,715 | 17,869 | 11,748 | |||||||||
Professional fees | 12,032 | 12,032 | 12,032 | |||||||||
Printing of shareholder reports | 6,739 | 8,352 | 7,185 | |||||||||
Trustees’ fees and expenses (Note 4) | 6,384 | 6,384 | 6,384 | |||||||||
Insurance expense | 5,071 | 6,944 | 4,452 | |||||||||
Postage and supplies | 4,801 | 5,798 | 5,201 | |||||||||
Other expenses | 4,979 | 4,823 | 3,630 | |||||||||
TOTAL EXPENSES | 2,194,380 | 2,930,495 | 1,844,011 | |||||||||
NET INVESTMENT INCOME (LOSS) | 1,290,511 | 7,407,703 | (364,906 | ) | ||||||||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN CURRENCIES | ||||||||||||
Net realized gains (losses) from: | ||||||||||||
Investments | 3,092,897 | 5,854,753 | 13,262,154 | |||||||||
Foreign currency transactions (Note 2) | — | (3,297 | ) | — | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 38,099,081 | 23,414,732 | 13,131,073 | |||||||||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS AND FOREIGN CURRENCIES | 41,191,978 | 29,266,188 | 26,393,227 | |||||||||
NET INCREASE IN NET ASSETS FROM OPERATIONS | $ | 42,482,489 | $ | 36,673,891 | $ | 26,028,321 |
See accompanying notes to financial statements.
39
THE DAVENPORT FUNDS | ||||||||
| Davenport | Davenport | ||||||
INVESTMENT INCOME | ||||||||
Dividends | $ | 784,524 | $ | 1,446,385 | ||||
Foreign withholding taxes on dividends | (4,733 | ) | (17,200 | ) | ||||
Interest | — | 690,313 | ||||||
TOTAL INVESTMENT INCOME | 779,791 | 2,119,498 | ||||||
EXPENSES | ||||||||
Investment advisory fees (Note 4) | 538,999 | 505,769 | ||||||
Administration fees (Note 4) | 97,006 | 84,634 | ||||||
Registration and filing fees | 18,155 | 14,103 | ||||||
Professional fees | 12,032 | 12,782 | ||||||
Trustees’ fees and expenses (Note 4) | 6,384 | 6,384 | ||||||
Custodian and bank service fees | 7,413 | 5,303 | ||||||
Compliance service fees (Note 4) | 5,614 | 5,363 | ||||||
Printing of shareholder reports | 4,068 | 3,712 | ||||||
Postage and supplies | 2,866 | 1,929 | ||||||
Insurance expense | 1,570 | 1,694 | ||||||
Other expenses | 3,102 | 7,231 | ||||||
TOTAL EXPENSES | 697,209 | 648,904 | ||||||
NET INVESTMENT INCOME | 82,582 | 1,470,594 | ||||||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN CURRENCIES | ||||||||
Net realized gains (losses) from: | ||||||||
Investments | 2,176,053 | (618,741 | ) | |||||
Foreign currency transactions (Note 2) | — | (356 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | 4,676,571 | 4,300,322 | ||||||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS AND FOREIGN CURRENCIES | 6,852,624 | 3,681,225 | ||||||
NET INCREASE IN NET ASSETS FROM OPERATIONS | $ | 6,935,206 | $ | 5,151,819 |
See accompanying notes to financial statements.
40
DAVENPORT CORE FUND | ||||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 1,290,511 | $ | 1,827,935 | ||||
Net realized gains from investment transactions | 3,092,897 | 18,131,241 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 38,099,081 | 26,314,576 | ||||||
Net increase in net assets from operations | 42,482,489 | 46,273,752 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (16,964,876 | ) | (11,016,319 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 20,955,214 | 51,436,059 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 16,318,845 | 10,570,642 | ||||||
Payments for shares redeemed | (13,312,202 | ) | (31,776,792 | ) | ||||
Net increase in net assets from capital share transactions | 23,961,857 | 30,229,909 | ||||||
TOTAL INCREASE IN NET ASSETS | 49,479,470 | 65,487,342 | ||||||
NET ASSETS | ||||||||
Beginning of period | 464,919,395 | 399,432,053 | ||||||
End of period | $ | 514,398,865 | $ | 464,919,395 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 891,017 | 2,301,979 | ||||||
Shares reinvested | 699,407 | 483,529 | ||||||
Shares redeemed | (568,017 | ) | (1,417,821 | ) | ||||
Net increase in shares outstanding | 1,022,407 | 1,367,687 | ||||||
Shares outstanding at beginning of period | 20,251,630 | 18,883,943 | ||||||
Shares outstanding at end of period | 21,274,037 | 20,251,630 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, distributions to shareholders consisted of $2,062,810 from net investment income and $8,953,509 from net realized gains from investment transactions. As of March 31, 2018, distributions in excess of net investment income was ($17,861). |
See accompanying notes to financial statements.
41
DAVENPORT VALUE & INCOME FUND | ||||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 7,407,703 | $ | 11,090,576 | ||||
Net realized gains (losses) from: | ||||||||
Investments | 5,854,753 | 25,670,551 | ||||||
Foreign currency transactions | (3,297 | ) | (3,074 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 23,414,732 | 23,552,203 | ||||||
Net increase in net assets from operations | 36,673,891 | 60,310,256 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (22,387,676 | ) | (29,581,135 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 30,458,881 | 78,456,849 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 20,808,176 | 27,437,503 | ||||||
Payments for shares redeemed | (28,485,953 | ) | (50,163,072 | ) | ||||
Net increase in net assets from capital share transactions | 22,781,104 | 55,731,280 | ||||||
TOTAL INCREASE IN NET ASSETS | 37,067,319 | 86,460,401 | ||||||
NET ASSETS | ||||||||
Beginning of period | 648,455,821 | 561,995,420 | ||||||
End of period | $ | 685,523,140 | $ | 648,455,821 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 1,799,059 | 4,644,008 | ||||||
Shares reinvested | 1,233,063 | 1,628,277 | ||||||
Shares redeemed | (1,680,595 | ) | (2,982,055 | ) | ||||
Net increase in shares outstanding | 1,351,527 | 3,290,230 | ||||||
Shares outstanding at beginning of period | 38,477,135 | 35,186,905 | ||||||
Shares outstanding at end of period | 39,828,662 | 38,477,135 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, distributions to shareholders consisted of $10,955,224 from net investment income and $18,625,911 from net realized gains from investment transactions. As of March 31, 2018, undistributed net investment income was $239,145. |
See accompanying notes to financial statements.
42
DAVENPORT EQUITY OPPORTUNITIES FUND | ||||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment loss | $ | (364,906 | ) | $ | (893,587 | ) | ||
Net realized gains from investment transactions | 13,262,154 | 6,190,759 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 13,131,073 | 41,890,913 | ||||||
Net increase in net assets from operations | 26,028,321 | 47,188,085 | ||||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 11,957,170 | 40,397,057 | ||||||
Payments for shares redeemed | (30,417,917 | ) | (39,879,119 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | (18,460,747 | ) | 517,938 | |||||
TOTAL INCREASE IN NET ASSETS | 7,567,574 | 47,706,023 | ||||||
| ||||||||
NET ASSETS | ||||||||
Beginning of period | 399,459,753 | 351,753,730 | ||||||
End of period | $ | 407,027,327 | $ | 399,459,753 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 660,483 | 2,345,472 | ||||||
Shares redeemed | (1,649,374 | ) | (2,332,638 | ) | ||||
Net increase (decrease) in shares outstanding | (988,891 | ) | 12,834 | |||||
Shares outstanding at beginning of period | 22,498,489 | 22,485,655 | ||||||
Shares outstanding at end of period | 21,509,598 | 22,498,489 |
(a) | As of March 31, 2018, accumulated net investment loss was ($222,138). |
See accompanying notes to financial statements.
43
DAVENPORT SMALL CAP FOCUS FUND | ||||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 82,582 | $ | 244,366 | ||||
Net realized gains from investment transactions | 2,176,053 | 2,987,414 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 4,676,571 | 4,792,699 | ||||||
Net increase in net assets from operations | 6,935,206 | 8,024,479 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (1,596,549 | ) | (2,522,386 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 43,101,690 | 39,158,303 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 1,556,576 | 2,449,992 | ||||||
Payments for shares redeemed | (4,662,062 | ) | (5,818,002 | ) | ||||
Net increase in net assets from capital share transactions | 39,996,204 | 35,790,293 | ||||||
TOTAL INCREASE IN NET ASSETS | 45,334,861 | 41,292,386 | ||||||
NET ASSETS | ||||||||
Beginning of period | 116,238,730 | 74,946,344 | ||||||
End of period | $ | 161,573,591 | $ | 116,238,730 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 3,146,864 | 3,026,417 | ||||||
Shares reinvested | 112,388 | 191,961 | ||||||
Shares redeemed | (345,786 | ) | (458,935 | ) | ||||
Net increase in shares outstanding | 2,913,466 | 2,759,443 | ||||||
Shares outstanding at beginning of period | 8,937,635 | 6,178,192 | ||||||
Shares outstanding at end of period | 11,851,101 | 8,937,635 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, distributions to shareholder consisted of $2,522,386 from net realized gains from investment transactions. As of March 31, 2018, undistributed net investment income was $239,015. |
See accompanying notes to financial statements.
44
DAVENPORT BALANCED INCOME FUND | ||||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 1,470,594 | $ | 2,014,933 | ||||
Net realized gains (losses) from: | ||||||||
Investments | (618,741 | ) | 1,426,553 | |||||
Foreign currency transactions | (356 | ) | (313 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 4,300,322 | 729,395 | ||||||
Net increase in net assets from operations | 5,151,819 | 4,170,568 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (2,314,304 | ) | (2,585,244 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 14,742,553 | 53,925,631 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 2,178,315 | 2,427,962 | ||||||
Payments for shares redeemed | (8,098,592 | ) | (12,089,899 | ) | ||||
Net increase in net assets from capital share transactions | 8,822,276 | 44,263,694 | ||||||
TOTAL INCREASE IN NET ASSETS | 11,659,791 | 45,849,018 | ||||||
NET ASSETS | ||||||||
Beginning of period | 129,267,650 | 83,418,632 | ||||||
End of period | $ | 140,927,441 | $ | 129,267,650 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 1,295,878 | 4,740,739 | ||||||
Shares reinvested | 191,242 | 213,171 | ||||||
Shares redeemed | (713,850 | ) | (1,063,184 | ) | ||||
Net increase in shares outstanding | 773,270 | 3,890,726 | ||||||
Shares outstanding at beginning of period | 11,463,754 | 7,573,028 | ||||||
Shares outstanding at end of period | 12,237,024 | 11,463,754 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, distributions to shareholders consisted of $1,619,327 from net investment income and $965,917 from net realized gains from net investment transactions. As of March 31, 2018, undistributed net investment income was $475,747. |
See accompanying notes to financial statements.
45
DAVENPORT CORE FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
Six Months |
| |||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 22.96 | $ | 21.15 | $ | 18.78 | $ | 20.02 | $ | 19.30 | $ | 16.75 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.06 | 0.09 | 0.11 | 0.11 | 0.10 | 0.12 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.99 | 2.29 | 2.92 | (0.56 | ) | 2.20 | 3.39 | |||||||||||||||||
Total from investment operations | 2.05 | 2.38 | 3.03 | (0.45 | ) | 2.30 | 3.51 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.11 | ) | (0.10 | ) | (0.11 | ) | (0.10 | ) | (0.12 | ) | ||||||||||||
Distributions from net realized gains | (0.77 | ) | (0.46 | ) | (0.56 | ) | (0.68 | ) | (1.48 | ) | (0.84 | ) | ||||||||||||
Total distributions | (0.83 | ) | (0.57 | ) | (0.66 | ) | (0.79 | ) | (1.58 | ) | (0.96 | ) | ||||||||||||
Net asset value at end of period | $ | 24.18 | $ | 22.96 | $ | 21.15 | $ | 18.78 | $ | 20.02 | $ | 19.30 | ||||||||||||
Total return (a) | 9.07 | %(b) | 11.38 | % | 16.56 | % | (2.39 | %) | 12.42 | % | 21.32 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 514,399 | $ | 464,919 | $ | 399,432 | $ | 337,229 | $ | 330,687 | $ | 281,231 | ||||||||||||
Ratio of total expenses to average net assets | 0.89 | %(c) | 0.90 | % | 0.90 | % | 0.92 | % | 0.93 | % | 0.94 | % | ||||||||||||
Ratio of net investment income to average net assets | 0.53 | %(c) | 0.41 | % | 0.56 | % | 0.56 | % | 0.49 | % | 0.64 | % | ||||||||||||
Portfolio turnover rate | 8 | %(b) | 22 | % | 23 | % | 23 | % | 21 | % | 29 | % |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Not annualized. |
(c) | Annualized. |
See accompanying notes to financial statements.
46
DAVENPORT VALUE & INCOME FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
Six Months |
| |||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 16.85 | $ | 15.97 | $ | 14.40 | $ | 15.46 | $ | 14.71 | $ | 13.18 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.19 | 0.30 | 0.30 | 0.29 | 0.25 | 0.30 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments and foreign currencies | 0.75 | 1.39 | 1.64 | (0.36 | ) | 1.45 | 2.04 | |||||||||||||||||
Total from investment operations | 0.94 | 1.69 | 1.94 | (0.07 | ) | 1.70 | 2.34 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.30 | ) | (0.31 | ) | (0.29 | ) | (0.25 | ) | (0.29 | ) | ||||||||||||
Distributions from net realized gains | (0.39 | ) | (0.51 | ) | (0.06 | ) | (0.70 | ) | (0.70 | ) | (0.52 | ) | ||||||||||||
Total distributions | (0.58 | ) | (0.81 | ) | (0.37 | ) | (0.99 | ) | (0.95 | ) | (0.81 | ) | ||||||||||||
Net asset value at end of period | $ | 17.21 | $ | 16.85 | $ | 15.97 | $ | 14.40 | $ | 15.46 | $ | 14.71 | ||||||||||||
Total return (a) | 5.65 | %(b) | 10.67 | % | 13.60 | % | (0.46 | %) | 11.92 | % | 18.25 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 685,523 | $ | 648,456 | $ | 561,995 | $ | 450,447 | $ | 407,777 | $ | 304,288 | ||||||||||||
Ratio of total expenses to average net assets | 0.88 | %(c) | 0.88 | % | 0.89 | % | 0.91 | % | 0.92 | % | 0.94 | % | ||||||||||||
Ratio of net investment income to average net assets | 2.22 | %(c) | 1.79 | % | 1.96 | % | 2.03 | % | 1.66 | % | 2.22 | % | ||||||||||||
Portfolio turnover rate | 11 | %(b) | 22 | % | 26 | % | 25 | % | 23 | % | 32 | % |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Not annualized. |
(c) | Annualized. |
See accompanying notes to financial statements.
47
DAVENPORT EQUITY OPPORTUNITIES FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
Six Months |
| |||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 17.75 | $ | 15.64 | $ | 14.73 | $ | 16.61 | $ | 15.91 | $ | 13.86 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (0.02 | ) | (0.04 | ) | 0.00 | (a) | 0.00 | (a) | 0.04 | 0.24 | ||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.19 | 2.15 | 1.10 | (1.14 | ) | 2.42 | 2.65 | |||||||||||||||||
Total from investment operations | 1.17 | 2.11 | 1.10 | (1.14 | ) | 2.46 | 2.89 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | — | — | (0.01 | ) | (0.26 | ) | (0.02 | ) | |||||||||||||||
Distributions from net realized gains | — | — | (0.19 | ) | (0.73 | ) | (1.50 | ) | (0.82 | ) | ||||||||||||||
Total distributions | — | — | (0.19 | ) | (0.74 | ) | (1.76 | ) | (0.84 | ) | ||||||||||||||
Net asset value at end of period | $ | 18.92 | $ | 17.75 | $ | 15.64 | $ | 14.73 | $ | 16.61 | $ | 15.91 | ||||||||||||
Total return (b) | 6.59 | %(c) | 13.49 | % | 7.57 | % | (7.07 | %) | 16.67 | % | 21.57 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 407,027 | $ | 399,460 | $ | 351,754 | $ | 316,788 | $ | 277,703 | $ | 174,489 | ||||||||||||
Ratio of total expenses to average net assets | 0.91 | %(d) | 0.91 | % | 0.92 | % | 0.93 | % | 0.96 | % | 0.97 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | (0.18 | %)(d) | (0.23 | %) | 0.00 | %(e) | 0.02 | % | 0.33 | % | 1.96 | % | ||||||||||||
Portfolio turnover rate | 9 | %(c) | 21 | % | 23 | % | 29 | % | 31 | % | 49 | % |
(a) | Amount rounds to less than $0.01 per share. |
(b) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(c) | Not annualized. |
(d) | Annualized. |
(e) | Amount rounds to less than 0.01%. |
See accompanying notes to financial statements.
48
DAVENPORT SMALL CAP FOCUS FUND | ||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||
| Six Months | Year | Year | Year | Period | |||||||||||||||
Net asset value at beginning of period | $ | 13.01 | $ | 12.13 | $ | 9.34 | $ | 10.41 | $ | 10.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | 0.00 | (b) | 0.02 | 0.02 | 0.01 | (0.01 | ) | |||||||||||||
Net realized and unrealized gains (losses) on investments | 0.76 | 1.22 | 2.77 | (1.07 | ) | 0.42 | ||||||||||||||
Total from investment operations | 0.76 | 1.24 | 2.79 | (1.06 | ) | 0.41 | ||||||||||||||
Less distributions: | ||||||||||||||||||||
Distributions from net realized gains | (0.14 | ) | (0.36 | ) | — | (0.01 | ) | — | ||||||||||||
Net asset value at end of period | $ | 13.63 | $ | 13.01 | $ | 12.13 | $ | 9.34 | $ | 10.41 | ||||||||||
Total return (c) | 5.86 | %(d) | 10.28 | % | 29.87 | % | (10.19 | %) | 4.10 | %(d) | ||||||||||
Net assets at end of period (000’s) | $ | 161,574 | $ | 116,239 | $ | 74,946 | $ | 39,636 | $ | 31,291 | ||||||||||
Ratio of net expenses to average net assets | 0.97 | %(e) | 1.00 | % | 1.06 | % | 1.15 | % | 1.25 | %(e)(f) | ||||||||||
Ratio of net investment income (loss) to average net assets | 0.11 | %(e) | 0.26 | % | 0.09 | % | 0.14 | % | (0.30 | %)(e)(g) | ||||||||||
Portfolio turnover rate | 18 | %(d) | 48 | % | 37 | % | 48 | % | 15 | %(d) |
(a) | Represents the period from commencement of operations (December 31, 2014) through March 31, 2015. |
(b) | Amount rounds to less than $0.01 per share. |
(c) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(d) | Not annualized. |
(e) | Annualized. |
(f) | Absent advisory fee reductions, the ratio of total expenses to average net assets would have been 1.42%(d) for the period ended March 31, 2015. |
(g) | Ratio was determined after advisory fee reductions. |
See accompanying notes to financial statements.
49
DAVENPORT BALANCED INCOME FUND | ||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||
| Six Months | Year | Year | Period | ||||||||||||
Net asset value at beginning of period | $ | 11.28 | $ | 11.02 | $ | 10.27 | $ | 10.00 | ||||||||
Income from investment operations: | ||||||||||||||||
Net investment income | 0.12 | 0.20 | 0.14 | 0.03 | ||||||||||||
Net realized and unrealized gains on investments and foreign currencies | 0.31 | 0.33 | 0.74 | 0.26 | ||||||||||||
Total from investment operations | 0.43 | 0.53 | 0.88 | 0.29 | ||||||||||||
Less distributions: | ||||||||||||||||
Dividends from net investment income | (0.12 | ) | (0.17 | ) | (0.13 | ) | (0.02 | ) | ||||||||
Distributions from net realized gains | (0.07 | ) | (0.10 | ) | — | — | ||||||||||
Total distributions | (0.19 | ) | (0.27 | ) | (0.13 | ) | (0.02 | ) | ||||||||
Net asset value at end of period | $ | 11.52 | $ | 11.28 | $ | 11.02 | $ | 10.27 | ||||||||
Total return (b) | 3.89 | %(c) | 4.81 | % | 8.59 | % | 2.90 | %(c) | ||||||||
Net assets at end of period (000’s) | $ | 140,927 | $ | 129,268 | $ | 83,419 | $ | 17,885 | ||||||||
Ratio of net expenses to average net assets | 0.96 | %(e) | 0.97 | % | 1.13 | %(d) | 1.25 | %(e)(f) | ||||||||
Ratio of net investment income to average net assets | 2.18 | %(e) | 1.85 | % | 1.55 | % | 1.65 | %(e)(g) | ||||||||
Portfolio turnover rate | 14 | %(c) | 23 | % | 16 | % | 7 | %(c) |
(a) | Represents the period from commencement of operations (December 31, 2015) through March 31, 2016. |
(b) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(c) | Not annualized. |
(d) | Absent advisory fee reductions and expense reimbursements recouped by the Adviser, the ratio of net expenses to average net assets would have been 1.08% for the year ended March 31, 2017. |
(e) | Annualized. |
(f) | Absent advisory fee reductions and expense reimbursements, the ratio of total expenses to average net assets would have been 2.25%(d) for the period ended March 31, 2016 (Note 4). |
(g) | Ratio was determined after advisory fee reductions and expense reimbursements. |
See accompanying notes to financial statements.
50
THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 2018 (Unaudited)
1. Organization
Davenport Core Fund, Davenport Value & Income Fund, Davenport Equity Opportunities Fund, Davenport Small Cap Focus Fund and Davenport Balanced Income Fund (individually, a “Fund,” and, collectively, the “Funds”) are each a no-load series of the Williamsburg Investment Trust (the “Trust”), an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Trust was organized as a Massachusetts business trust on July 18, 1988. Other series of the Trust are not incorporated in this report.
Davenport Core Fund’s investment objective is long term growth of capital.
Davenport Value & Income Fund’s investment objective is to achieve long term growth while generating current income through dividend payments on portfolio securities.
Davenport Equity Opportunities Fund’s investment objective is long term capital appreciation.
Davenport Small Cap Focus Fund’s investment objective is long term capital appreciation.
Davenport Balanced Income Fund’s investment objective is current income and an opportunity for long term growth.
Davenport Core Fund, Davenport Value & Income Fund, Davenport Small Cap Focus Fund and Davenport Balanced Income Fund are each classified as a diversified fund. Davenport Equity Opportunities Fund is classified as a non-diversified fund.
2. Significant Accounting Policies
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted regulations that eliminated or amended disclosure requirements that were redundant or outdated in light of changes in the SEC requirements, accounting principles generally accepted in the United States of America (“GAAP”), International Financial Reporting Standards or changes in technology or the business environment. These regulations were effective November 5, 2018, and the Funds are complying with them effective with these financial statements.
Each Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.” The following is a summary of the Funds’ significant accounting policies. The policies are in conformity with GAAP.
New accounting pronouncement — On August 28, 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820, “Fair Value Measurement” (“ASC 820”). ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration of entities when evaluating disclosure
51
THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
requirements. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. Management is evaluating what, if any, impact the adoption of ASU 2018-13 will have on the Funds’ financial statements.
Securities valuation — The Funds’ portfolio securities are valued as of the close of business of the regular session of the New York Stock Exchange (the “NYSE”) (normally 4:00 p.m. Eastern time). Securities traded on a national stock exchange, including common stocks and exchange-traded funds (“ETFs”), are valued based upon the closing price on the principal exchange where the security is traded, if available, otherwise, at the last quoted bid price. Securities that are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Investments representing shares of money market funds and other open-end investment companies, other than ETFs, are valued at their net asset value (“NAV”) as reported by such companies. When using a quoted price and when the market is considered active, securities will be classified as Level 1 within the fair value hierarchy (see below).
Fixed income securities, including corporate bonds and U.S. Treasury obligations, are typically valued on the basis of prices provided by an independent pricing service. The prices provided by the pricing service are determined with consideration given to institutional bid and last sale prices and take into account securities prices, yields, maturities, call features, ratings, institutional trading in similar groups of securities, and developments related to specific securities. Given the inputs used by the pricing service, these securities are classified as Level 2 within the fair value hierarchy.
When market quotations are not readily available, if a pricing service cannot provide a price, or if the investment adviser believes the price received from the pricing service is not indicative of market value, securities will be valued in good faith at fair value using methods consistent with procedures adopted by the Board of Trustees and will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. Such methods of fair valuation may include, but are not limited to: multiple of earnings, multiple of book value, discount from market of a similar freely traded security, purchase price of the security, subsequent private transactions in the security or related securities, or a combination of these and other factors.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of the Funds’ investments. These inputs are summarized in the three broad levels listed below:
● | Level 1 – quoted prices in active markets for identical securities |
● | Level 2 – other significant observable inputs |
● | Level 3 – significant unobservable inputs |
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THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value the Funds’ investments as of September 30, 2018, by security type:
Davenport Core Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 489,242,968 | $ | — | $ | — | $ | 489,242,968 | ||||||||
Exchange-Traded Funds | 6,923,424 | — | — | 6,923,424 | ||||||||||||
Money Market Funds | 7,526,819 | — | — | 7,526,819 | ||||||||||||
Total | $ | 503,693,211 | $ | — | $ | — | $ | 503,693,211 |
Davenport Value & Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 660,791,242 | $ | — | $ | — | $ | 660,791,242 | ||||||||
Money Market Funds | 24,111,719 | — | — | 24,111,719 | ||||||||||||
Total | $ | 684,902,961 | $ | — | $ | — | $ | 684,902,961 |
Davenport Equity Opportunities Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 403,804,767 | $ | — | $ | — | $ | 403,804,767 | ||||||||
Money Market Funds | 3,654,480 | — | — | 3,654,480 | ||||||||||||
Total | $ | 407,459,247 | $ | — | $ | — | $ | 407,459,247 |
Davenport Small Cap Focus Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 151,937,836 | $ | — | $ | — | $ | 151,937,836 | ||||||||
Money Market Funds | 9,639,358 | — | — | 9,639,358 | ||||||||||||
Total | $ | 161,577,194 | $ | — | $ | — | $ | 161,577,194 |
Davenport Balanced Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 84,705,932 | $ | — | $ | — | $ | 84,705,932 | ||||||||
Fixed Rate Corporate Bonds | — | 29,039,966 | — | 29,039,966 | ||||||||||||
Variable Rate Corporate Bonds | — | 18,508,512 | — | 18,508,512 | ||||||||||||
U.S. Treasury Obligations | — | 3,745,105 | — | 3,745,105 | ||||||||||||
Money Market Funds | 4,405,652 | — | — | 4,405,652 | ||||||||||||
Total | $ | 89,111,584 | $ | 51,293,583 | $ | — | $ | 140,405,167 |
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THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Refer to each Fund’s Schedule of Investments for a listing of the securities by sector type. As of September 30, 2018, the Funds did not have any transfers into or out of any Level. There were no Level 3 securities or derivative instruments held by the Funds as of September 30, 2018. It is the Funds’ policy to recognize transfers into or out of any Level at the end of the reporting period.
Foreign currency translation — Investment securities and other assets and liabilities denominated in or expected to settle in foreign currencies, if any, are translated into U.S. dollars based on exchange rates on the following basis:
A. | The fair values of investment securities and other assets and liabilities are translated as of the close of the NYSE each day. |
B. | Purchases and sales of investment securities and income and expenses are translated at the rate of exchange prevailing as of 4:00 p.m. Eastern time on the respective date of such transactions. |
C. | The Funds do not isolate that portion of the results of operations caused by changes in foreign exchange rates on investments from those caused by changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses on investments. |
Reported net realized foreign exchange gains or losses arise from 1) purchases and sales of foreign currencies and 2) the difference between the amounts of dividends and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Reported net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities that result from changes in exchange rates.
Share valuation — The NAV per share of each Fund is calculated daily by dividing the total value of its assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Fund is equal to the NAV per share.
Investment income — Interest income is accrued as earned. Discounts and premiums on fixed-income securities are amortized using the interest method. Dividend income is recorded on the ex-dividend date. The Funds record distributions received from investments in real estate investment trusts (also known as “REITs”) in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. These amounts are recorded once the issuers provide information about the actual composition of the distributions. Withholding taxes on foreign dividends have been recorded in accordance with the Funds’ understanding of the applicable country’s rules and tax rates.
Investment transactions — Investment transactions are accounted for on trade date for financial reporting purposes. Realized gains and losses on investment securities sold are determined on a specific identification basis.
Common expenses — Common expenses of the Trust are allocated among the Funds and the other series of the Trust based on relative net assets of each series or the nature of the services performed and the relative applicability to each series.
54
THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Distributions to shareholders — Dividends arising from net investment income, if any, are declared and paid quarterly to shareholders of Davenport Core Fund, Davenport Value & Income Fund, Davenport Small Cap Focus Fund and Davenport Balanced Income Fund; and declared and paid semi-annually to shareholders of Davenport Equity Opportunities Fund. Net realized short-term capital gains, if any, may be distributed throughout the year and net realized long-term capital gains, if any, are distributed at least once each year. The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from GAAP. Dividends and distributions are recorded on the ex-dividend date.
The tax character of distributions paid during the periods ended September 30, 2018 and March 31, 2018 was as follows:
| Period | Ordinary | Long-Term | Total | |||||||||
Davenport Core Fund | 09/30/18 | $ | 1,269,206 | $ | 15,695,670 | $ | 16,964,876 | ||||||
03/31/18 | $ | 2,062,810 | $ | 8,953,509 | $ | 11,016,319 | |||||||
Davenport Value & Income Fund | 09/30/18 | $ | 7,847,001 | $ | 14,540,675 | $ | 22,387,676 | ||||||
03/31/18 | $ | 10,955,224 | $ | 18,625,911 | $ | 29,581,135 | |||||||
Davenport Small Cap Focus Fund | 09/30/18 | $ | — | $ | 1,596,549 | $ | 1,596,549 | ||||||
03/31/18 | $ | — | $ | 2,522,386 | $ | 2,522,386 | |||||||
Davenport Balanced Income Fund | 09/30/18 | $ | 1,710,883 | $ | 603,421 | $ | 2,314,304 | ||||||
03/31/18 | $ | 1,967,387 | $ | 617,857 | $ | 2,585,244 |
Davenport Equity Opportunities Fund did not pay any distributions to shareholders during the periods ended September 30, 2018 and March 31, 2018.
Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Federal income tax — Each Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Funds of liability for federal income taxes to the extent 100% of their net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
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THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The following information is computed on a tax basis for each item as of September 30, 2018:
| Davenport | Davenport | Davenport | |||||||||
Cost of portfolio investments | $ | 316,971,245 | $ | 545,558,592 | $ | 309,143,827 | ||||||
Gross unrealized appreciation | $ | 194,741,282 | $ | 151,718,425 | $ | 111,216,592 | ||||||
Gross unrealized depreciation | (8,019,316 | ) | (12,374,056 | ) | (12,901,172 | ) | ||||||
Net unrealized appreciation | 186,721,966 | 139,344,369 | 98,315,420 | |||||||||
Capital loss carryforwards | — | — | (1,759,717 | ) | ||||||||
Accumulated ordinary income (loss) | 3,444 | 190,480 | (587,044 | ) | ||||||||
Accumulated capital and other gains | 3,093,202 | 5,853,354 | 12,946,496 | |||||||||
Accumulated earnings | $ | 189,818,612 | $ | 145,388,203 | $ | 108,915,155 |
| Davenport | Davenport | ||||||
Cost of portfolio investments | $ | 142,659,422 | $ | 131,431,182 | ||||
Gross unrealized appreciation | $ | 27,440,628 | $ | 11,905,334 | ||||
Gross unrealized depreciation | (8,522,856 | ) | (2,931,349 | ) | ||||
Net unrealized appreciation | 18,917,772 | 8,973,985 | ||||||
Accumulated ordinary income | 53,350 | 222,544 | ||||||
Accumulated capital and other gains (losses) | 2,065,984 | (618,762 | ) | |||||
Accumulated earnings | $ | 21,037,106 | $ | 8,577,767 |
The difference between the federal income tax cost of portfolio investments and the financial statement cost of portfolio investments for each Fund, except Davenport Value & Income Fund, is due to certain timing differences in the recognition of capital gains and losses under income tax regulations and GAAP. These timing differences are temporary in nature and are due to the tax deferral of losses on wash sales and adjustments to basis on publicly traded partnerships and passive foreign investment companies.
As of March 31, 2018, Davenport Equity Opportunities Fund had a short-term capital loss carryforward of $1,457,453 and a long-term capital loss carryforward of $302,264 for federal income tax purposes, which may be carried forward indefinitely. These capital loss carryforwards are available to offset net realized capital gains in the current and future years, thereby reducing future taxable gains distributions.
The Funds recognize the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions taken on Federal income tax returns for each Fund for the current and all applicable open tax years (generally three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements.
56
THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Investment Transactions
Investment transactions, other than short-term investments and U.S. government securities, were as follows for the six months ended September 30, 2018:
| Davenport | Davenport | Davenport | |||||||||
Purchases of investment securities | $ | 37,832,762 | $ | 69,452,941 | $ | 35,732,983 | ||||||
Proceeds from sales and maturities of investment securities | $ | 35,664,166 | $ | 71,993,960 | $ | 46,456,679 |
| Davenport | Davenport | ||||||
Purchases of investment securities | $ | 61,158,330 | $ | 20,152,641 | ||||
Proceeds from sales and maturities of investment securities | $ | 24,283,705 | $ | 17,780,472 |
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENTS
Each Fund’s investments are managed by Davenport & Company LLC (the “Adviser”) under the terms of an Investment Advisory Agreement. Under the Investment Advisory Agreement, each Fund pays the Adviser a fee, which is computed and accrued daily and paid monthly, at an annual rate of 0.75% of its average daily net assets. Certain officers and a Trustee of the Trust are also officers of the Adviser.
A significant portion of the Funds’ investment trades are executed through an affiliated broker-dealer of the Adviser. No commissions are paid by the Funds to the Adviser or the affiliate for these trades.
OTHER SERVICE PROVIDERS
Ultimus Fund Solutions, LLC (“Ultimus”) provides administration, fund accounting, compliance and transfer agent services to the Funds. The Funds pay Ultimus fees in accordance with the agreements for such services. In addition, the Funds pay out-of-pocket expenses including, but not limited to, postage, supplies, and costs of pricing the Funds’ portfolio securities. Certain officers of the Trust are also officers of Ultimus, or of Ultimus Fund Distributors, LLC (the “Distributor”), the principal underwriter of each Fund’s shares and an affiliate of Ultimus. The Distributor is compensated by the Adviser (not the Funds) for acting as principal underwriter.
COMPENSATION OF TRUSTEES
Trustees and officers affiliated with the Adviser or Ultimus are not compensated by the Trust for their services. Each Trustee who is not an affiliated person of the Adviser or Ultimus receives from the Trust an annual retainer of $20,000, payable quarterly; a fee of $2,000 for attendance at each meeting of the Board of Trustees (except that such fee is $3,000 for the independent chair);
57
THE DAVENPORT FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
and a fee of $1,000 for attendance at each meeting of any committee of the Board (except that such fee is $1,500 for the committee chair); plus reimbursement of travel and other expenses incurred in attending meetings. Each Fund pays its proportionate share of such fees along with the other series of the Trust.
5. Sector Risk
If a Fund has significant investments in the securities of issuers in industries within a particular business sector, any development affecting that sector will have a greater impact on the value of the net assets of the Fund than would be the case if the Fund did not have significant investments in that sector. In addition, this may increase the risk of loss of an investment in the Fund and increase the volatility of the Fund’s NAV per share. From time to time, circumstances may affect a particular sector and the companies within such sector. For instance, economic or market factors, regulation or deregulation, or other developments may negatively impact all companies in a particular sector and therefore the value of a Fund’s portfolio would be adversely affected. As of September 30, 2018, Davenport Small Cap Focus Fund had 28.0% of the value of its net assets invested in common stocks within the Industrials sector.
6. Contingencies and Commitments
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from the performance of their duties to the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
7. Subsequent Events
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.
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THE DAVENPORT FUNDS
YOUR FUNDS’ EXPENSES (Unaudited)
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of the Funds, you incur ongoing costs, including management fees and other expenses. These ongoing costs, which are deducted from each Fund’s gross income, directly reduce the investment return of the Funds.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The examples below are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (April 1, 2018 and held through September 30, 2018).
The table below illustrates each Fund’s ongoing costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from each Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Funds. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, 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 given for the applicable Fund under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare each Fund’s ongoing costs with those of other mutual funds. It assumes that each Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is not each Fund’s actual return, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess each Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Funds do not charge sales loads or redemption fees.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
More information about each Fund’s expenses, including historical annual expense ratios, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Funds’ prospectus.
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THE DAVENPORT FUNDS
YOUR FUNDS’ EXPENSES (Unaudited) (Continued)
| Beginning | Ending | Expense | Expenses Paid |
Davenport Core Fund |
|
|
|
|
Based on Actual Fund Return | $1,000.00 | $1,090.70 | 0.89% | $4.66 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.61 | 0.89% | $4.51 |
Davenport Value & Income Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,056.50 | 0.88% | $4.54 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.66 | 0.88% | $4.46 |
Davenport Equity Opportunities Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,065.90 | 0.91% | $4.71 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.51 | 0.91% | $4.61 |
Davenport Small Cap Focus Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,058.60 | 0.97% | $5.01 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.21 | 0.97% | $4.91 |
Davenport Balanced Income Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,038.90 | 0.96% | $4.91 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.26 | 0.96% | $4.86 |
(a) | Annualized, based on each Fund’s most recent one-half year expenses. |
(b) | Expenses are equal to each Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
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THE DAVENPORT FUNDS |
A description of the policies and procedures that the Funds use to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-800-281-3217, or on the SEC’s website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available without charge upon request by calling toll-free 1-800-281-3217, or on the SEC’s website at http://www.sec.gov.
The Trust files a complete listing of portfolio holdings for each Fund with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. These filings are available upon request by calling 1-800-281-3217. Furthermore, you may obtain a copy of these filings on the SEC’s website at http://www.sec.gov.
A complete listing of portfolio holdings for each Fund is updated daily and can be reviewed at the Funds’ website at http://www.investdavenport.com.
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THE DAVENPORT FUNDS
Investment Adviser
Administrator
Custodian
Independent Registered Public
Legal Counsel
Board of Trustees
Officers
|
One James Center
901 East Cary Street
Richmond, VA 23219
Davenport & Company LLC
Member: NYSE ● SIPC
Toll Free: (800) 846-6666
www.investdavenport.com
FBP Equity & Dividend Plus Fund FBP Appreciation & Income Opportunities Fund
Semi-Annual Report September 30, 2018 (Unaudited)
No-Load Funds
|
i
Letter to Shareholders | November 9, 2018 |
We are pleased to report on your Funds and their investments for the six-month period ended September 30, 2018, and to provide some additional information since we last communicated with you.
Economic and Market Update
Equity markets heated up during the summer, carrying that momentum through the end of this semi-annual period. Broad stock market indexes, including the Dow Jones Industrials Average and the S&P 500, recently set record high closing levels. Stocks continue to move in synch with improving GDP growth and, in particular, earnings growth, which accelerated significantly following last year’s tax cut.
Economically, many of the trends visible all year continued through September. Lower corporate and individual tax rates along with reduced government regulations have combined to spur consumer and business confidence, helping to propel GDP growth to higher levels. Employment numbers are strong, and consumer spending has been robust. Most economists have pointed to trade issues and a generally toxic political environment as the biggest ongoing risks to the economy.
Looking forward, we continue to see a very positive economic environment, but headwinds are building on the horizon that bear monitoring. Inflation, while not showing up significantly in reported numbers just yet, is a potential negative. Higher input costs due to the imposition of new tariffs may work their way into prices in the coming quarters. Unemployment remains very low, near all-time low levels at under 4% and it is certainly indicative of a tightening labor market. Typically, one would expect to see noticeable inflationary wage gains with unemployment so low, but wage growth numbers remain rather modest. Monetary policy is becoming less accommodative. The Federal Reserve’s Open Market Committee moved to increase the fed funds rate to an effective rate of 2.25% at its September meeting and, while holding the rate steady at its November meeting, indicated that more increases are planned through 2019. Geopolitical tensions with Iran, North Korea, and China continue to foster uncertainty, with additional tariffs against China potentially coming soon. China would naturally retaliate, creating difficult conditions for consumers in both nations. If this happens, we would anticipate productive trade negotiations would follow. Now that the mid-term elections have been held and political power in Washington is divided, investors can be more focused on economic fundamentals. The rate of growth of earnings for many companies may be peaking as the positive effect of tax cuts flow through income statements, however we believe the absolute increase in earnings will continue for some time.
Factoring in all of the above, we are likely in the later stages of the economic cycle. The difficulty is knowing how long this cycle will last. GDP growth is still very strong. Companies are doing a nice job managing their businesses in this environment, giving us confidence that they will continue to generate earnings growth, albeit at a slower pace than witnessed last year. Valuations are reasonable given current growth rates and the level of interest rates. We expect equity returns to remain positive but with more volatility and periodic corrections, which would hopefully provide opportunities to add some attractively valued companies to the Funds.
FBP Equity & Dividend Plus Fund Review
The FBP Equity & Dividend Plus Fund returned 9.77% for the semi-annual period and 13.25% for the annual period ended September 30, 2018. The S&P 500 Index returned 11.41% and 17.91%, while the Russell 1000 Value Index returned 6.95% and 9.45% over the same periods. The Fund was invested 93.1% equity and 6.9% cash as of September 30, 2018.
1
Performance for the Fund for the period was broad-based with all sectors providing positive returns; however, Health Care was particularly strong. Eli Lilly and Merck led the way for that sector. Consumer Discretionary and Telecommunication Services were also strong. Target and CenturyLink were the better performers in those sectors. Laggards were Materials and Financials, whose shares were affected generally by a lack of loan growth. The Fund’s two weakest stocks were Ford, depressed over concerns of future economic growth, and General Electric, dealing with a host of problems including a new management team. During the period, the Fund reduced shares of several strong performers including ConocoPhillips, Kohl’s, Occidental Petroleum and Target. The Fund completely sold its holdings of Rio Tinto, Intel, and LyondellBasell through covered call option exercises. The Fund added new positions in Hershey Company, Dominion Energy, DowDuPont and Broadcom after those stocks experienced price weakness. Hershey is one of the world’s largest confectioners with a stellar brand name. In addition to favorable valuation, the stock pays an attractive dividend, and we believe the company can increase its payout over time. Dominion Energy, a diversified electric utility, has an above-average dividend yield and we believe it will increase its dividend at rates higher than the typical utility company over the next few years. Dow and Dupont merged in 2017 with plans to combine, restructure and ultimately separate into three companies that should be stronger, more focused global competitors. We believe the result will be attractive total returns for investors. DowDuPont pays an above-market dividend yield that provides good cash flow while we wait for the split. We took advantage of market weakness to add Broadcom to the portfolio following the announcement of its acquisition of Computer Associates. Broadcom has a very attractive dividend yield, and we believe the company’s strong free cash flow will allow it to grow its dividend going forward. Portfolio income growth has been strong in 2018 as companies have raised dividends, and the Fund’s portfolio changes and covered call option selling have enhanced cash flow generation. We believe dividend growth will remain an important driver of equity returns, and we will continue to search for undervalued companies that have the potential to grow their dividend.
The Fund does utilize as part of its investment discipline the use of covered call options as individual securities approach the top of the Adviser’s growth and price expectations. The Fund’s purpose in selling the call option is to generate additional cash flow to the Fund and to hedge the possibility the security may not achieve its price objective. In very strong stock markets, this discipline may limit the upside of the securities where options have been written, but in flat to negative markets, it may provide additional return. During the six months ended September 30, 2018, the amount of premiums generated from selling covered call options was $236,421.
FBP Appreciation & Income Opportunities Fund Review
The FBP Appreciation & Income Opportunities Fund returned 7.78% for the semi-annual period and 12.15% for the annual period ended September 30, 2018. The S&P 500 Index returned 11.41% and 17.91%, and the Bloomberg Barclays U.S. Government/Credit Index returned -0.27% and -1.37% over the same periods. The Fund was 76.8% equity, 16.9% fixed income and 6.3% cash as of September 30, 2018.
Performance for the Fund for the period was broad-based with all sectors except Financials providing positive returns. Health Care was the strongest sector lead by Eli Lilly and Merck. Telecommunication Services, Energy and Information Technology were also strong. CenturyLink, ConocoPhillips, and Apple and were the better performers in those sectors. Laggards were Consumer Staples and Financials, where shares were affected generally by a lack of loan growth. The Fund’s two weakest stocks were Freeport-McMoran and Bloomin’ Brands. During the period, the Fund reduced shares of several strong performers including Apple, Kohl’s, Microsoft and Target. The Fund added new positions in Amgen, Dominion Energy, Compass Minerals and Broadcom after these stocks experienced price weakness. Amgen is a large biotechnology company selling at a very reasonable valuation relative to its growth rate. Dominion Energy
2
is a diversified electric utility. Both have above-average dividend yields and, in our opinion, will increase their respective dividend at rates higher than the typical company over the next few years. The Fund also established a new position in Compass Minerals, a global leader in the mining of road salt. A sell-off in the shares of Broadcom following the announcement of its acquisition of Computer Associates provided the opportunity to add this large semiconductor company. Broadcom has a very attractive dividend yield, and we believe the company’s strong free cash flow will allow it to grow its dividend going forward. The Fund also increased its fixed-income holdings, taking advantage of the higher yields now available. Portfolio income growth has been strong in 2018 as companies have raised dividends, and the Fund’s portfolio actions have enhanced cash flow generation.
The Fund does utilize as part of its investment discipline the use of covered call options as individual securities approach the top of the Adviser’s growth and price expectations. The Fund’s purpose in selling the call option is to generate additional income to the Fund and to hedge the possibility the security may not achieve its price objective. In very strong stock markets, this discipline may limit the upside of the securities where options have been written, but in modest to negative markets, it may provide additional return. During the six months ended September 30, 2018, the amount of premiums generated from selling covered call options was $83,192.
We want to thank you for your continued support and investment in the Flippin, Bruce & Porter Funds. Please visit our website at www.fbpfunds.com for information on your Funds and the investment philosophy and process we utilize to achieve their investment objectives.
John T. Bruce, CFA
President - Portfolio Manager
November 9, 2018
Data presented reflects past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Updated performance information, current through the most recent month-end, is available by contacting the Funds at 1-866-738-1127.
This report is submitted for the general information of the shareholders of the Funds. It reflects our views, opinions and portfolio holdings as of the date of this letter. These views are subject to change at any time based upon market or other conditions. For more current information throughout the year please visit www.fbpfunds.com or call the Funds at 1-866-738-1127. This report is not authorized for distribution to prospective investors in the Funds unless accompanied by a current prospectus.
3
THE FLIPPIN, BRUCE & PORTER FUNDS
COMPARATIVE PERFORMANCE CHARTS
(Unaudited)
Performance for each Fund is compared to the most appropriate broad-based index, the Standard and Poor’s 500® Index, an unmanaged index of 500 large common stocks. Each Fund’s performance results are also compared to the Consumer Price Index, a measure of inflation.
FBP Equity & Dividend Plus Fund
Comparison of the Change in Value of a $10,000 Investment in FBP Equity & Dividend Plus Fund,
the Standard & Poor’s 500® Index, the Consumer Price Index and the Russell 1000 Value Index
4
THE FLIPPIN, BRUCE & PORTER FUNDS
COMPARATIVE PERFORMANCE CHARTS
(Unaudited) (Continued)
FBP Appreciation & Income Opportunities Fund
Comparison of the Change in Value of a $10,000 Investment in FBP Appreciation & Income Opportunities Fund, the Standard & Poor’s 500® Index, the Consumer Price Index,
the Russell 1000 Value Index and the Bloomberg Barclays U.S. Government/Credit Index
Average Annual Total Returns (for periods ended September 30, 2018) | ||||
| 1 Year | 5 Years | 10 Years | |
FBP Equity & Dividend Plus Fund(a) | 13.25% | 8.98% | 7.55% | |
FBP Appreciation & Income Opportunities Fund(a) | 12.15% | 7.40% | 7.32% | |
Standard & Poor’s 500® Index | 17.91% | 13.95% | 11.97% | |
Consumer Price Index | 2.69% | 1.51% | 1.41% | |
Russell 1000 Value Index | 9.45% | 10.72% | 9.79% | |
Bloomberg Barclays U.S. Government/Credit Index | -1.37% | 2.23% | 3.95% |
(a) | Total returns are a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns do not reflect the deduction of taxes a shareholder would pay on the Fund’s distributions or the redemption of Fund shares. |
5
FBP EQUITY & DIVIDEND PLUS FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
General Information |
| |||
Net Asset Value Per Share | $ | 27.17 | ||
Total Net Assets ( Millions ) | $ | 30.2 | ||
Current Expense Ratio | 1.07 | % | ||
Portfolio Turnover | 10 | % | ||
Fund Inception Date | 7/30/1993 |
Stock Characteristics | Fund | S&P 500® | ||||||
Number of Stocks | 54 | 500 | ||||||
Weighted Average Market Capitalization ( Billions ) | $ | 142.7 | $ | 252.1 | ||||
Price-to-Earnings Ratio (Bloomberg 1 Year Forecast EPS) | $ | 13.3 | $ | 16.7 | ||||
Price-to-Book Value | $ | 2.5 | $ | 3.5 |
Asset Allocation (% of Net Assets) |
|
Sector Diversification vs. the S&P 500® Index |
Ten Largest Equity Holdings | % of Net Assets |
International Business Machines Corporation | 3.0% |
BB&T Corporation | 2.5% |
U.S. Bancorp | 2.5% |
Pfizer, Inc. | 2.5% |
Procter & Gamble Company (The) | 2.5% |
JPMorgan Chase & Company | 2.4% |
Cisco Systems, Inc. | 2.4% |
Exxon Mobil Corporation | 2.4% |
HP, Inc. | 2.3% |
Eaton Corporation plc | 2.3% |
6
FBP APPRECIATION & INCOME OPPORTUNITIES FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
General Information | ||||
Net Asset Value Per Share | $ | 20.28 | ||
Total Net Assets ( Millions ) | $ | 36.5 | ||
Current Expense Ratio | 1.00 | % | ||
Portfolio Turnover | 11 | % | ||
Fund Inception Date | 7/3/1989 |
Asset Allocation (% of Net Assets) |
|
Common Stock Portfolio (76.5% of Net Assets) | ||||
Number of Stocks | 50 | |||
Weighted Average Market Capitalization ( Billions ) | $ | 181.7 | ||
Price-to-Earnings Ratio (Bloomberg 1 Year Forecast EPS) | $ | 12.9 | ||
Price-to-Book Value | $ | 2.2 |
Ten Largest Equity Holdings | % of Net Assets |
JPMorgan Chase & Company | 3.7% |
Bank of America Corporation | 3.6% |
Apple, Inc. | 3.0% |
Cisco Systems, Inc. | 2.8% |
Lincoln National Corporation | 2.6% |
ConocoPhillips | 2.3% |
Microsoft Corporation | 2.2% |
International Business Machines Corporation | 2.2% |
Travelers Companies, Inc. (The) | 2.0% |
Royal Dutch Shell plc - Class B - ADR | 1.9% |
Five Largest Sectors | % of Net Assets |
Financials | 18.2% |
Information Technology | 14.8% |
Energy | 10.6% |
Health Care | 9.3% |
Industrials | 7.5% |
Fixed-Income Portfolio (13.6% of Net Assets) | |
Number of Fixed-Income Securities | 12 |
Average Quality | BBB+ |
Average Weighted Maturity | 2.3 yrs. |
Average Effective Duration | 2.2 yrs. |
Sector Breakdown | % of Net Assets |
U.S. Government Agency Obligations | 1.3% |
Consumer Staples | 1.3% |
Energy | 2.7% |
Financials | 5.4% |
Health Care | 1.4% |
Industrials | 2.0% |
Telecommunication Services | 1.4% |
Utilities | 1.4% |
7
FBP EQUITY & DIVIDEND PLUS FUND | ||||||||
COMMON STOCKS — 93.1% | Shares | Value | ||||||
Consumer Discretionary — 10.8% | ||||||||
Ford Motor Company | 70,000 | $ | 647,500 | |||||
Kohl's Corporation (a) | 6,000 | 447,300 | ||||||
Nordstrom, Inc. (a) | 8,900 | 532,309 | ||||||
Tapestry, Inc. (a) | 11,300 | 568,051 | ||||||
Target Corporation (a) | 6,500 | 573,365 | ||||||
Williams-Sonoma, Inc. (a) | 7,400 | 486,328 | ||||||
3,254,853 | ||||||||
Consumer Staples — 8.6% | ||||||||
Coca-Cola Company (The) (a) | 6,000 | 277,140 | ||||||
Hershey Company (The) | 4,100 | 418,200 | ||||||
Kellogg Company (a) | 6,200 | 434,124 | ||||||
PepsiCo, Inc. | 3,500 | 391,300 | ||||||
Procter & Gamble Company (The) | 9,000 | 749,070 | ||||||
Walmart, Inc. (a) | 3,700 | 347,467 | ||||||
2,617,301 | ||||||||
Energy — 11.2% | ||||||||
Chevron Corporation | 4,800 | 586,944 | ||||||
ConocoPhillips (a) | 6,000 | 464,400 | ||||||
Exxon Mobil Corporation | 8,400 | 714,168 | ||||||
Occidental Petroleum Corporation (a) | 5,000 | 410,850 | ||||||
Royal Dutch Shell plc - Class B - ADR | 9,500 | 673,835 | ||||||
Schlumberger Ltd. | 8,700 | 530,004 | ||||||
3,380,201 | ||||||||
Financials — 16.6% | ||||||||
BB&T Corporation | 15,500 | 752,370 | ||||||
JPMorgan Chase & Company | 6,500 | 733,460 | ||||||
KeyCorp | 30,000 | 596,700 | ||||||
MetLife, Inc. | 10,200 | 476,544 | ||||||
People's United Financial, Inc. | 25,000 | 428,000 | ||||||
Prudential Financial, Inc. | 6,000 | 607,920 | ||||||
U.S. Bancorp | 14,200 | 749,902 | ||||||
Wells Fargo & Company | 13,000 | 683,280 | ||||||
5,028,176 | ||||||||
Health Care — 11.4% | ||||||||
Amgen, Inc. (a) | 2,400 | 497,496 | ||||||
CVS Health Corporation | 7,300 | 574,656 | ||||||
Eli Lilly & Company (a) | 5,500 | 590,205 | ||||||
Johnson & Johnson | 2,600 | 359,242 | ||||||
Merck & Company, Inc. | 9,400 | 666,836 | ||||||
Pfizer, Inc. | 17,000 | 749,190 | ||||||
3,437,625 |
8
FBP EQUITY & DIVIDEND PLUS FUND | ||||||||
COMMON STOCKS — 93.1% (Continued) | Shares | Value | ||||||
Industrials — 7.6% | ||||||||
Eaton Corporation plc (a) | 8,000 | $ | 693,840 | |||||
Emerson Electric Company (a) | 4,000 | 306,320 | ||||||
General Electric Company (a) | 41,900 | 473,051 | ||||||
United Parcel Service, Inc. - Class B | 4,400 | 513,700 | ||||||
United Technologies Corporation | 2,200 | 307,582 | ||||||
2,294,493 | ||||||||
Information Technology — 13.3% | ||||||||
Apple, Inc. (a) | 2,200 | 496,628 | ||||||
Broadcom, Inc. | 1,350 | 333,085 | ||||||
Cisco Systems, Inc. (a) | 15,000 | 729,750 | ||||||
HP, Inc. | 27,500 | 708,675 | ||||||
International Business Machines Corporation | 6,100 | 922,381 | ||||||
Microsoft Corporation (a) | 2,700 | 308,799 | ||||||
Western Union Company (The) (a) | 28,000 | 533,680 | ||||||
4,032,998 | ||||||||
Materials — 4.0% | ||||||||
Compass Minerals International, Inc. | 6,100 | 409,920 | ||||||
DowDuPont, Inc. | 4,400 | 282,964 | ||||||
Nucor Corporation | 8,200 | 520,290 | ||||||
1,213,174 | ||||||||
Real Estate — 2.1% | ||||||||
Public Storage | 1,500 | 302,445 | ||||||
Ventas, Inc. | 6,000 | 326,280 | ||||||
628,725 | ||||||||
Telecommunication Services — 3.9% | ||||||||
AT&T, Inc. | 20,300 | 681,674 | ||||||
CenturyLink, Inc. | 24,000 | 508,800 | ||||||
1,190,474 | ||||||||
Utilities — 3.6% | ||||||||
Dominion Energy, Inc. | 4,000 | 281,120 | ||||||
FirstEnergy Corporation | 15,000 | 557,550 | ||||||
PPL Corporation | 8,500 | 248,710 | ||||||
1,087,380 | ||||||||
Total Common Stocks (Cost $21,224,493) | $ | 28,165,400 |
9
FBP EQUITY & DIVIDEND PLUS FUND | ||||||||
MONEY MARKET FUNDS — 8.1% | Shares | Value | ||||||
Fidelity Institutional Money Market Government Portfolio - Class I, 1.92% (b) | 2,369,823 | $ | 2,369,823 | |||||
First American Government Obligations Fund - Class Z, 1.94% (b) | 79,284 | 79,284 | ||||||
Total Money Market Funds (Cost $2,449,107) | $ | 2,449,107 | ||||||
Total Investments at Value — 101.2% (Cost $23,673,600) | $ | 30,614,507 | ||||||
Liabilities in Excess of Other Assets — (1.2%) | (367,565 | ) | ||||||
Net Assets — 100.0% | $ | 30,246,942 |
ADR - American Depositary Receipt. | |
(a) | Security covers a written call option. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements. |
10
FBP EQUITY & DIVIDEND PLUS FUND | |||||||||||||||||
COVERED WRITTEN | Contracts | Notional | Strike | Expiration | Value of | ||||||||||||
Amgen, Inc. | 10 | $ | 207,290 | $ | 200.00 | 01/18/19 | $ | 13,450 | |||||||||
Apple, Inc. | 22 | 496,628 | 205.00 | 01/18/19 | 55,000 | ||||||||||||
Cisco Systems, Inc. | 10 | 48,650 | 48.00 | 10/19/18 | 960 | ||||||||||||
Coca-Cola Company (The) | 60 | 277,140 | 47.00 | 02/15/19 | 6,600 | ||||||||||||
ConocoPhillips | 60 | 464,400 | 65.00 | 11/16/18 | 77,100 | ||||||||||||
Eaton Corporation plc | 40 | 346,920 | 82.50 | 10/19/18 | 18,800 | ||||||||||||
Eli Lilly & Company | 30 | 321,930 | 100.00 | 10/19/18 | 23,280 | ||||||||||||
Eli Lilly & Company | 25 | 268,275 | 90.00 | 01/18/19 | 45,000 | ||||||||||||
Emerson Electric Company | 40 | 306,320 | 80.00 | 01/18/19 | 6,600 | ||||||||||||
General Electric Company | 90 | 101,610 | 16.00 | 12/21/18 | 180 | ||||||||||||
Kellogg Company | 18 | 126,036 | 80.00 | 03/15/19 | 1,440 | ||||||||||||
Kohl's Corporation | 60 | 447,300 | 85.00 | 01/18/19 | 12,600 | ||||||||||||
Microsoft Corporation | 27 | 308,799 | 115.00 | 01/18/19 | 13,365 | ||||||||||||
Nordstrom, Inc. | 39 | 233,259 | 60.00 | 01/18/19 | 16,497 | ||||||||||||
Nordstrom, Inc. | 50 | 299,050 | 70.00 | 04/18/19 | 12,500 | ||||||||||||
Occidental Petroleum Corporation | 50 | 410,850 | 80.00 | 11/16/18 | 20,750 | ||||||||||||
Tapestry, Inc. | 50 | 251,350 | 55.00 | 02/15/19 | 9,000 | ||||||||||||
Target Corporation | 30 | 264,630 | 85.00 | 03/15/19 | 22,350 | ||||||||||||
Target Corporation | 35 | 308,735 | 95.00 | 04/18/19 | 12,250 | ||||||||||||
Walmart, Inc. | 37 | 347,467 | 110.00 | 03/15/19 | 2,664 | ||||||||||||
Western Union Company (The) | 140 | 266,840 | 21.00 | 11/16/18 | 2,100 | ||||||||||||
Williams-Sonoma, Inc. | 27 | 177,444 | 62.50 | 01/18/19 | 17,820 | ||||||||||||
Williams-Sonoma, Inc. | 47 | 308,884 | 80.00 | 02/15/19 | 4,324 | ||||||||||||
Total Covered Written Call Options (Premiums received $236,421) | $ | 6,589,807 | $ | 394,630 |
See accompanying notes to financial statements. |
11
FBP APPRECIATION & INCOME OPPORTUNITIES FUND | ||||||||
COMMON STOCKS — 76.8% | Shares | Value | ||||||
Consumer Discretionary — 6.4% | ||||||||
Bloomin' Brands, Inc. | 13,000 | $ | 257,270 | |||||
CBS Corporation - Class B | 5,100 | 292,995 | ||||||
Ford Motor Company | 58,000 | 536,500 | ||||||
Kohl's Corporation (a) | 5,000 | 372,750 | ||||||
Tapestry, Inc. | 7,000 | 351,890 | ||||||
Target Corporation (a) | 6,000 | 529,260 | ||||||
2,340,665 | ||||||||
Consumer Staples — 2.6% | ||||||||
PepsiCo, Inc. | 2,500 | 279,500 | ||||||
Walmart, Inc. (a) | 7,000 | 657,370 | ||||||
936,870 | ||||||||
Energy — 10.6% | ||||||||
Chevron Corporation | 5,000 | 611,400 | ||||||
ConocoPhillips (a) | 11,000 | 851,400 | ||||||
Devon Energy Corporation (a) | 12,900 | 515,226 | ||||||
Occidental Petroleum Corporation (a) | 8,200 | 673,794 | ||||||
Royal Dutch Shell plc - Class B - ADR | 10,000 | 709,300 | ||||||
Schlumberger Ltd. | 8,000 | 487,360 | ||||||
3,848,480 | ||||||||
Financials — 18.2% | ||||||||
Bank of America Corporation | 45,000 | 1,325,700 | ||||||
Bank of New York Mellon Corporation (The) | 13,500 | 688,365 | ||||||
Capital One Financial Corporation | 6,000 | 569,580 | ||||||
JPMorgan Chase & Company | 12,000 | 1,354,080 | ||||||
KeyCorp | 16,320 | 324,605 | ||||||
Lincoln National Corporation | 14,000 | 947,240 | ||||||
MetLife, Inc. | 15,000 | 700,800 | ||||||
Travelers Companies, Inc. (The) | 5,500 | 713,405 | ||||||
6,623,775 | ||||||||
Health Care — 9.3% | ||||||||
Amgen, Inc. | 2,400 | 497,496 | ||||||
CVS Health Corporation | 7,500 | 590,400 | ||||||
Eli Lilly & Company | 5,500 | 590,205 | ||||||
Johnson & Johnson | 4,000 | 552,680 | ||||||
Merck & Company, Inc. | 8,200 | 581,708 | ||||||
Pfizer, Inc. | 13,500 | 594,945 | ||||||
3,407,434 | ||||||||
Industrials — 7.5% | ||||||||
Eaton Corporation plc (a) | 7,200 | 624,456 | ||||||
FedEx Corporation | 2,500 | 601,975 | ||||||
General Electric Company | 40,000 | 451,600 | ||||||
Ingersoll-Rand plc | 4,700 | 480,810 | ||||||
United Technologies Corporation | 4,200 | 587,202 | ||||||
2,746,043 |
12
FBP APPRECIATION & INCOME OPPORTUNITIES FUND | ||||||||
COMMON STOCKS — 76.8% (Continued) | Shares | Value | ||||||
Information Technology — 14.8% | ||||||||
Apple, Inc. | 4,800 | $ | 1,083,552 | |||||
Broadcom, Inc. | 1,300 | 320,749 | ||||||
Cisco Systems, Inc. | 21,000 | 1,021,650 | ||||||
HP, Inc. | 20,000 | 515,400 | ||||||
International Business Machines Corporation | 5,200 | 786,292 | ||||||
Microsoft Corporation | 7,000 | 800,590 | ||||||
Nokia Corporation - ADR | 67,000 | 373,860 | ||||||
Western Union Company (The) | 25,000 | 476,500 | ||||||
5,378,593 | ||||||||
Materials — 2.2% | ||||||||
Compass Minerals International, Inc. | 4,000 | 268,800 | ||||||
Mosaic Company (The) | 8,000 | 259,840 | ||||||
Nucor Corporation | 4,500 | 285,525 | ||||||
814,165 | ||||||||
Real Estate — 0.7% | ||||||||
Ventas, Inc. | 4,500 | 244,710 | ||||||
Telecommunication Services — 2.2% | ||||||||
AT&T, Inc. | 8,000 | 268,640 | ||||||
CenturyLink, Inc. | 25,000 | 530,000 | ||||||
798,640 | ||||||||
Utilities — 2.3% | ||||||||
Dominion Energy, Inc. | 4,000 | 281,120 | ||||||
FirstEnergy Corporation | 8,000 | 297,360 | ||||||
PPL Corporation | 9,000 | 263,340 | ||||||
841,820 | ||||||||
Total Common Stocks (Cost $17,113,792) | $ | 27,981,195 |
| ||||||||
U.S. GOVERNMENT AGENCY | Par Value | Value | ||||||
Federal National Mortgage Association — 1.3% | ||||||||
1.20%, due 07/17/2020 (Cost $500,000) | $ | 500,000 | $ | 486,257 |
13
FBP APPRECIATION & INCOME OPPORTUNITIES FUND | ||||||||
CORPORATE BONDS — 15.6% | Par Value | Value | ||||||
Consumer Staples — 1.3% | ||||||||
Kroger Company (The), 2.60%, due 02/01/2021 | $ | 500,000 | $ | 490,217 | ||||
Energy — 2.7% | ||||||||
Dominion Resources, Inc., 2.50%, due 12/01/2019 | 500,000 | 496,123 | ||||||
Pioneer Natural Resources Company, 3.95%, due 07/15/2022 | 500,000 | 504,100 | ||||||
1,000,223 | ||||||||
Financials — 5.4% | ||||||||
America Express Company, 3.40%, due 02/27/2023 | 500,000 | 492,120 | ||||||
Citigroup, Inc., 2.90%, due 12/08/2021 | 500,000 | 489,631 | ||||||
Unum Group, 3.00%, due 05/15/2021 | 500,000 | 491,921 | ||||||
Wells Fargo & Company, 3.50%, due 03/08/2022 | 500,000 | 499,280 | ||||||
1,972,952 | ||||||||
Health Care — 1.4% | ||||||||
Anthem, Inc., 2.25%, due 08/15/2019 | 500,000 | 497,279 | ||||||
Industrials — 2.0% | ||||||||
Ryder System, Inc., 2.50%, due 05/11/2020 | 750,000 | 740,892 | ||||||
Telecommunication Services — 1.4% | ||||||||
AT&T, Inc., 2.375%, due 11/27/2018 | 500,000 | 499,820 | ||||||
Utilities — 1.4% | ||||||||
PSEG Power LLC, 3.00%, due 06/15/2021 | 500,000 | 492,251 | ||||||
Total Corporate Bonds (Cost $5,743,234) | $ | 5,693,634 |
| ||||||||
MONEY MARKET FUNDS — 6.4% | Shares | Value | ||||||
Fidelity Institutional Money Market Government Portfolio - Class I, 1.92% (b) (Cost $2,319,929) | 2,319,929 | $ | 2,319,929 | |||||
Total Investments at Value — 100.1% (Cost $25,676,955) | $ | 36,481,015 | ||||||
Liabilities in Excess of Other Assets — (0.1%) | (25,161 | ) | ||||||
Net Assets — 100.0% | $ | 36,455,854 |
ADR- American Depositary Receipt. | |
(a) | Security covers a written call option. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements. |
14
FBP APPRECIATION & INCOME OPPORTUNITIES FUND | |||||||||||||||||
COVERED WRITTEN | Contracts | Notional | Strike | Expiration | Value of | ||||||||||||
ConocoPhillips | 50 | $ | 387,000 | $ | 65.00 | 11/16/18 | $ | 64,250 | |||||||||
Devon EnergyCorporation | 70 | 279,580 | 45.00 | 10/19/18 | 630 | ||||||||||||
Eaton Corporation plc | 25 | 216,825 | 82.50 | 10/19/18 | 11,750 | ||||||||||||
Kohl's Corporation | 10 | 74,550 | 85.00 | 01/18/19 | 2,100 | ||||||||||||
Occidental Petroleum Corporation | 40 | 328,680 | 80.00 | 11/16/18 | 16,600 | ||||||||||||
Target Corporation | 30 | 264,630 | 85.00 | 03/15/19 | 22,350 | ||||||||||||
Target Corporation | 30 | 264,630 | 95.00 | 04/18/19 | 10,500 | ||||||||||||
Walmart, Inc. | 15 | 140,865 | 110.00 | 03/15/19 | 1,080 | ||||||||||||
Total Covered Written Call Options (Premiums received $83,192) | $ | 1,956,760 | $ | 129,260 |
See accompanying notes to financial statements. |
15
THE FLIPPIN, BRUCE & PORTER FUNDS | ||||||||
| FBP Equity | FBP | ||||||
ASSETS | ||||||||
Investments in securities: | ||||||||
At cost | $ | 23,673,600 | $ | 25,676,955 | ||||
At value (Note 2) | $ | 30,614,507 | $ | 36,481,015 | ||||
Cash | — | 2,491 | ||||||
Receivable for capital shares sold | 2,452 | 66,572 | ||||||
Dividends and interest receivable | 47,549 | 80,747 | ||||||
Other assets | 13,166 | 12,103 | ||||||
TOTAL ASSETS | 30,677,674 | 36,642,928 | ||||||
LIABILITIES | ||||||||
Written call options, at value (Notes 2 and 5) (premiums received $236,421 and $83,192, respectively) | 394,630 | 129,260 | ||||||
Distributions payable | 1,992 | 12,547 | ||||||
Payable for capital shares redeemed | 11,299 | 17,663 | ||||||
Accrued investment advisory fees (Note 4) | 14,856 | 19,399 | ||||||
Payable to administrator (Note 4) | 5,700 | 5,700 | ||||||
Other accrued expenses and liabilities | 2,255 | 2,505 | ||||||
TOTAL LIABILITIES | 430,732 | 187,074 | ||||||
NET ASSETS | $ | 30,246,942 | $ | 36,455,854 | ||||
Net assets consist of: | ||||||||
Paid-in capital | $ | 22,701,971 | $ | 24,976,723 | ||||
Accumulated earnings | 7,544,971 | 11,479,131 | ||||||
Net assets | $ | 30,246,942 | $ | 36,455,854 | ||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, $0.01 par value) | 1,113,110 | 1,797,437 | ||||||
Net asset value, offering price and redemption price per share (Note 2) | $ | 27.17 | $ | 20.28 |
See accompanying notes to financial statements. |
16
THE FLIPPIN, BRUCE & PORTER FUNDS | ||||||||
| FBP Equity | FBP | ||||||
INVESTMENT INCOME | ||||||||
Dividends | $ | 465,153 | $ | 432,952 | ||||
Foreign withholding taxes on dividends | — | (2,579 | ) | |||||
Interest | — | 74,960 | ||||||
TOTAL INVESTMENT INCOME | 465,153 | 505,333 | ||||||
EXPENSES | ||||||||
Investment advisory fees (Note 4) | 97,745 | 124,915 | ||||||
Administration fees (Note 4) | 30,000 | 30,000 | ||||||
Professional fees | 12,782 | 12,782 | ||||||
Trustees’ fees and expenses (Note 4) | 6,436 | 6,436 | ||||||
Registration and filing fees | 5,275 | 4,237 | ||||||
Compliance service fees (Note 4) | 4,200 | 4,200 | ||||||
Printing of shareholder reports | 4,830 | 3,025 | ||||||
Custodian and bank service fees | 4,080 | 3,481 | ||||||
Postage and supplies | 2,484 | 1,663 | ||||||
Account maintenance fees | 692 | 1,592 | ||||||
Insurance expense | 597 | 518 | ||||||
Other expenses | 3,810 | 4,489 | ||||||
TOTAL EXPENSES | 172,931 | 197,338 | ||||||
Fees voluntarily waived by the Adviser (Note 4) | (24,000 | ) | (19,000 | ) | ||||
NET EXPENSES | 148,931 | 178,338 | ||||||
NET INVESTMENT INCOME | 316,222 | 326,995 | ||||||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND WRITTEN OPTION CONTRACTS | ||||||||
Net realized gains (losses) from: | ||||||||
Investment transactions | 781,866 | 920,564 | ||||||
Written option contracts (Note 5) | (22,662 | ) | (120,551 | ) | ||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments | 1,601,489 | 1,501,563 | ||||||
Written option contracts (Note 5) | (116,908 | ) | 34,821 | |||||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS AND WRITTEN OPTION CONTRACTS | 2,243,785 | 2,336,397 | ||||||
NET INCREASE IN NET ASSETS FROM OPERATIONS | $ | 2,560,007 | $ | 2,663,392 |
See accompanying notes to financial statements. |
17
FBP EQUITY & DIVIDEND PLUS FUND | ||||||||
| Six Months | Year Ended | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 316,222 | $ | 586,459 | ||||
Net realized gains (losses) from: | ||||||||
Investment transactions | 781,866 | 1,141,946 | ||||||
Written option contracts (Note 5) | (22,662 | ) | 122,178 | |||||
Net realized gains from in-kind redemptions | — | 498,179 | ||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments | 1,601,489 | (230,632 | ) | |||||
Written option contracts (Note 5) | (116,908 | ) | (77,199 | ) | ||||
Net increase in net assets from operations | 2,560,007 | 2,040,931 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (1,005,852 | ) | (2,286,616 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 2,099,181 | 415,812 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 994,065 | 2,251,859 | ||||||
Payments for shares redeemed | (678,963 | ) | (3,558,200 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | 2,414,283 | (890,529 | ) | |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 3,968,438 | (1,136,214 | ) | |||||
NET ASSETS | ||||||||
Beginning of period | 26,278,504 | 27,414,718 | ||||||
End of period | $ | 30,246,942 | $ | 26,278,504 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 76,847 | 16,167 | ||||||
Shares reinvested | 38,221 | 89,387 | ||||||
Shares redeemed | (25,322 | ) | (138,180 | ) | ||||
Net increase (decrease) in shares outstanding | 89,746 | (32,626 | ) | |||||
Shares outstanding, beginning of period | 1,023,364 | 1,055,990 | ||||||
Shares outstanding, end of period | 1,113,110 | 1,023,364 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, distributions to shareholders consisted of $586,581 from net investment income and $1,700,035 from net realized gains from investment transactions. As of March 31, 2018, undistributed net investment income was $2,581. |
See accompanying notes to financial statements. |
18
FBP APPRECIATION & INCOME OPPORTUNITIES FUND | ||||||||
| Six Months | Year Ended | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 326,995 | $ | 739,449 | ||||
Net realized gains (losses) from: | ||||||||
Investment transactions | 920,564 | 791,841 | ||||||
Written option contracts (Note 5) | (120,551 | ) | 39,716 | |||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments | 1,501,563 | 1,095,760 | ||||||
Written option contracts (Note 5) | 34,821 | (83,560 | ) | |||||
Net increase in net assets from operations | 2,663,392 | 2,583,206 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (327,035 | ) | (2,251,693 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 296,143 | 470,661 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 301,411 | 2,180,127 | ||||||
Payments for shares redeemed | (1,092,213 | ) | (2,436,914 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | (494,659 | ) | 213,874 | |||||
TOTAL INCREASE IN NET ASSETS | 1,841,698 | 545,387 | ||||||
NET ASSETS | ||||||||
Beginning of period | 34,614,156 | 34,068,769 | ||||||
End of period | $ | 36,455,854 | $ | 34,614,156 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 14,859 | 24,569 | ||||||
Shares reinvested | 15,234 | 115,761 | ||||||
Shares redeemed | (55,409 | ) | (128,348 | ) | ||||
Net increase (decrease) in shares outstanding | (25,316 | ) | 11,982 | |||||
Shares outstanding, beginning of period | 1,822,753 | 1,810,771 | ||||||
Shares outstanding, end of period | 1,797,437 | 1,822,753 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, distributions to shareholders consisted of $740,853 from net investment income and $1,510,840 from net realized gains from investment transactions. As of March 31, 2018, distributions in excess of net investment income was ($1,981). |
See accompanying notes to financial statements. |
19
FBP EQUITY & DIVIDEND PLUS FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
Six Months | Years Ended March 31, | |||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 25.68 | $ | 25.96 | $ | 22.65 | $ | 24.89 | $ | 24.78 | $ | 21.67 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.30 | 0.57 | 0.50 | 0.61 | 0.50 | 0.42 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments and written option contracts | 2.17 | 1.38 | 3.37 | (1.21 | ) | 0.57 | 3.11 | |||||||||||||||||
Total from investment operations | 2.47 | 1.95 | 3.87 | (0.60 | ) | 1.07 | 3.53 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.30 | ) | (0.57 | ) | (0.50 | ) | (0.61 | ) | (0.51 | ) | (0.42 | ) | ||||||||||||
Distributions from net realized gains | (0.68 | ) | (1.66 | ) | (0.06 | ) | (1.03 | ) | (0.45 | ) | — | |||||||||||||
Total distributions | (0.98 | ) | (2.23 | ) | (0.56 | ) | (1.64 | ) | (0.96 | ) | (0.42 | ) | ||||||||||||
Net asset value at end of period | $ | 27.17 | $ | 25.68 | $ | 25.96 | $ | 22.65 | $ | 24.89 | $ | 24.78 | ||||||||||||
Total return (a) | 9.77 | %(b) | 7.91 | % | 17.29 | % | (2.31 | %) | 4.23 | % | 16.40 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 30,247 | $ | 26,279 | $ | 27,415 | $ | 24,764 | $ | 28,782 | $ | 27,794 | ||||||||||||
Ratio of total expenses to average net assets | 1.24 | %(c) | 1.24 | % | 1.25 | % | 1.19 | % | 1.17 | % | 1.21 | % | ||||||||||||
Ratio of net expenses to average net assets (d) | 1.07 | %(c) | 1.07 | % | 1.07 | % | 1.07 | % | 1.07 | % | 1.07 | % | ||||||||||||
Ratio of net investment income to average net assets (d) | 2.26 | %(c) | 2.19 | % | 2.07 | % | 2.60 | % | 1.98 | % | 1.82 | % | ||||||||||||
Portfolio turnover rate | 10 | %(b) | 18 | % | 19 | % | 21 | % | 19 | % | 24 | % |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Not annualized. |
(c) | Annualized. |
(d) | Ratios were determined after voluntary advisory fee waivers by the Adviser (Note 4). |
See accompanying notes to financial statements. |
20
FBP APPRECIATION & INCOME OPPORTUNITIES FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
Six Months | Years Ended March 31, | |||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 18.99 | $ | 18.81 | $ | 16.55 | $ | 18.53 | $ | 18.97 | $ | 17.16 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.18 | 0.41 | 0.28 | 0.31 | 0.26 | 0.25 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments and written option contracts | 1.29 | 1.03 | 2.28 | (1.11 | ) | 0.19 | 2.50 | |||||||||||||||||
Total from investment operations | 1.47 | 1.44 | 2.56 | (0.80 | ) | 0.45 | 2.75 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.18 | ) | (0.41 | ) | (0.28 | ) | (0.32 | ) | (0.26 | ) | (0.26 | ) | ||||||||||||
Distributions from net realized gains | — | (0.85 | ) | (0.02 | ) | (0.86 | ) | (0.63 | ) | (0.68 | ) | |||||||||||||
Total distributions | (0.18 | ) | (1.26 | ) | (0.30 | ) | (1.18 | ) | (0.89 | ) | (0.94 | ) | ||||||||||||
Net asset value at end of period | $ | 20.28 | $ | 18.99 | $ | 18.81 | $ | 16.55 | $ | 18.53 | $ | 18.97 | ||||||||||||
Total return (a) | 7.78 | %(b) | 7.91 | % | 15.58 | % | (4.48 | %) | 2.36 | % | 16.50 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 36,456 | $ | 34,614 | $ | 34,069 | $ | 31,669 | $ | 38,991 | $ | 39,951 | ||||||||||||
Ratio of total expenses to average net assets | 1.11 | %(c) | 1.10 | % | 1.12 | % | 1.05 | % | 1.04 | % | 1.03 | % | ||||||||||||
Ratio of net expenses to average net assets (d) | 1.00 | %(c) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of net investment income to average net assets (d) | 1.83 | %(c) | 2.16 | % | 1.57 | % | 1.75 | % | 1.36 | % | 1.36 | % | ||||||||||||
Portfolio turnover rate | 11 | %(b) | 10 | % | 18 | % | 23 | % | 12 | % | 10 | % |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Not annualized. |
(c) | Annualized. |
(d) | Ratios were determined after voluntary advisory fee waivers by the Adviser (Note 4). |
See accompanying notes to financial statements. |
21
THE FLIPPIN, BRUCE & PORTER FUNDS |
1. Organization
FBP Equity & Dividend Plus Fund and FBP Appreciation & Income Opportunities Fund (each a “Fund” and collectively the “Funds”) are no-load, diversified series of Williamsburg Investment Trust (the “Trust”), an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Trust was organized as a Massachusetts business trust on July 18, 1988. Other series of the Trust are not included in this report.
FBP Equity & Dividend Plus Fund seeks to provide above-average and growing income while also achieving long-term growth of capital.
FBP Appreciation & Income Opportunities Fund seeks long-term capital appreciation and current income, assuming a moderate level of investment risk.
2. Significant Accounting Policies
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted regulations that eliminated or amended disclosure requirements that were redundant or outdated in light of changes in the SEC requirements, accounting principles generally accepted in the United States of America (“GAAP”), International Financial Reporting Standards or changes in technology or the business environment. These regulations were effective November 5, 2018, and the Funds are complying with them effective with these financial statements.
Each Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.” The following is a summary of the Funds’ significant accounting policies. These policies are in conformity with GAAP.
New Accounting Pronouncement — On August 28, 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820, “Fair Value Measurement” (“ASC 820”). ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration of entities when evaluating disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. Management is evaluating what, if any, impact the adoption of ASU 2018-13 will have on the Funds’ financial statements.
Securities valuation — The Funds’ portfolio securities are valued as of the close of business of the regular session of the New York Stock Exchange (normally 4:00 p.m. Eastern time). Securities traded on a national stock exchange, including common stocks and closed-end investment companies, if any, are valued based upon the closing price on the principal exchange where the security is traded, if available, otherwise, at the last quoted bid price. Securities that are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Covered call options written by the Funds are valued at the last quoted sale price or, in the absence of a sale, at the ask price on the principal exchanges on which they are traded. Investments representing shares of
22
THE FLIPPIN, BRUCE & PORTER FUNDS |
money market funds and other open-end investment companies are valued at their net asset value (“NAV”) as reported by such companies. When using a quoted price and when the market is considered active, securities will be classified as Level 1 within the fair value hierarchy (see below).
Fixed income securities, including U.S. government agency obligations and corporate bonds, are typically valued on the basis of prices provided by an independent pricing service. The prices provided by the pricing service are determined with consideration given to institutional bid and last sale prices and take into account securities prices, yields, maturities, call features, ratings, institutional trading in similar groups of securities, and developments related to specific securities. Given the inputs used by the pricing service, these securities are classified as Level 2 within the fair value hierarchy.
When market quotations are not readily available, if a pricing service cannot provide a price, or if the investment adviser believes the price received from the pricing service is not indicative of market value, securities will be valued in good faith at fair value using methods consistent with procedures adopted by the Board of Trustees and will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. Such methods of fair valuation may include, but are not limited to: multiple of earnings, multiple of book value, discount from market of a similar freely traded security, purchase price of the security, subsequent private transactions in the security or related securities, or a combination of these and other factors.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. Various inputs are used in determining the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below:
● | Level 1 – quoted prices in active markets for identical securities |
● | Level 2 – other significant observable inputs |
● | Level 3 – significant unobservable inputs |
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value each Fund’s investments and other financial instruments as of September 30, 2018, by security type:
FBP Equity & Dividend Plus Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Investments in Securities: | ||||||||||||||||
Common Stocks | $ | 28,165,400 | $ | — | $ | — | $ | 28,165,400 | ||||||||
Money Market Funds | 2,449,107 | — | — | 2,449,107 | ||||||||||||
Total | $ | 30,614,507 | $ | — | $ | — | $ | 30,614,507 | ||||||||
Other Financial Instruments: | ||||||||||||||||
Covered Written Call Options | $ | (394,630 | ) | $ | — | $ | — | $ | (394,630 | ) | ||||||
Total | $ | (394,630 | ) | $ | — | $ | — | $ | (394,630 | ) |
23
THE FLIPPIN, BRUCE & PORTER FUNDS |
FBP Appreciation & Income | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Investments in Securities: | ||||||||||||||||
Common Stocks | $ | 27,981,195 | $ | — | $ | — | $ | 27,981,195 | ||||||||
U.S. Government Agency Obligations | — | 486,257 | — | 486,257 | ||||||||||||
Corporate Bonds | — | 5,693,634 | — | 5,693,634 | ||||||||||||
Money Market Funds | 2,319,929 | — | — | 2,319,929 | ||||||||||||
Total | $ | 30,301,124 | $ | 6,179,891 | $ | — | $ | 36,481,015 | ||||||||
Other Financial Instruments: | ||||||||||||||||
Covered Written Call Options | $ | (129,260 | ) | $ | — | $ | — | $ | (129,260 | ) | ||||||
Total | $ | (129,260 | ) | $ | — | $ | — | $ | (129,260 | ) |
Refer to each Fund’s Schedule of Investments for a listing of the common stocks and corporate bonds by sector type. As of September 30, 2018, the Funds did not have any transfers into or out of any Level. There were no Level 3 investments held by the Funds as of September 30, 2018. It is the Funds’ policy to recognize transfers into or out of any Level at the end of the reporting period.
Share valuation — The NAV per share of each Fund is calculated daily by dividing the total value of its assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Fund is equal to its NAV per share.
Investment income — Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. Discounts and premiums on fixed income securities purchased are amortized using the interest method. Withholding taxes on foreign dividends have been recorded in accordance with the Funds’ understanding of the applicable country’s rules and tax rates.
Distributions to shareholders — Dividends arising from net investment income are declared and paid quarterly to shareholders of each Fund. Net realized short-term capital gains, if any, may be distributed throughout the year and net realized long-term capital gains, if any, are distributed at least once each year. The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are either temporary or permanent in nature. Dividends and distributions are recorded on the ex-dividend date. The tax character of distributions paid during the periods ended September 30, 2018 and March 31, 2018 was as follows:
| Period | Ordinary | Long-Term | Total | |||||||||
FBP Equity & Dividend Plus Fund | 09/30/18 | $ | 333,260 | $ | 672,592 | $ | 1,005,852 | ||||||
03/31/18 | $ | 636,626 | $ | 1,649,990 | $ | 2,286,616 | |||||||
FBP Appreciation & Income | 09/30/18 | $ | 327,035 | $ | — | $ | 327,035 | ||||||
Opportunities Fund | 03/31/18 | $ | 816,087 | $ | 1,435,606 | $ | 2,251,693 |
Investment transactions — Investment transactions are accounted for on trade date for financial reporting purposes. Realized gains and losses on investments sold are determined on a specific identification basis.
24
THE FLIPPIN, BRUCE & PORTER FUNDS |
Common expenses — Common expenses of the Trust are allocated among the Funds and the other series of the Trust based on relative net assets of each series or the nature of the services performed and the relative applicability to each series.
Options transactions — When the Funds’ investment adviser believes that individual portfolio investment securities held by the Funds are approaching the top of the adviser’s growth and price expectations, covered call options can be written (sold) against such securities and the Funds will receive a premium in return. The Funds write options only for income generation and hedging purposes and not for speculation. The premiums received from writing the options are recorded as a liability and are subsequently valued daily at the closing prices on their primary exchanges. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised increase the proceeds used to calculate the realized gain or loss on the sale of the underlying security. If a closing purchase transaction is used to terminate a Fund’s obligation on a call option, a gain or loss will be realized, depending upon whether the price of the closing purchase transaction is more or less than the premium previously received on the call option written.
Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Federal income tax — Each Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Funds of liability for federal income taxes to the extent 100% of their net investment income and any net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of September 30, 2018:
| FBP Equity | FBP Appreciation | ||||||
Tax cost of portfolio investments and written option contracts | $ | 23,437,179 | $ | 25,598,371 | ||||
Gross unrealized appreciation | $ | 7,554,672 | $ | 11,372,857 | ||||
Gross unrealized depreciation | (771,974 | ) | (619,473 | ) | ||||
Net unrealized appreciation | 6,782,698 | 10,753,384 | ||||||
Accumulated ordinary income | 5,221 | 14,159 | ||||||
Accumulated capital and other gains | 759,044 | 724,135 | ||||||
Distribution payable | (1,992 | ) | (12,547 | ) | ||||
Accumulated distributable earnings | $ | 7,544,971 | $ | 11,479,131 |
25
THE FLIPPIN, BRUCE & PORTER FUNDS |
The difference between the federal income tax cost of portfolio investments and the financial statement cost of portfolio investments for FBP Appreciation & Income Opportunities Fund is due to certain differences in the recognition of capital gains and losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are primarily due to differing methods in the amortization of discounts and premiums on fixed income securities.
The Funds recognize the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions taken by each Fund on federal income tax returns for the current and all open tax years (generally three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements.
3. Investment Transactions
Investment transactions, other than short-term investments and U.S. government securities, were as follows for the six months ended September 30, 2018:
| FBP Equity | FBP Appreciation | ||||||
Purchases of investment securities | $ | 3,181,101 | $ | 3,594,721 | ||||
Proceeds from sales and maturities of investment securities | $ | 2,577,067 | $ | 3,797,557 |
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENTS
Each Fund’s investments are managed by Flippin, Bruce & Porter, Inc. (the “Adviser”) under the terms of an Investment Advisory Agreement. Under the Investment Advisory Agreements, each Fund pays the Adviser a fee, which is computed and accrued daily and paid monthly, at an annual rate of 0.70% of its average daily net assets up to $250 million; 0.65% of the next $250 million of such assets; and 0.50% of such assets in excess of $500 million.
During the six months ended September 30, 2018, the Adviser voluntarily waived $24,000 and $19,000 of its investment advisory fees from FBP Equity & Dividend Plus Fund and FBP Appreciation & Income Opportunities Fund, respectively. These amounts are not subject to recapture in future periods.
Certain officers and a Trustee of the Trust are also officers of the Adviser.
26
THE FLIPPIN, BRUCE & PORTER FUNDS |
OTHER SERVICE PROVIDERS
Ultimus Fund Solutions, LLC (“Ultimus”) provides administration, fund accounting, compliance and transfer agent services to the Funds. The Funds pay Ultimus fees in accordance with the agreements for such services. In addition, the Funds pay out-of-pocket expenses including, but not limited to, postage, supplies, and costs of pricing the Funds’ portfolio securities. Certain officers of the Trust are also officers of Ultimus, or of Ultimus Fund Distributors, LLC (the “Distributor”), the principal underwriter of each Fund’s shares and an affiliate of Ultimus. The Distributor is compensated by the Adviser (not the Funds) for acting as principal underwriter.
COMPENSATION OF TRUSTEES
Trustees and officers affiliated with the Adviser or Ultimus are not compensated by the Trust for their services. Each Trustee who is not an affiliated person of the Adviser or Ultimus receives from the Trust an annual retainer of $20,000, payable quarterly; a fee of $2,000 for attendance at each meeting of the Board of Trustees (except that such fee is $3,000 for the independent chair); and a fee of $1,000 for attendance at each meeting of any committee of the Board (except that such fee is $1,500 for the committee chair); plus reimbursement of travel and other expenses incurred in attending meetings. Each Fund pays its proportionate share of such fees along with the other series of the Trust.
5. Derivatives Transactions
The location in the Statements of Assets and Liabilities of the Funds’ derivative positions is as follows:
FBP Equity & Dividend Plus Fund
| Gross Notional | ||||||||||||
Type of Derivative (Risk) | Location | Asset | Liability | September 30, | |||||||||
Call options written (Equity) | Written call options, at value | $ | — | $ | (394,630 | ) | $ | (6,589,807 | ) |
FBP Appreciation & Income Opportunities Fund
| Gross Notional | ||||||||||||
Type of Derivative (Risk) | Location | Asset | Liability | September 30, | |||||||||
Call options written (Equity) | Written call options, at value | $ | — | $ | (129,260 | ) | $ | (1,956,760 | ) |
27
THE FLIPPIN, BRUCE & PORTER FUNDS |
The Funds’ transactions in derivative instruments during the six months ended September 30, 2018 are recorded in the following location in the Statements of Operations:
FBP Equity & Dividend Plus Fund
Type of Derivative (Risk) | Location | Net | Location | Change in | ||||||
Call options written (Equity) | Net realized gains (losses) from written option contracts | $ | (22,662 | ) | Net change in unrealized appreciation (depreciation) on written option contracts | $ | (116,908 | ) |
FBP Appreciation & Income Opportunities Fund
Type of Derivative (Risk) | Location | Net | Location | Change in | ||||||
Call options written (Equity) | Net realized gains (losses) from written option contracts | $ | (120,551 | ) | Net change in unrealized appreciation (depreciation) on written option contracts | $ | 34,821 |
The average monthly notional amount of written call options during the six months ended September 30, 2018 is $5,605,136 and $1,879,105 for FBP Equity & Dividend Plus Fund and FBP Appreciation & Income Opportunities Fund, respectively.
6. Contingencies and Commitments
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from the performance of their duties to the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Trust expects the risk of loss to be remote.
7. Subsequent Events
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.
28
THE FLIPPIN, BRUCE & PORTER FUNDS |
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of a Fund, you incur ongoing costs, including management fees and other operating expenses. These ongoing costs, which are deducted from each Fund’s gross income, directly reduce the investment return of the Funds.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The examples below are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (April 1, 2018 through September 30, 2018).
The table below illustrates each Fund’s ongoing costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from each Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Funds. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, 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 given for the Funds under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare the Funds’ ongoing costs with those of other mutual funds. It assumes that each Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the returns used are not the Funds’ actual returns, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess each Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Funds do not charge sales loads or redemption fees.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
More information about the Funds’ expenses, including annual expense ratios for the past five fiscal years, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Funds’ prospectus.
29
THE FLIPPIN, BRUCE & PORTER FUNDS |
| Beginning | Ending | Net | Expenses |
FBP Equity & Dividend Plus Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,097.70 | 1.07% | $5.63 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,019.70 | 1.07% | $5.42 |
FBP Appreciation & Income Opportunities Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,077.80 | 1.00% | $5.21 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.05 | 1.00% | $5.06 |
(a) | Annualized, based on each Fund’s most recent one-half year expenses. |
(b) | Expenses are equal to each Fund’s annualized net expense ratio multiplied by the average account value over the period, muliplied by 183/365 (to reflect the one-half year period). |
30
THE FLIPPIN, BRUCE & PORTER FUNDS |
The Trust files a complete listing of portfolio holdings for the Funds with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. The filings are available upon request, by calling 1-800-327-9375. Furthermore, you may obtain a copy of these filings on the SEC’s website at http://www.sec.gov.
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-800-327-9375, or on the SEC’s website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available without charge upon request by calling toll-free 1-800-327-9375, or on the SEC’s website at http://www.sec.gov.
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| |||
Investment Adviser
Flippin, Bruce & Porter, Inc. 800 Main Street, Second Floor P.O. Box 6138 Lynchburg, Virginia 24505 Toll-Free 1-800-851-3804 www.fbpfunds.com
Administrator
Ultimus Fund Solutions, LLC P.O. Box 46707 Cincinnati, Ohio 45246-0707 Toll-Free 1-866-738-1127
Custodian
U.S. Bank, N.A. 425 Walnut Street Cincinnati, Ohio 45202
Independent Registered
Cohen & Company, Ltd. Cleveland, Ohio 44115
| Legal Counsel
Sullivan & Worcester LLP 1666 K Street, N.W. Washington, DC 20006
Officers
John T. Bruce, President and Portfolio Manager Norman D. Darden, III, John H. Hanna, IV, Vice President
Trustees
Robert S. Harris, Ph.D., Chairman John P. Ackerly, IV John T. Bruce George K. Jennison Harris V. Morrissette Elizabeth W. Robertson |
34
THE GOVERNMENT STREET FUNDS
No-Load Mutual Funds
Semi-Annual Report
|
The Government Street Equity Fund The Government Street Mid-Cap Fund The Alabama Tax Free Bond Fund
|
LETTER FROM THE PRESIDENT | November 6, 2018 |
Dear Fellow Shareholders:
We are enclosing for your review the audited Semi-Annual Reports of The Government Street Funds for the period ended September 30, 2018.
The Government Street Equity Fund
The Government Street Equity Fund had a positive 10.87% total return for the 6 month period ended September 30, 2018. By comparison, the S&P 500® Index and the Morningstar Large Blend categories returned 11.41% and 9.53%, respectively.
| Government | S&P 500 | Morningstar |
3 Qtr 2018 | 8.75% | 7.71% | 6.67% |
2 Qtr 2018 | 1.95% | 3.43% | 2.68% |
1 Qtr 2018 | -0.74% | -0.76% | -0.98% |
4 Qtr 2017 | 6.01% | 6.64% | 6.41% |
Year ended 9/30/18 | 16.67% | 17.91% | 15.35% |
As can be seen in the chart, your Fund and the other representative measures of large capitalization securities enjoyed strong positive returns for the same semi-annual period covered by this report. The double-digit returns for the twelve month period were exceptionally robust.
The U.S. markets were propelled by continued strong profit growth, thanks in large part to the Trump corporate tax cuts along with reduced regulatory constraints. S&P 500 operating earnings per share grew 27% year over year in the third quarter compared to their 6% long term annualized growth rate. A record high 80% of the S&P 500 companies reported earnings that beat the consensus expectation. Record levels of share buybacks provided further support for the U.S. markets. It was a good year to be invested in large capitalization domestic stocks.
Within the S&P 500, growth stocks outperformed value stocks for the twelve months, by 25.21% to 10.06% respectively. Apple, Inc. achieved a market capitalization in excess of one trillion dollars for the first time. Other growth stocks achieved many individual historic high values in the period.
At the same time, other areas of domestic markets achieved strong results. The S&P Mid Capitalization 400 Index and the Russell 2000 Index (small capitalization index) turned in positive results of 14.21% and 15.24%, respectively, for the year ended September 30, 2018. All domestic markets eclipsed international investments as represented by MSCI EAFE Index (large capitalization developed countries index) and the MSCI Emerging Market Index which achieved 2.74% and -0.81%, respectively, for the same period.
Major purchases for the period were Amazon and Alibaba (Consumer Discretionary), Walmart (Consumer Staples), Skyworks Solutions, Micron Technology and QUALCOMM (Information Technology).
1
Major sales for the period were Vulcan Materials (Materials), Berkshire Hathaway - Class B, Brookfield Asset Management (Financials) and Vanguard Mid-Cap (EFT).
The transactions, in total, were distributed along the investment sectors of your Fund with the Standard & Poor’s 500 sectors as guidelines. While your Fund is not invested with a pseudo index approach, the sectors provide an objective comparison for the diversification we believe important for the control of relative risk in your portfolio. Over all we depend on our own conclusions as to the ultimate security selection and position weightings.
The top 10 holdings in The Government Street Equity Fund as of September 30, 2018 were:
Security Description | % of Net Assets |
Apple, Inc. | 6.3% |
JPMorgan Chase & Company | 4.7% |
Visa, Inc. – Class A | 4.2% |
Lockheed Martin Corporation | 4.0% |
NVIDIA Corporation | 3.8% |
United Technologies Corporation | 2.9% |
Bio-Techne Corporation | 2.8% |
Honeywell International, Inc. | 2.6% |
Comcast Corporation – Class A | 2.4% |
Alphabet, Inc. – Class C | 2.4% |
There were significant individual performances during the twelve months ended September 30, 2018. The five highest returns, held for the entire 12 months, as measured by the time weighted rate of return were:
Security Description | 1 Year |
Bio-Techne Corporation | 70.28% |
NIKE, Inc – Class B | 65.07% |
NVIDIA Corporation | 57.65% |
Mastercard, Inc. – Class A | 56.93% |
Microsoft Corporation | 56.21% |
The five worst individual performances, held for the twelve months ended September 30, 2018, as measured by time weighted rate of return for the entire period were:
Security Description | 1 Year |
Comcast Corporation – Class A | -6.17% |
Tencent Holdings Ltd. - ADR | -7.01% |
Micron Technology, Inc. | -11.97% |
BorgWarner, Inc. | -15.32% |
Skyworks Solutions, Inc. | -17.82% |
2
The Fund’s best performing economic sector for the 12 months was Information Technology, up 33.8%. The second-best sector was Consumer Discretionary up 28.5%. The worst performing sector was Real Estate down -2.7%.
Note: The investment performances listed for economic sectors and securities in the two preceding paragraphs are extracted from an in-house independent time weighted rates of return computation by the Addepar portfolio accounting system. The calculations are gross investment returns. Total investment returns are for the twelve months ended September 30, 2018.
The following comments are drawn from previous newsletters but continue to reflect our current thoughts on the future investment prospects.
We believe that continued upward movement of markets and economies worldwide are highly dependent on Governments getting their financial balance sheets in order. There has been unparalleled deficit spending around the world. Those economies not directly participating in the credit shortfalls will be indirectly impacted by lower import/export activities brought on by significant debt imposed slowdown. This will occur domestically and internationally as economies have become more highly correlated in their economic cycles.
In response to this perceived scenario; risk management takes precedent over return pursuits in the near term. We believe your Fund remains invested to capture returns, but highly diversified to mitigate the risks associated with that position. We believe that the future transition to a sound economic scenario will determine the continuation of current positive performances. We are not totally convinced of that outcome.
While significant risks exist, we continue to believe that investors have potential for one of the greatest investment environments for generations. There are over 7 billion people in the world today (USA population is approximately 325 million). Many of these potential consumers are moving into middle class ranks. In our opinion, the demand for goods and services for the future is tremendous. Remember that, in our own economy, approximately 60% of GDP is tied to consumers. With the business advantages that the USA enjoys in manufacturing know how, technology, intellectual content, productivity, and numerous other characteristics, if the U.S. Government will provide a competitive framework for operating, the benefits could be the best ever. We just need Government policies that foster growth in profits and wages domestically and internationally. We believe that tax rate reduction (specifically corporate rates) and reduced regulatory burdens are an important first step.
There are many additional moving parts in our economy and exogenous factors such as the geopolitical instabilities that will always cause uneven effects. However, it is our thought that keeping our fiscal house in order is basic to all considerations. The irresponsible spending activities of our Government continue to unnerve us. It remains to be seen if the economy can overcome the negative influence of Government policies and have a successful impact on market values. We see Government debt as being the single greatest threat to the future of our Country.
3
As of September 30, 2018, the Fund’s net assets were $64.5 million; net asset value per share was $80.10; and the annualized ratio of expenses to net average assets was 0.89%. Portfolio turnover rate was 7% (not annualized). Income dividends of $0.3000 per share and capital gains of $2.1120 per share were distributed to shareholders during the six months ended September 30, 2018.
The Government Street Mid-Cap Fund
The Government Street Mid-Cap Fund, as of September 30, 2018, produced a fiscal 6 month total return of 6.15%. By comparison the Standard & Poor’s 400® Index and the Morningstar Mid Cap Blended Index, used as relative performance benchmarks, were positive 8.32% and 7.00%, respectively.
The mid-capitalization category of individual companies is usually represented by the Standard & Poor’s 400 ranging from approximately $1.1 billion to $10.0 billion market values. Generally, these companies are considered to have slightly higher risk and return characteristics than the S&P 500 companies, which start at the upper end of the mid cap values and range in sizes 10 times or greater in terms of capitalization. As you would guess, the mid-cap companies tend to be primarily domestically oriented.
Your Fund has a slightly different range of capitalizations than the S&P 400. Upper and lower limits for Fund purchase consideration are $11.7 billion and $894 million, respectively. There are 2 provisions that allow the makeup of the Fund to exceed those limits. To the extent securities originally purchased within the limits have grown to greater capitalizations they may be retained without limitation. Secondly, the Fund manager has latitude to purchase and hold up to 20% of the Fund’s value outside the limitations.
It should be noted that your Fund has initiated positions directly into International investments thru individual stock purchases. These investments meet the same capitalization constraints as domestic security holdings. This global approach is being done to provide additional diversification of the portfolio’s risk component and to address attractive potential return areas. The approach falls within the allowed exceptions previously cited and are expected to improve the compounded investment return over time.
The top 10 holdings in The Government Street Mid-Cap Fund as of September 30, 2018 were:
Security Description | % of Net Assets |
Mid-America Apartment Communities, Inc. | 3.0% |
NVIDIA Corporation | 2.8% |
Vanguard Mid-Cap ETF | 2.4% |
Invesco Zacks Mid-Cap ETF | 2.4% |
Lam Research Corporation | 2.2% |
Teleflex, Inc. | 2.1% |
Bio-Techne Corporation | 2.1% |
CME Group, Inc. | 2.0% |
Graco, Inc. | 2.0% |
Chemed Corporation | 1.9% |
4
Exchange-traded funds represent significant holdings in the Fund. Vanguard and Invesco mid-caps are all constituted differently but cover the capitalization ranges mentioned earlier. Since the mid-cap universe contains a much greater number of companies than its larger index counterparts, we like to broaden your portfolios exposure across the range to govern risk control through diversification.
There were significant individual performances during the twelve months ended September 30, 2018. The five highest returns, held for the entire period, as measured by the time weighted rate of return, were:
Security Description | 1 Year |
Bio-Techne Corporation | 70.28% |
Broadridge Financial Solutions, Inc. | 65.59% |
Chemed Corporation | 58.79% |
NVIDIA Corporation | 57.90% |
ANSYS, Inc. | 52.11% |
The five worst individual performances, held for the entire period, as measured by time weighted rate of return, were:
Security Description | 1 Year |
NVR, Inc. | -13.78% |
Lam Research Corporation | -16.66% |
Scotts Miracle-Gro Company (The) | -17.14% |
Tech Data Corporation | -19.45% |
Albemarle Corporation | -25.83% |
The Fund’s best performing economic sector for the 12 months was Health Care, up 32.4%. The second-best sector was Industrials, up 20.7%. The worst performing sector was Materials, down -4.2%.
Note: The investment performances listed for economic sectors and securities in the two preceding paragraphs are extracted from an in-house independent time weighted rates of return computation by the Addepar portfolio accounting system. The calculations are gross investment returns. Total investment returns are for the year ended September 30, 2018.
We believe that mid cap stocks offer an attractive combination of growth and safety as they have successfully overcome startup challenges yet remain nimble enough to generate stronger growth than large cap stocks. Mid cap stocks have been able to match the performance of large cap stocks in down markets while exceeding large cap performance in up markets, leading to long-term outperformance.
5
It may be interesting for the readers to compare and contrast the Global Industry Classification Standard (GICS) sectors between the larger capitalization S&P 500 and the lower capitalization S&P 400. The approximate weights based on component’s capitalizations change daily but are reasonably stable over short periods. As of October 26, 2017, they are:
GICS | S&P 500 | S&P 400 |
Energy | 5.69% | 5.33% |
Materials | 2.35% | 6.81% |
Industrials | 9.29% | 14.58% |
Consumer Discretionary | 9.80% | 11.67% |
Consumer Staples | 7.48% | 3.34% |
Health Care | 15.25% | 10.18% |
Financials | 13.56% | 16.00% |
Information Technology | 20.60% | 16.46% |
Telecommunication Services | 9.93% | 2.13% |
Utilities | 3.19% | 4.63% |
Real Estate | 2.86% | 8.87% |
The Government Street Mid Cap Fund uses the S&P 400 sector weights for guidance in its diversification of investment holdings.
As of September 30, 2018, the net assets of the Government Street Mid Cap Fund were $49.7 million and the net asset value per share was $27.77. The turnover rate for the previous six months was 5% and the total number of holdings was 93 as of September 30, 2018. The net annualized expense ratio for the Fund was 1.08%.
The Alabama Tax Free Bond Fund
Investors in fixed income markets remain focused on actions of the U.S. Federal Reserve as the long period of near zero interest rates fades into the past. Driven by strong economic data, the Federal Reserve raised the target federal funds rate by 0.25% to a range of 2% to 2.25% in September, 2018. This was the third such quarter point increase this year and expectations are for another 25 basis points hike in December, 2018. The Federal Open Market Committee projects another three rate hikes in 2019. The 10-year Treasury yield rose to 3.05% at the end of September, 2018, flirting with a seven-year high.
Bond yields rose across the curve but the spread between shorter-term rates and longer-term rates was at a decade low level at the end of September. An inverted yield curve (short rates higher than long rates) draws the attention of investors as a signal that a recession is on the horizon. The gap between the yields on two and ten year Treasuries narrowed to 0.20 percentage point in the third quarter of 2018. The flattening yield curve has emerged despite continued strong economic growth, a near record low unemployment rate and rising corporate profits. Inflation remains subdued and wage pressures are just beginning to show signs of increasing, and the Fed has made it clear that it does not want to raise rates too far and have economic growth grind to a halt.
6
Municipal bonds generally posted modest positive returns during the past six month period. The total return of the Alabama Tax Free Bond Fund for the six months ended September 30, 2018 was 0.24%. For the same period the Bloomberg Barclays 3-year Municipal Bond Index had a total return of 0.53% and the Bloomberg Barclays 7-year Municipal Bond Index returned 0.85%. The Alabama Tax Free Bond Fund has a generally defensive portfolio of high quality and short duration bonds. More than 90% of the portfolio is rated A, AA or AAA by Moody’s or Standard & Poor’s rating agencies. The duration of the portfolio as of September 30, 2018 was 3.4 years, up from 3.1 years at the end of the prior fiscal year. The Fund’s weighted average maturity was 3.8 years.
The net assets of the Fund as of September 30, 2018 were $22,342,096 and the net asset value per share was $10.17. The annualized ratio of net investment income to average net assets during the six months was 1.25% and the annualzied ratio of net expenses to average net assets was 0.65%.
Thank you for your continued confidence in The Government Street Funds. Please call us if we can be of further service to you.
Very truly yours,
Thomas W. Leavell
President
Leavell Investment Management, Inc.
The Government Street Funds
7
THE GOVERNMENT STREET EQUITY FUND PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Asset Allocation
(% of Net Assets)
Top Ten Equity Holdings
Security Description | % of Net Assets |
Apple, Inc. | 6.3% |
JPMorgan Chase & Company | 4.7% |
Visa, Inc. - Class A | 4.2% |
Lockheed Martin Corporation | 4.0% |
NVIDIA Corporation | 3.8% |
United Technologies Corporation | 2.9% |
Bio-Techne Corporation | 2.8% |
Honeywell International, Inc. | 2.6% |
Comcast Corporation - Class A | 2.4% |
Alphabet, Inc. - Class C | 2.4% |
8
THE GOVERNMENT STREET MID-CAP FUND PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Asset Allocation
(% of Net Assets)
Top Ten Equity Holdings
Security Description | % of Net Assets |
Mid-America Apartment Communities, Inc. | 3.0% |
NVIDIA Corporation | 2.8% |
Vanguard Mid-Cap ETF | 2.4% |
Invesco Zacks Mid-Cap ETF | 2.4% |
Lam Research Corporation | 2.2% |
Teleflex, Inc. | 2.1% |
Bio-Techne Corporation | 2.1% |
CME Group, Inc. | 2.0% |
Graco, Inc. | 2.0% |
Chemed Corporation | 1.9% |
9
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Asset Allocation
(% of Net Assets)
Distribution by Rating | ||
Rating | % of Holdings | |
AAA | 18% | |
AA | 68% | |
A | 4% | |
Not Rated | 10% |
10
THE GOVERNMENT STREET EQUITY FUND | ||||||||
COMMON STOCKS — 94.0% | Shares | Value | ||||||
Consumer Discretionary — 11.2% | ||||||||
Amazon.com, Inc. (a) | 550 | $ | 1,101,650 | |||||
BorgWarner, Inc. | 8,000 | 342,240 | ||||||
Comcast Corporation - Class A | 44,000 | 1,558,040 | ||||||
Home Depot, Inc. (The) | 6,500 | 1,346,475 | ||||||
Lowe's Companies, Inc. | 8,000 | 918,560 | ||||||
McDonald's Corporation | 5,000 | 836,450 | ||||||
NIKE, Inc. - Class B | 10,000 | 847,200 | ||||||
Vail Resorts, Inc. | 1,000 | 274,420 | ||||||
7,225,035 | ||||||||
Consumer Staples — 4.1% | ||||||||
Coca-Cola Company (The) | 12,000 | 554,280 | ||||||
McCormick & Company, Inc. | 7,000 | 922,250 | ||||||
Walmart, Inc. | 12,500 | 1,173,875 | ||||||
2,650,405 | ||||||||
Energy — 4.8% | ||||||||
Marathon Petroleum Corporation | 10,000 | 799,700 | ||||||
Pioneer Natural Resources Company | 7,500 | 1,306,425 | ||||||
Valero Energy Corporation | 8,500 | 966,875 | ||||||
3,073,000 | ||||||||
Financials — 13.3% | ||||||||
Aflac, Inc. | 23,130 | 1,088,729 | ||||||
BB&T Corporation | 7,000 | 339,780 | ||||||
Brookfield Asset Management, Inc. - Class A | 24,000 | 1,068,720 | ||||||
CME Group, Inc. | 8,500 | 1,446,785 | ||||||
Intercontinental Exchange, Inc. | 20,000 | 1,497,800 | ||||||
JPMorgan Chase & Company | 27,000 | 3,046,680 | ||||||
U.S. Bancorp | 2,000 | 105,620 | ||||||
8,594,114 | ||||||||
Health Care — 10.1% | ||||||||
Abbott Laboratories | 9,000 | 660,240 | ||||||
AbbVie, Inc. | 11,500 | 1,087,670 | ||||||
Bio-Techne Corporation | 9,000 | 1,836,990 | ||||||
Centene Corporation (a) | 7,000 | 1,013,460 | ||||||
Henry Schein, Inc. (a) | 9,000 | 765,270 | ||||||
Pfizer, Inc. | 24,000 | 1,057,680 | ||||||
UnitedHealth Group, Inc. | 500 | 133,020 | ||||||
6,554,330 | ||||||||
Industrials — 12.7% | ||||||||
Emerson Electric Company | 13,000 | 995,540 | ||||||
General Dynamics Corporation | 5,200 | 1,064,544 | ||||||
Honeywell International, Inc. | 10,000 | 1,664,000 | ||||||
Lockheed Martin Corporation | 7,500 | 2,594,700 |
11
THE GOVERNMENT STREET EQUITY FUND | ||||||||
COMMON STOCKS — 94.0% (Continued) | Shares | Value | ||||||
Industrials — 12.7% (Continued) | ||||||||
United Technologies Corporation | 13,500 | $ | 1,887,435 | |||||
8,206,219 | ||||||||
Information Technology — 29.3% | ||||||||
Accenture plc - Class A | 8,150 | 1,387,130 | ||||||
Alibaba Group Holding Ltd. - ADR (a) | 2,500 | 411,900 | ||||||
Alphabet, Inc. - Class A (a) | 800 | 965,664 | ||||||
Alphabet, Inc. - Class C (a) | 1,302 | 1,553,898 | ||||||
Apple, Inc. | 18,000 | 4,063,320 | ||||||
Baidu, Inc. - ADR (a) | 1,500 | 343,020 | ||||||
Mastercard, Inc. - Class A | 2,000 | 445,220 | ||||||
Micron Technology, Inc. (a) | 6,000 | 271,380 | ||||||
Microsoft Corporation | 11,000 | 1,258,070 | ||||||
NVIDIA Corporation | 8,650 | 2,430,823 | ||||||
QUALCOMM, Inc. | 4,000 | 288,120 | ||||||
Skyworks Solutions, Inc. | 6,000 | 544,260 | ||||||
TE Connectivity Ltd. | 9,000 | 791,370 | ||||||
Tencent Holdings Ltd. - ADR | 7,000 | 285,880 | ||||||
Texas Instruments, Inc. | 10,500 | 1,126,545 | ||||||
Visa, Inc. - Class A | 18,200 | 2,731,638 | ||||||
18,898,238 | ||||||||
Materials — 3.8% | ||||||||
DowDuPont, Inc. | 11,000 | 707,410 | ||||||
Ecolab, Inc. | 6,000 | 940,680 | ||||||
Praxair, Inc. | 5,000 | 803,650 | ||||||
2,451,740 | ||||||||
Real Estate — 1.8% | ||||||||
Mid-America Apartment Communities, Inc. | 11,394 | 1,141,451 | ||||||
Telecommunication Services — 0.4% | ||||||||
China Telecom Corporation Ltd. - ADR | 5,000 | 247,100 | ||||||
Utilities — 2.5% | ||||||||
Duke Energy Corporation | 8,250 | 660,165 | ||||||
WEC Energy Group, Inc. | 14,000 | 934,640 | ||||||
1,594,805 | ||||||||
Total Common Stocks (Cost $28,202,451) | $ | 60,636,437 |
12
THE GOVERNMENT STREET EQUITY FUND | ||||||||
EXCHANGE-TRADED FUNDS — 1.5% | Shares | Value | ||||||
Vanguard Mid-Cap ETF (Cost $334,457) | 6,000 | $ | 985,140 |
MONEY MARKET FUNDS — 4.6% | Shares | Value | ||||||
Fidelity Institutional Money Market Government Portfolio - Class I, 1.92% (b) (Cost $2,991,981) | 2,991,981 | $ | 2,991,981 | |||||
Total Investments at Value — 100.1% (Cost $31,528,889) | $ | 64,613,558 | ||||||
Liabilities in Excess of Other Assets — (0.1%) | (79,491 | ) | ||||||
Net Assets — 100.0% | $ | 64,534,067 |
ADR - American Depositary Receipt. | |
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements. |
13
THE GOVERNMENT STREET MID-CAP FUND | ||||||||
COMMON STOCKS — 89.8% | Shares | Value | ||||||
Consumer Discretionary — 8.8% | ||||||||
Cracker Barrel Old Country Store, Inc. | 1,500 | $ | 220,695 | |||||
Gildan Activewear, Inc. | 14,400 | 438,192 | ||||||
Hasbro, Inc. | 7,000 | 735,840 | ||||||
Leggett & Platt, Inc. | 7,000 | 306,530 | ||||||
Melco Resorts & Entertainment Ltd. - ADR | 5,000 | 105,750 | ||||||
NVR, Inc. (a) | 100 | 247,080 | ||||||
PulteGroup, Inc. | 10,000 | 247,700 | ||||||
Service Corporation International | 17,200 | 760,240 | ||||||
Tiffany & Company | 3,475 | 448,171 | ||||||
Vail Resorts, Inc. | 1,600 | 439,072 | ||||||
VF Corporation | 4,700 | 439,215 | ||||||
4,388,485 | ||||||||
Consumer Staples — 2.0% | ||||||||
Church & Dwight Company, Inc. | 9,000 | 534,330 | ||||||
Edgewell Personal Care Company (a) | 2,000 | 92,460 | ||||||
Energizer Holdings, Inc. | 5,000 | 293,250 | ||||||
Hain Celestial Group, Inc. (The) (a) | 3,000 | 81,360 | ||||||
1,001,400 | ||||||||
Energy — 4.1% | ||||||||
Andeavor | 1,740 | 267,090 | ||||||
CNX Resources Corporation (a) | 2,000 | 28,620 | ||||||
Concho Resources, Inc. (a) | 1,920 | 293,280 | ||||||
Energen Corporation (a) | 1,500 | 129,255 | ||||||
Oil States International, Inc. (a) | 9,000 | 298,800 | ||||||
ONEOK, Inc. | 11,000 | 745,690 | ||||||
U.S. Silica Holdings, Inc. | 4,000 | 75,320 | ||||||
WPX Energy, Inc. (a) | 10,000 | 201,200 | ||||||
2,039,255 | ||||||||
Financials — 18.6% | ||||||||
Alleghany Corporation | 865 | 564,438 | ||||||
American Financial Group, Inc. | 7,600 | 843,372 | ||||||
Arthur J. Gallagher & Company | 9,250 | 688,570 | ||||||
Bank of Hawaii Corporation | 4,000 | 315,640 | ||||||
Berkley (W.R.) Corporation | 7,450 | 595,479 | ||||||
Brown & Brown, Inc. | 20,000 | 591,400 | ||||||
CME Group, Inc. | 5,735 | 976,154 | ||||||
Cullen/Frost Bankers, Inc. | 8,000 | 835,520 | ||||||
Eaton Vance Corporation | 13,000 | 683,280 | ||||||
Intercontinental Exchange, Inc. | 11,000 | 823,790 | ||||||
Nasdaq, Inc. | 11,000 | 943,800 | ||||||
Old Republic International Corporation | 24,400 | 546,072 | ||||||
SEI Investments Company | 10,500 | 641,550 |
14
THE GOVERNMENT STREET MID-CAP FUND | ||||||||
COMMON STOCKS — 89.8% (Continued) | Shares | Value | ||||||
Financials — 18.6% (Continued) | ||||||||
Umpqua Holdings Corporation | 5,000 | $ | 104,000 | |||||
Voya Financial, Inc. | 1,500 | 74,505 | ||||||
9,227,570 | ||||||||
Health Care — 14.1% | ||||||||
Bio-Rad Laboratories, Inc. - Class A (a) | 1,700 | 532,083 | ||||||
Bio-Techne Corporation | 5,000 | 1,020,550 | ||||||
Centene Corporation (a) | 6,000 | 868,680 | ||||||
Charles River Laboratories International, Inc. (a) | 4,500 | 605,430 | ||||||
Chemed Corporation | 3,000 | 958,740 | ||||||
Computer Programs & Systems, Inc. | 3,000 | 80,550 | ||||||
Laboratory Corporation of America Holdings (a) | 2,574 | 447,052 | ||||||
Penumbra, Inc. (a) | 2,500 | 374,250 | ||||||
ResMed, Inc. | 6,000 | 692,040 | ||||||
Teleflex, Inc. | 3,950 | 1,051,056 | ||||||
Waters Corporation (a) | 2,000 | 389,360 | ||||||
7,019,791 | ||||||||
Industrials — 14.8% | ||||||||
AMETEK, Inc. | 2,350 | 185,932 | ||||||
C.H. Robinson Worldwide, Inc. | 4,000 | 391,680 | ||||||
Donaldson Company, Inc. | 13,000 | 757,380 | ||||||
Expeditors International of Washington, Inc. | 8,000 | 588,240 | ||||||
Fastenal Company | 10,000 | 580,200 | ||||||
Graco, Inc. | 21,000 | 973,140 | ||||||
Harris Corporation | 3,500 | 592,235 | ||||||
Jacobs Engineering Group, Inc. | 6,475 | 495,337 | ||||||
L3 Technologies, Inc. | 3,000 | 637,860 | ||||||
MSC Industrial Direct Company, Inc. - Class A | 6,000 | 528,660 | ||||||
nVent Electric plc | 2,900 | 78,764 | ||||||
Pentair plc | 2,900 | 125,715 | ||||||
Snap-on, Inc. | 1,475 | 270,810 | ||||||
Waste Connections, Inc. | 10,500 | 837,585 | ||||||
Woodward, Inc. | 4,150 | 335,569 | ||||||
7,379,107 | ||||||||
Information Technology — 14.3% | ||||||||
58.com, Inc. - ADR (a) | 1,500 | 110,400 | ||||||
Analog Devices, Inc. | 3,671 | 339,421 | ||||||
ANSYS, Inc. (a) | 3,500 | 653,380 | ||||||
Arrow Electronics, Inc. (a) | 10,100 | 744,572 | ||||||
Autohome, Inc. - ADR | 1,500 | 116,115 | ||||||
Broadridge Financial Solutions, Inc. | 3,500 | 461,825 | ||||||
InterDigital, Inc. | 1,200 | 96,000 | ||||||
Lam Research Corporation | 7,200 | 1,092,240 | ||||||
Microchip Technology, Inc. | 6,000 | 473,460 |
15
THE GOVERNMENT STREET MID-CAP FUND | ||||||||
COMMON STOCKS — 89.8% (Continued) | Shares | Value | ||||||
Information Technology — 14.3% (Continued) | ||||||||
National Instruments Corporation | 12,000 | $ | 579,960 | |||||
NVIDIA Corporation | 5,000 | 1,405,100 | ||||||
Okta, Inc. (a) | 3,500 | 246,260 | ||||||
Tech Data Corporation (a) | 3,500 | 250,495 | ||||||
Xilinx, Inc. | 7,000 | 561,190 | ||||||
7,130,418 | ||||||||
Materials — 7.3% | ||||||||
Albemarle Corporation | 6,700 | 668,526 | ||||||
Ashland Global Holdings, Inc. | 6,000 | 503,160 | ||||||
Berry Global Group, Inc. (a) | 5,000 | 241,950 | ||||||
Graphic Packaging Holding Company | 6,000 | 84,060 | ||||||
Martin Marietta Materials, Inc. | 3,000 | 545,850 | ||||||
Packaging Corporation of America | 6,000 | 658,140 | ||||||
Scotts Miracle-Gro Company (The) | 2,500 | 196,825 | ||||||
Steel Dynamics, Inc. | 12,000 | 542,280 | ||||||
Valvoline, Inc. | 8,236 | 177,156 | ||||||
3,617,947 | ||||||||
Real Estate — 3.0% | ||||||||
Mid-America Apartment Communities, Inc. | 15,000 | 1,502,700 | ||||||
Utilities — 2.8% | ||||||||
AmeriGas Partners, L.P. | 6,500 | 256,815 | ||||||
ONE Gas, Inc. | 3,500 | 287,980 | ||||||
Vectren Corporation | 11,600 | 829,284 | ||||||
1,374,079 | ||||||||
Total Common Stocks (Cost $20,350,743) | $ | 44,680,752 |
| ||||||||
EXCHANGE-TRADED FUNDS — 4.8% | Shares | Value | ||||||
Invesco Zacks Mid-Cap ETF | 17,100 | $ | 1,165,948 | |||||
Vanguard Mid-Cap ETF | 7,350 | 1,206,797 | ||||||
Total Exchange-Traded Funds (Cost $1,104,143) | $ | 2,372,745 |
16
THE GOVERNMENT STREET MID-CAP FUND | ||||||||
MONEY MARKET FUNDS — 5.5% | Shares | Value | ||||||
Fidelity Institutional Money Market Government Portfolio - Class I, 1.92% (b) (Cost $2,723,452) | 2,723,452 | $ | 2,723,452 | |||||
Total Investments at Value — 100.1% (Cost $24,178,338) | $ | 49,776,949 | ||||||
Liabilities in Excess of Other Assets — (0.1%) | (50,891 | ) | ||||||
Net Assets — 100.0% | $ | 49,726,058 |
ADR - American Depositary Receipt. | |
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements. |
17
THE ALABAMA TAX FREE BOND FUND | ||||||||
ALABAMA FIXED RATE REVENUE AND | Par Value | Value | ||||||
Alabama Drinking Water Financing Auth., Series A, Rev., | ||||||||
3.00%, due 08/15/2019 | $ | 530,000 | $ | 534,765 | ||||
Alabama State Federal Highway Finance Auth., Rev., | ||||||||
5.00%, due 09/01/2025 | 195,000 | 222,216 | ||||||
Alabama State Public School & College Auth., Rev., | ||||||||
5.00%, due 01/01/2024 | 600,000 | 678,990 | ||||||
5.00%, due 01/01/2025 | 195,000 | 221,163 | ||||||
Alabama State, Series A, GO, | ||||||||
5.00%, due 08/01/2023 | 400,000 | 450,464 | ||||||
5.00%, due 08/01/2024 | 500,000 | 571,785 | ||||||
Athens, AL, Electric Rev., Warrants, | ||||||||
3.00%, due 06/01/2019 | 375,000 | 377,629 | ||||||
Athens, AL, GO, Warrants, | ||||||||
5.00%, due 04/01/2024 | 500,000 | 561,645 | ||||||
Athens, AL, Water & Sewer, Rev., | ||||||||
3.50%, due 05/01/2023 | 350,000 | 366,600 | ||||||
Auburn University, AL, General Fee Rev., | ||||||||
5.00%, due 06/01/2020 | 350,000 | 366,912 | ||||||
Baldwin Co., AL, GO, Warrants, | ||||||||
4.00%, due 06/01/2019 | 200,000 | 202,766 | ||||||
Chambers Co., AL, Gasoline Tax Anticipation, Rev., Warrants, | ||||||||
2.00%, due 11/01/2019 | 290,000 | 289,411 | ||||||
City of Northport, AL, GO, | ||||||||
3.00%, due 08/01/2025 | 500,000 | 505,820 | ||||||
Cullman, AL, Board of Education Special Tax School Warrants, Rev., | ||||||||
2.00%, due 03/01/2023 | 325,000 | 318,701 | ||||||
Daphne, AL, GO, Warrants, | ||||||||
2.10%, due 04/01/2023 | 400,000 | 390,736 | ||||||
Decatur, AL, Sewer Rev., Warrants, | ||||||||
3.00%, due 08/15/2019 | 500,000 | 504,495 | ||||||
Elmore Co., AL, GO, Warrants, | ||||||||
5.00%, due 10/01/2022 | 415,000 | 448,482 | ||||||
Foley, AL, Utilities Board, Utilities Rev., | ||||||||
4.00%, due 11/01/2018 | 710,000 | 711,228 | ||||||
4.00%, due 11/01/2019 | 225,000 | 229,905 | ||||||
Hoover City, AL, Board of Education, Special Tax School Warrants, | ||||||||
4.00%, due 02/15/2020 | 470,000 | 482,883 |
18
THE ALABAMA TAX FREE BOND FUND | ||||||||
ALABAMA FIXED RATE REVENUE AND | Par Value | Value | ||||||
Huntsville, AL, Electric System, Rev., Series A, | ||||||||
5.00%, due 12/01/2025 | $ | 210,000 | $ | 244,232 | ||||
Huntsville, AL, GO, | ||||||||
5.00%, due 11/01/2024 | 265,000 | 304,085 | ||||||
Huntsville, AL, Series A, GO, Warrants, | ||||||||
5.00%, due 05/01/2024 | 665,000 | 757,395 | ||||||
Huntsville, AL, Series C, GO, School Warrants, | ||||||||
5.00%, due 11/01/2023 | 400,000 | 451,908 | ||||||
Huntsville, AL, Series C, GO, Warrants, | ||||||||
4.00%, due 05/01/2022 | 500,000 | 531,350 | ||||||
Huntsville, AL, Series E, GO, Warrants, | ||||||||
5.00%, due 11/01/2022 | 240,000 | 266,086 | ||||||
Lee Co., AL, Board of Education Warrants, Rev., | ||||||||
4.00%, due 02/01/2025 | 500,000 | 538,180 | ||||||
Limestone Co., AL, Board of Education, Special Tax Warrants, | ||||||||
3.00%, due 11/01/2019 | 560,000 | 565,953 | ||||||
Madison Co., AL, Board of Education, Rev., Tax Anticipation Warrants, | ||||||||
2.00%, due 09/01/2019 | 220,000 | 220,097 | ||||||
Madison Co., AL, GO, School Warrants, | ||||||||
5.00%, due 03/01/2025 | 500,000 | 573,005 | ||||||
Madison Co., AL, GO, Warrants, | ||||||||
4.00%, due 09/01/2021 | 465,000 | 487,148 | ||||||
4.00%, due 07/01/2024 | 305,000 | 329,342 | ||||||
Madison Co., AL, Water & Wastewater Board, Rev., | ||||||||
3.00%, due 12/01/2019 | 430,000 | 435,113 | ||||||
Mobile Co., AL, School Board, Special Tax, | ||||||||
5.00%, due 03/01/2026 | 400,000 | 450,832 | ||||||
Mobile Co., AL, GO, Refunding, | ||||||||
5.00%, due 06/01/2023 | 520,000 | 581,984 | ||||||
Mobile, AL, Board of School Commissioners, GO, Warrants, | ||||||||
5.00%, due 03/01/2025 | 250,000 | 279,280 | ||||||
Mobile, AL, Board of Water and Sewer, Rev., | ||||||||
5.00%, due 01/01/2025 | 500,000 | 552,390 | ||||||
Montgomery, AL, GO, Warrants, | ||||||||
2.50%, due 04/01/2021 | 500,000 | 500,070 | ||||||
Montgomery, AL, Series A, GO, Warrants, | ||||||||
5.00%, due 02/01/2024 | 220,000 | 228,056 |
19
THE ALABAMA TAX FREE BOND FUND | ||||||||
ALABAMA FIXED RATE REVENUE AND | Par Value | Value | ||||||
Morgan Co., AL, Board of Education, Capital Outlay Warrants, Rev., | ||||||||
4.00%, due 03/01/2019 | $ | 165,000 | $ | 166,397 | ||||
Mountain Brook, AL, City Board of Education, GO, Warrants, | ||||||||
3.00%, due 03/01/2020 | 300,000 | 304,368 | ||||||
North AL Gas District, Rev., | ||||||||
3.00%, due 06/01/2020 | 420,000 | 420,248 | ||||||
Northport, AL, GO, Warrants, | ||||||||
3.00%, due 09/01/2024 | 385,000 | 392,327 | ||||||
Prattville, AL, GO, Warrants, | ||||||||
5.00%, due 11/01/2022 | 400,000 | 440,352 | ||||||
Russellville, AL, Rev., | ||||||||
3.00%, due 03/01/2025 | 475,000 | 479,109 | ||||||
Shelby Co., AL, Special Tax, School Warrants, | ||||||||
3.00%, due 02/01/2023 | 300,000 | 305,742 | ||||||
Trussville, AL, GO, | ||||||||
5.00%, due 10/01/2019 | 400,000 | 411,668 | ||||||
Tuscaloosa, AL, Series B, GO, Warrants, | ||||||||
4.00%, due 01/01/2020 | 500,000 | 512,555 | ||||||
Vestavia Hills, AL, GO, Warrants, | ||||||||
4.00%, due 02/01/2021 | 500,000 | 522,185 | ||||||
4.00%, due 02/01/2025 | 500,000 | 544,565 | ||||||
Total Alabama Fixed Rate Revenue and General Obligation (GO) Bonds (Cost $21,532,463) | $ | 21,232,618 |
| ||||||||
MONEY MARKET FUNDS — 6.3% | Shares | Value | ||||||
Federated Government Obligations Fund - Institutional Class, 1.92% (a) (Cost $1,410,384) | 1,410,384 | $ | 1,410,384 | |||||
Total Investments at Value — 101.3% (Cost $22,942,847) | $ | 22,643,002 | ||||||
Liabilities in Excess of Other Assets — (1.3%) | (300,906 | ) | ||||||
Net Assets — 100.0% | $ | 22,342,096 |
(a) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements. |
20
THE GOVERNMENT STREET FUNDS | ||||||||||||
| Government | Government | Alabama | |||||||||
ASSETS | ||||||||||||
Investments in securities: | ||||||||||||
At cost | $ | 31,528,889 | $ | 24,178,338 | $ | 22,942,847 | ||||||
At value (Note 2) | $ | 64,613,558 | $ | 49,776,949 | $ | 22,643,002 | ||||||
Receivable for capital shares sold | — | 100 | — | |||||||||
Dividends and interest receivable | 22,848 | 36,003 | 223,460 | |||||||||
Other assets | 11,928 | 12,121 | 11,036 | |||||||||
TOTAL ASSETS | 64,648,334 | 49,825,173 | 22,877,498 | |||||||||
LIABILITIES | ||||||||||||
Distributions payable | 4,224 | — | 1,288 | |||||||||
Payable for capital shares redeemed | 67,199 | 57,944 | 15,791 | |||||||||
Payable for investment securities purchased | — | — | 508,362 | |||||||||
Accrued investment advisory fees (Note 4) | 31,729 | 31,396 | 926 | |||||||||
Payable to administrator (Note 4) | 7,450 | 6,525 | 5,575 | |||||||||
Other accrued expenses | 3,665 | 3,250 | 3,460 | |||||||||
TOTAL LIABILITIES | 114,267 | 99,115 | 535,402 | |||||||||
NET ASSETS | $ | 64,534,067 | $ | 49,726,058 | $ | 22,342,096 | ||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 29,868,517 | $ | 23,364,994 | $ | 22,707,400 | ||||||
Accumulated earnings (deficit) | 34,665,550 | 26,361,064 | (365,304 | ) | ||||||||
Net assets | $ | 64,534,067 | $ | 49,726,058 | $ | 22,342,096 | ||||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, $0.01 par value) | 805,718 | 1,790,804 | 2,196,382 | |||||||||
Net asset value, offering price and redemption price per share (Note 2) | $ | 80.10 | $ | 27.77 | $ | 10.17 |
See accompanying notes to financial statements. |
21
THE GOVERNMENT STREET FUNDS | ||||||||||||
| Government | Government | Alabama | |||||||||
INVESTMENT INCOME | ||||||||||||
Dividends | $ | 528,128 | $ | 407,003 | $ | 8,770 | ||||||
Foreign withholding taxes on dividends | (1,206 | ) | (925 | ) | — | |||||||
Interest | — | — | 207,258 | |||||||||
TOTAL INVESTMENT INCOME | 526,922 | 406,078 | 216,028 | |||||||||
EXPENSES | ||||||||||||
Investment advisory fees (Note 4) | 190,258 | 191,223 | 39,734 | |||||||||
Administration fees (Note 4) | 41,024 | 34,938 | 30,000 | |||||||||
Professional fees | 12,032 | 12,032 | 12,782 | |||||||||
Account maintenance fees | 9,409 | 8,148 | 2,870 | |||||||||
Trustees’ fees and expenses (Note 4) | 6,384 | 6,384 | 6,384 | |||||||||
Registration and filing fees | 4,562 | 4,540 | 3,542 | |||||||||
Compliance fees (Note 4) | 3,933 | 3,764 | 3,410 | |||||||||
Custodian and bank service fees | 3,617 | 2,991 | 2,283 | |||||||||
Printing of shareholder reports | 3,258 | 3,764 | 1,628 | |||||||||
Pricing costs | 1,471 | 1,109 | 4,242 | |||||||||
Postage and supplies | 1,954 | 2,034 | 1,291 | |||||||||
Other expenses | 3,051 | 3,537 | 2,210 | |||||||||
TOTAL EXPENSES | 280,953 | 274,464 | 110,376 | |||||||||
Fees voluntarily waived by the Adviser (Note 4) | — | — | (36,583 | ) | ||||||||
NET EXPENSES | 280,953 | 274,464 | 73,793 | |||||||||
NET INVESTMENT INCOME | 245,969 | 131,614 | 142,235 | |||||||||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||||||||||
Net realized gains (losses) from investment transactions | 1,577,277 | 584,252 | (7,516 | ) | ||||||||
Net realized gains from in-kind redemptions (Note 2) | 834,729 | 1,553,098 | — | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 3,812,556 | 749,380 | (71,023 | ) | ||||||||
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | 6,224,562 | 2,886,730 | (78,539 | ) | ||||||||
NET INCREASE IN NET ASSETS FROM OPERATIONS | $ | 6,470,531 | $ | 3,018,344 | $ | 63,696 |
See accompanying notes to financial statements. |
22
THE GOVERNMENT STREET FUNDS | ||||||||||||||||
| Government Street | Government Street | ||||||||||||||
| Six Months | Year | Six Months | Year | ||||||||||||
FROM OPERATIONS | ||||||||||||||||
Net investment income | $ | 245,969 | $ | 578,039 | $ | 131,614 | $ | 380,153 | ||||||||
Net realized gains (losses) from: | ||||||||||||||||
Investments | 1,577,277 | 2,435,751 | 584,252 | 2,081,238 | ||||||||||||
Foreign currency transactions | — | (625 | ) | — | — | |||||||||||
Net realized gains from in-kind redemptions (Note 2) | 834,729 | 3,177,769 | 1,553,098 | 1,836,225 | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | 3,812,556 | 2,815,559 | 749,380 | 2,321,664 | ||||||||||||
Net increase in net assets from operations | 6,470,531 | 9,006,493 | 3,018,344 | 6,619,280 | ||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (1,974,203 | ) | (2,180,855 | ) | (906,054 | ) | (2,440,567 | ) | ||||||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||||||||||
Proceeds from shares sold | 247,202 | 365,782 | 1,090,089 | 1,717,988 | ||||||||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 1,901,012 | 2,093,287 | 868,370 | 2,350,450 | ||||||||||||
Payments for shares redeemed | (4,817,035 | ) | (11,985,459 | ) | (4,403,668 | ) | (6,728,252 | ) | ||||||||
Net decrease in net assets from capital share transactions | (2,668,821 | ) | (9,526,390 | ) | (2,445,209 | ) | (2,659,814 | ) | ||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 1,827,507 | (2,700,752 | ) | (332,919 | ) | 1,518,899 | ||||||||||
NET ASSETS | ||||||||||||||||
Beginning of period | 62,706,560 | 65,407,312 | 50,058,977 | 48,540,078 | ||||||||||||
End of period | $ | 64,534,067 | $ | 62,706,560 | $ | 49,726,058 | $ | 50,058,977 | ||||||||
CAPITAL SHARE ACTIVITY | ||||||||||||||||
Shares sold | 3,196 | 4,995 | 40,089 | 64,603 | ||||||||||||
Shares reinvested | 25,653 | 29,289 | 32,719 | 91,019 | ||||||||||||
Shares redeemed | (63,724 | ) | (168,824 | ) | (161,046 | ) | (264,296 | ) | ||||||||
Net decrease in shares outstanding | (34,875 | ) | (134,540 | ) | (88,238 | ) | (108,674 | ) | ||||||||
Shares outstanding, beginning of period | 840,593 | 975,133 | 1,879,042 | 1,987,716 | ||||||||||||
Shares outstanding, end of period | 805,718 | 840,593 | 1,790,804 | 1,879,042 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, Distributions to Shareholders were from net investment income of $571,972 and net realized gains on investment transactions of $1,608,883 for The Government Street Equity Fund and were from net investment income of $374,355 and net realized gains on investment transactions of $2,066,212 for The Government Street Mid-Cap Fund. As of March 31, 2018, undistributed net investment income was $1,586 for The Government Street Equity Fund and $77,352 for The Government Street Mid-Cap Fund. |
See accompanying notes to financial statements. |
23
THE GOVERNMENT STREET FUNDS | ||||||||
| Alabama Tax Free | |||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 142,235 | $ | 300,989 | ||||
Net realized gains (losses) from investment transactions | (7,516 | ) | 3,546 | |||||
Net change in unrealized appreciation (depreciation) on investments | (71,023 | ) | (317,921 | ) | ||||
Net increase (decrease) in net assets from operations | 63,696 | (13,386 | ) | |||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (142,235 | ) | (300,989 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 52,037 | 24,063 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 132,718 | 282,902 | ||||||
Payments for shares redeemed | (1,015,374 | ) | (3,424,283 | ) | ||||
Net decrease in net assets from capital share transactions | (830,619 | ) | (3,117,318 | ) | ||||
TOTAL DECREASE IN NET ASSETS | (909,158 | ) | (3,431,693 | ) | ||||
NET ASSETS | ||||||||
Beginning of period | 23,251,254 | 26,682,947 | ||||||
End of period | $ | 22,342,096 | $ | 23,251,254 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 5,110 | 2,325 | ||||||
Shares reinvested | 13,006 | 27,385 | ||||||
Shares redeemed | (99,615 | ) | (332,528 | ) | ||||
Net decrease in shares outstanding | (81,499 | ) | (302,818 | ) | ||||
Shares outstanding, beginning of period | 2,277,881 | 2,580,699 | ||||||
Shares outstanding, end of period | 2,196,382 | 2,277,881 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, Distributions to Shareholders were from net investment income of $300,989. As of March 31, 2018, undistributed net investment income was $—. |
See accompanying notes to financial statements. |
24
THE GOVERNMENT STREET EQUITY FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
| Six Months | Years Ended March 31, | ||||||||||||||||||||||
| (Unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 74.60 | $ | 67.08 | $ | 61.72 | $ | 65.95 | $ | 62.78 | $ | 53.61 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.30 | 0.66 | 0.68 | 0.61 | 0.67 | 0.62 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments and foreign currencies | 7.61 | 9.32 | 6.76 | (2.17 | ) | 6.55 | 9.17 | |||||||||||||||||
Total from investment operations | 7.91 | 9.98 | 7.44 | (1.56 | ) | 7.22 | 9.79 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.30 | ) | (0.65 | ) | (0.68 | ) | (0.64 | ) | (0.64 | ) | (0.61 | ) | ||||||||||||
Distributions from net realized gains | (2.11 | ) | (1.81 | ) | (1.40 | ) | (2.03 | ) | (3.41 | ) | (0.01 | ) | ||||||||||||
Total distributions | (2.41 | ) | (2.46 | ) | (2.08 | ) | (2.67 | ) | (4.05 | ) | (0.62 | ) | ||||||||||||
Net asset value at end of period | $ | 80.10 | $ | 74.60 | $ | 67.08 | $ | 61.72 | $ | 65.95 | $ | 62.78 | ||||||||||||
Total return (a) | 10.87 | %(b) | 15.08 | % | 12.32 | % | (2.46 | %) | 11.87 | % | 18.34 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 64,534 | $ | 62,707 | $ | 65,407 | $ | 80,307 | $ | 93,778 | $ | 94,287 | ||||||||||||
Ratio of total expenses to average net assets | 0.89 | %(c) | 0.88 | % | 0.87 | % | 0.85 | % | 0.84 | % | 0.84 | % | ||||||||||||
Ratio of net investment income to average net assets | 0.78 | %(c) | 0.90 | % | 1.03 | % | 0.95 | % | 1.02 | % | 1.06 | % | ||||||||||||
Portfolio turnover rate | 7 | %(b) | 13 | % | 20 | % | 17 | % | 26 | % | 36 | % |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Not annualized |
(c) | Annualized |
See accompanying notes to financial statements. |
25
THE GOVERNMENT STREET MID-CAP FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
| Six Months | Years Ended March 31, | ||||||||||||||||||||||
| (Unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 26.64 | $ | 24.42 | $ | 21.95 | $ | 22.96 | $ | 21.68 | $ | 18.26 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.07 | 0.20 | 0.16 | 0.10 | 0.10 | 0.09 | ||||||||||||||||||
Net realized and unrealized gains on investments | 1.55 | 3.32 | 3.36 | 0.11 | 2.02 | 3.46 | ||||||||||||||||||
Total from investment operations | 1.62 | 3.52 | 3.52 | 0.21 | 2.12 | 3.55 | ||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | (0.20 | ) | (0.14 | ) | (0.10 | ) | (0.07 | ) | (0.11 | ) | ||||||||||||
Distributions from net realized gains | (0.47 | ) | (1.10 | ) | (0.91 | ) | (1.12 | ) | �� | (0.77 | ) | (0.02 | ) | |||||||||||
Total distributions | (0.49 | ) | (1.30 | ) | (1.05 | ) | (1.22 | ) | (0.84 | ) | (0.13 | ) | ||||||||||||
Net asset value at end of period | $ | 27.77 | $ | 26.64 | $ | 24.42 | $ | 21.95 | $ | 22.96 | $ | 21.68 | ||||||||||||
Total return (a) | 6.15 | %(b) | 14.67 | % | 16.44 | % | 1.04 | % | 10.14 | % | 19.43 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 49,726 | $ | 50,059 | $ | 48,540 | $ | 48,547 | $ | 51,898 | $ | 54,875 | ||||||||||||
Ratio of total expenses to average net assets | 1.08 | %(c) | 1.06 | % | 1.07 | % | 1.07 | % | 1.05 | % | 1.06 | % | ||||||||||||
Ratio of net investment income to average net assets | 0.52 | %(c) | 0.78 | % | 0.66 | % | 0.46 | % | 0.47 | % | 0.43 | % | ||||||||||||
Portfolio turnover rate | 5 | %(b) | 12 | % | 14 | % | 20 | % | 16 | % | 10 | % |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Not annualized |
(c) | Annualized |
See accompanying notes to financial statements. |
26
THE ALABAMA TAX FREE BOND FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
| Six Months | Years Ended March 31, | ||||||||||||||||||||||
| (Unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 10.21 | $ | 10.34 | $ | 10.49 | $ | 10.49 | $ | 10.51 | $ | 10.63 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.06 | 0.12 | 0.13 | 0.13 | 0.14 | 0.15 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.04 | ) | (0.13 | ) | (0.15 | ) | 0.00 | (a) | (0.02 | ) | (0.12 | ) | ||||||||||||
Total from investment operations | 0.02 | (0.01 | ) | (0.02 | ) | 0.13 | 0.12 | 0.03 | ||||||||||||||||
Less dividends from net investment income | (0.06 | ) | (0.12 | ) | (0.13 | ) | (0.13 | ) | (0.14 | ) | (0.15 | ) | ||||||||||||
Net asset value at end of period | $ | 10.17 | $ | 10.21 | $ | 10.34 | $ | 10.49 | $ | 10.49 | $ | 10.51 | ||||||||||||
Total return (b) | 0.24 | %(c) | (0.09 | %) | (0.21 | %) | 1.28 | % | 1.14 | % | 0.28 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 22,342 | $ | 23,251 | $ | 26,683 | $ | 28,864 | $ | 29,969 | $ | 32,630 | ||||||||||||
Ratio of total expenses to average net assets | 0.97 | %(d) | 0.89 | % | 0.86 | % | 0.82 | % | 0.79 | % | 0.76 | % | ||||||||||||
Ratio of net expenses to average net assets (e) | 0.65 | %(d) | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||
Ratio of net investment income to average net assets (e) | 1.25 | %(d) | 1.17 | % | 1.23 | % | 1.27 | % | 1.32 | % | 1.41 | % | ||||||||||||
Portfolio turnover rate | 12 | %(c) | 16 | % | 12 | % | 13 | % | 6 | % | 10 | % |
(a) | Amount rounds to less than $0.01 per share. |
(b) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(c) | Not annualized |
(d) | Annualized |
(e) | Ratios were determined after voluntary advisory fee waivers by the Adviser (Note 4). |
See accompanying notes to financial statements. |
27
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 2018 (Unaudited)
1. Organization
The Government Street Equity Fund, The Government Street Mid-Cap Fund and The Alabama Tax Free Bond Fund (the “Funds”) are each a no-load series of the Williamsburg Investment Trust (the “Trust”), an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Government Street Equity Fund and The Government Street Mid-Cap Fund are each a diversified fund and The Alabama Tax Free Bond Fund is a non-diversified fund. The Trust was organized as a Massachusetts business trust on July 18, 1988. Other series of the Trust are not included in this report.
The Government Street Equity Fund’s investment objective is to seek capital appreciation.
The Government Street Mid-Cap Fund’s investment objective is to seek capital appreciation.
The Alabama Tax Free Bond Fund’s investment objectives are to provide current income exempt from federal income taxes and from the personal income taxes of Alabama and to preserve capital.
2. Significant Accounting Policies
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted regulations that eliminated or amended disclosure requirements that were redundant or outdated in light of changes in SEC requirements, accounting principles generally accepted in the United States of America (“GAAP”), International Financial Reporting Standards or changes in technology or the business environment. These regulations were effective November 5, 2018, and the Funds are complying with them effective with these financial statements.
Each Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.” The following is a summary of the Funds’ significant accounting policies. The policies are in conformity with GAAP.
New Accounting Pronouncement — On August 28, 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820, “Fair Value Measurement” (“ASC 820”). ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration of entities when evaluating disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years beginning after
28
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
December 15, 2019, including interim periods therein. Early adoption is permitted. Management is evaluating what, if any, impact the adoption of ASU 2018-13 will have on the Funds’ financial statements.
Securities valuation — The Funds’ portfolio securities are valued as of the close of business of the regular session of the New York Stock Exchange (“NYSE”) (normally 4:00 p.m. Eastern time). Securities traded on a national stock exchange, including common stocks and exchange-traded funds, are valued based upon the closing price on the principal exchange where the security is traded, if available, otherwise, at the last quoted bid price. Securities that are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Investments representing shares of other open-end investment companies, including money market funds, are valued at their net asset value (“NAV”) as reported by such companies. When using a quoted price and when the market is considered active, securities will be classified as Level 1 within the fair value hierarchy (see below).
Fixed income securities, including municipal bonds, are typically valued on the basis of prices provided by an independent pricing service. The prices provided by the pricing service are determined with consideration given to institutional bid and last sale prices and take into account securities prices, yields, maturities, call features, ratings, institutional trading in similar groups of securities, and developments related to specific securities. Given the inputs used by the pricing service, these securities are classified as Level 2 within the fair value hierarchy.
When market quotations are not readily available, if a pricing service cannot provide a price, or if the investment adviser believes the price received from the pricing service is not indicative of market value, securities will be valued in good faith at fair value using methods consistent with procedures adopted by the Board of Trustees and will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. Such methods of fair valuation may include, but are not limited to: multiple of earnings, multiple of book value, discount from market of a similar freely traded security, purchase price of the security, subsequent private transactions in the security or related securities, or a combination of these and other factors.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below:
● | Level 1 – quoted prices in active markets for identical securities |
● | Level 2 – other significant observable inputs |
● | Level 3 – significant unobservable inputs |
29
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value each Fund’s investments as of September 30, 2018, by security type:
The Government Street Equity Fund: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 60,636,437 | $ | — | $ | — | $ | 60,636,437 | ||||||||
Exchange-Traded Funds | 985,140 | — | — | 985,140 | ||||||||||||
Money Market Funds | 2,991,981 | — | — | 2,991,981 | ||||||||||||
Total | $ | 64,613,558 | $ | — | $ | — | $ | 64,613,558 |
The Government Street Mid-Cap Fund: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 44,680,752 | $ | — | $ | — | $ | 44,680,752 | ||||||||
Exchange-Traded Funds | 2,372,745 | — | — | 2,372,745 | ||||||||||||
Money Market Funds | 2,723,452 | — | — | 2,723,452 | ||||||||||||
Total | $ | 49,776,949 | $ | — | $ | — | $ | 49,776,949 |
The Alabama Tax Free Bond Fund: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Revenue and General Obligation Municipal Bonds | $ | — | $ | 21,232,618 | $ | — | $ | 21,232,618 | ||||||||
Money Market Funds | 1,410,384 | — | — | 1,410,384 | ||||||||||||
Total | $ | 1,410,384 | $ | 21,232,618 | $ | — | $ | 22,643,002 |
Refer to The Government Street Equity Fund’s and The Government Street Mid-Cap Fund’s Schedules of Investments for a listing of the common stocks by sector type. As of September 30, 2018, the Funds did not have any transfers into or out of any Level. There were no Level 3 securities or derivative instruments held by the Funds as of September 30, 2018. It is the Funds’ policy to recognize transfers into or out of any Level at the end of the reporting period.
Foreign currency translation — Investment securities and other assets and liabilities denominated in or expected to settle in foreign currencies, if any, are translated into U.S. dollars based on exchange rates on the following basis:
A. | The fair values of investment securities and other assets and liabilities are translated as of the close of the NYSE each day. |
30
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
B. | Purchases and sales of investment securities and income and expenses are translated at the rate of exchange prevailing as of 4:00 p.m. Eastern time on the respective date of such transactions. |
C. | The Fund does not isolate that portion of the results of operations caused by changes in foreign exchange rates on investments from those caused by changes in market prices of investment securities held. Such fluctuations are included with the net realized and unrealized gains or losses on investments. |
Reported net realized foreign exchange gains or losses arise from 1) purchases and sales of foreign currencies and 2) the difference between the amounts of dividends and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Reported net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities that result from changes in exchange rates.
Share valuation — The NAV per share of each Fund is calculated daily by dividing the total value of its assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Fund is equal to the NAV per share.
Investment income — Interest income is accrued as earned. Discounts and premiums on fixed-income securities purchased are amortized using the interest method. Dividend income is recorded on the ex-dividend date. Withholding taxes on foreign dividends for The Government Street Equity Fund and The Government Street Mid-Cap Fund have been recorded in accordance with the Trust’s understanding of the applicable country’s rules and tax rates.
Distributions to shareholders — Dividends arising from net investment income are declared and paid quarterly to shareholders of The Government Street Equity Fund; declared and paid annually to shareholders of The Government Street Mid-Cap Fund; and declared daily and paid monthly to shareholders of The Alabama Tax Free Bond Fund. Net realized short-term capital gains, if any, may be distributed throughout the year and net realized long-term capital gains, if any, are distributed at least once each year. Dividends and distributions are recorded on the ex-dividend date. The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are either temporary or permanent in nature.
31
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The tax character of distributions paid during the periods ended March 31, 2018 and September 30, 2018 was as follows:
| Period | Ordinary | Exempt- | Long-Term | Total | |||||||||||||||
The Government Street Equity Fund | 09/30/18 | $ | 243,870 | $ | — | $ | 1,730,333 | $ | 1,974,203 | |||||||||||
03/31/18 | $ | 678,883 | $ | — | $ | 1,501,972 | $ | 2,180,855 | ||||||||||||
The Government Street Mid-Cap Fund | 09/30/18 | $ | 30,730 | $ | — | $ | 875,324 | $ | 906,054 | |||||||||||
03/31/18 | $ | 374,355 | $ | — | $ | 2,066,212 | $ | 2,440,567 | ||||||||||||
The Alabama Tax Free Bond Fund | 09/30/18 | $ | 7,194 | $ | 135,041 | $ | — | $ | 142,235 | |||||||||||
03/31/18 | $ | 7,903 | $ | 293,086 | $ | — | $ | 300,989 |
Investment transactions — Investment transactions are accounted for on trade date for financial reporting purposes. Realized gains and losses on investment securities sold are determined on a specific identification basis.
Common expenses — Common expenses of the Trust are allocated among the Funds and the other series of the Trust based on relative net assets of each series or the nature of the services performed and the relative applicability to each series.
Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Federal income tax — Each Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Funds of liability for federal income taxes to the extent 100% of their net investment income and any net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
32
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The following information is computed on a tax basis for each item as of September 30, 2018:
| The Government | The Government | The Alabama | |||||||||
Cost of portfolio investments | $ | 31,528,889 | $ | 24,131,689 | $ | 22,942,847 | ||||||
Gross unrealized appreciation | $ | 33,275,234 | $ | 25,906,789 | $ | 5,433 | ||||||
Gross unrealized depreciation | (190,565 | ) | (261,529 | ) | (305,278 | ) | ||||||
Net unrealized appreciation (depreciation) | 33,084,669 | 25,645,260 | (299,845 | ) | ||||||||
Accumulated ordinary income | 7,909 | 131,587 | — | |||||||||
Accumulated tax-exempt income | — | — | 1,288 | |||||||||
Accumulated capital and other gains (losses) | 1,577,196 | 584,217 | (65,459 | ) | ||||||||
Distributions payable | (4,224 | ) | — | (1,288 | ) | |||||||
Total distributable earnings (deficit) | $ | 34,665,550 | $ | 26,361,064 | $ | (365,304 | ) |
The difference between the federal income tax cost of portfolio investments and the financial statement cost of portfolio investments for The Government Street Mid-Cap Fund is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are primarily due to adjustments to basis on publicly traded partnerships.
As of March 31, 2018, The Alabama Tax Free Bond Fund had a short-term capital loss carryforward for federal income tax purposes of $24,704 and a long-term capital loss carryforward for federal income tax purposes of $33,239, both of which may be carried forward indefinitely. These capital loss carryforwards are available to offset realized capital gains in the current and future years, thereby reducing future taxable gains distributions.
During the six months ended September 30, 2018, The Government Street Equity Fund and The Government Street Mid-Cap Fund realized $834,729 and $1,553,098, respectively, of net capital gains resulting from in-kind redemptions (redemptions in which shareholders who redeemed Fund shares received investment securities held by the Fund rather than cash). The Funds recognize a gain on in-kind redemptions to the extent that the value of the distributed investment securities on the date of redemption exceeds the cost of those investment securities. Such gains are not taxable to the Funds and are not required to be distributed to shareholders. The Funds have reclassified these gains against paid-in capital on the Statements of Assets and Liabilities. Such reclassifications, the result of permanent differences between the financial statement and income tax reporting requirements, had no effect on each Fund’s net assets or NAV per share.
33
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The Funds recognize the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions taken on federal income tax returns for the current and all open tax years (tax years ended March 31, 2015 through March 31, 2018) of each Fund and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements.
3. Investment Transactions
Investment transactions, other than short-term investments and U.S. government securities, were as follows for the six months ended September 30, 2018:
| The Government | The Government | The Alabama | |||||||||
Purchases of investment securities | $ | 4,105,920 | $ | 2,428,873 | $ | 2,660,536 | ||||||
Proceeds from sales and maturities of investment securities | $ | 10,421,715 | $ | 6,692,532 | $ | 3,953,168 |
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENT
Each Fund’s investments are managed by Leavell Investment Management, Inc. (the “Adviser”) under the terms of an Investment Advisory Agreement. The Government Street Equity Fund pays the Adviser a fee, which is computed and accrued daily and paid monthly, at annual rates of 0.60% of its average daily net assets up to $100 million and 0.50% of such assets in excess of $100 million. The Government Street Mid-Cap Fund pays the Adviser a fee, which is computed and accrued daily and paid monthly, at an annual rate of 0.75% of its average daily net assets. The Alabama Tax Free Bond Fund pays the Adviser a fee, which is computed and accrued daily and paid monthly, at annual rates of 0.35% of its average daily net assets up to $100 million and 0.25% of such assets in excess of $100 million.
During the six months ended September 30, 2018, the Adviser voluntarily limited the total annual operating expenses of The Alabama Tax Free Bond Fund to 0.65% of the Fund’s average daily net assets. Accordingly, the Adviser waived $36,583 of its investment advisory fees from The Alabama Tax Free Bond Fund during the six months ended September 30, 2018. This amount is not subject to recapture in future periods.
Certain officers of the Trust are also officers of the Adviser.
34
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
OTHER SERVICE PROVIDERS
Ultimus Fund Solutions, LLC (“Ultimus”) provides administration, fund accounting, compliance and transfer agent services to the Funds. The Funds pay Ultimus fees in accordance with the agreements for such services. In addition, the Funds pay out-of-pocket expenses including, but not limited to, postage, supplies, and costs of pricing the Funds’ portfolio securities. Certain officers of the Trust are also officers of Ultimus, or of Ultimus Fund Distributors, LLC (the “Distributor”), the principal underwriter of each Fund’s shares and an affiliate of Ultimus. The Distributor is compensated by the Adviser (not the Funds) for acting as principal underwriter.
COMPENSATION OF TRUSTEES
Trustees and officers affiliated with the Adviser or Ultimus are not compensated by the Trust for their services. Each Trustee who is not an affiliated person of the Adviser or Ultimus receives from the Trust an annual retainer of $20,000, payable quarterly; a fee of $2,000 for attendance at each meeting of the Board of Trustees (except that such fee is $3,000 for the independent chair); and a fee of $1,000 for attendance at each meeting of any committee of the Board (except that such fee is $1,500 for the committee chair); plus reimbursement of travel and other expenses incurred in attending meetings. Each series of the Trust pays its proportionate share of such fees.
5. Contingencies and Commitments
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Trust expects the risk of loss to be remote.
6. Sector Risk
If a Fund has significant investments in the securities of issuers in industries within a particular sector, any development affecting that sector will have a greater impact on the value of the net assets of the Fund than would be the case if the Fund did not have significant investments in that sector. In addition, this may increase the risk of loss of an investment in the Fund and increase the volatility of the Fund’s NAV per share. From time to time, circumstances may affect a particular sector and the companies within such sector. For instance, economic or market factors, regulation or deregulation, and technological or other developments may negatively impact all companies in a particular sector and therefore the value of a Fund’s portfolio will be adversely affected. As of September 30, 2018, The Government Street Equity Fund had 29.3% of the value of its net assets invested in stocks within the Information Technology sector.
35
THE GOVERNMENT STREET FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Concentration of Credit Risk
The Alabama Tax Free Bond Fund invests primarily in debt instruments of municipal issuers in the state of Alabama. The issuers’ abilities to meet their obligations may be affected by economic developments in the state or its region, as well as disruptions in the credit markets and the economy, generally.
8. Subsequent Events
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.
36
THE GOVERNMENT STREET FUNDS
ABOUT YOUR FUNDS’ EXPENSES (Unaudited)
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of the Funds, you incur ongoing costs, including management fees and other expenses. These ongoing costs, which are deducted from each Fund’s gross income, directly reduce the investment returns of the Funds.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The examples below are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (April 1, 2018 through September 30, 2018).
The table below illustrates each Fund’s ongoing costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from each Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Funds. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, 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 given for the Funds under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare the Funds’ ongoing costs with those of other mutual funds. It assumes that each Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the returns used are not the Funds’ actual returns, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess each Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Funds do not charge sales loads or redemption fees.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
37
THE GOVERNMENT STREET FUNDS
ABOUT YOUR FUNDS’ EXPENSES (Unaudited) (Continued)
More information about the Funds’ expenses, including historical expense ratios, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Funds’ prospectus.
Beginning | Ending | Net | Expenses | |
The Government Street Equity Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,108.70 | 0.89% | $4.70 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.61 | 0.89% | $4.51 |
The Government Street Mid-Cap Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,061.50 | 1.08% | $5.58 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,019.65 | 1.08% | $5.47 |
The Alabama Tax Free Bond Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,002.40 | 0.65% | $3.26 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,021.81 | 0.65% | $3.29 |
(a) | Annualized, based on the Fund’s most recent one-half year expenses. |
(b) | Expenses are equal to the Funds’ annualized net expense ratio multiplied by the average account value over the period, muliplied by 183/365 (to reflect the one-half year period). |
38
THE GOVERNMENT STREET FUNDS
OTHER INFORMATION (Unaudited)
A description of the policies and procedures that the Funds use to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-866-738-1125, or on the SEC’s website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available without charge upon request by calling toll-free 1-866-738-1125 or on the SEC’s website at http://www.sec.gov.
The Trust files a complete listing of portfolio holdings for the Funds with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. The filings are available upon request, by calling 1-866-738-1125. Furthermore, you may obtain a copy of these filings on the SEC’s website at http://www.sec.gov.
39
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The Government Street Funds No-Load Mutual Funds
|
Investment Adviser Leavell Investment Management, Inc. 210 St. Joseph Street Mobile, AL 36602
Administrator Ultimus Fund Solutions, LLC P.O. Box 46707 Cincinnati, OH 45246-0707 1-866-738-1125
Legal Counsel Sullivan & Worcester LLP 1666 K Street, N.W. Washington, DC 20006
Independent Registered Public Accounting Firm Cohen & Company, Ltd. 1350 Euclid Avenue Suite 800 Cleveland, Ohio 44115
Board of Trustees Robert S. Harris, Ph.D., Chairman John P. Ackerly, IV John T. Bruce George K. Jennison Harris V. Morrissette Elizabeth W. Robertson
Portfolio Managers Thomas W. Leavell, The Government Street Equity Fund The Government Street Mid-Cap Fund Timothy S. Healey, The Alabama Tax Free Bond Fund |
THE
No-Load Funds
The Jamestown Equity Fund
SEMI-ANNUAL REPORT
September 30, 2018
Investment Adviser Lowe, Brockenbrough & Company, Inc. Richmond, Virginia
|
LETTER TO SHAREHOLDERS | November 14, 2018 |
The Jamestown Equity Fund
For the six-month period ended September 30, 2018, The Jamestown Equity Fund rose 9.20% compared to 11.41% for the S&P 500 Index. The equity market continued to march forward with little downside volatility in the past six months. Investors have shrugged off geopolitical concerns and discord in Washington as the U.S. economy remained robust, while international economies have slowed modestly. The U.S. GDP grew over 3.5% in the past two quarters.
The S&P 500 companies have responded to global growth, lower corporate tax rates, and a recovery in energy prices to post mid-twenty percent growth in both of the past two quarters. Importantly, revenue growth for S&P 500 companies has been among the most impressive of any two-quarter period since the early days of the economic recovery. The S&P 500 currently trades at 16.8X forecasted earnings for 2018. This valuation is slightly elevated compared to the average of slightly over 15X earnings in the past 10 years and the 30-year average of 16X earnings. The free cash flow yield of the S&P 500 remains slightly above 4%.
We do expect an increase in equity price volatility as investors weigh how late we are in the economic cycle. While both economic and earnings growth continue to impress, the Federal Reserve continues to remove liquidity from the system through higher interest rates and the reduction in bonds held on their balance sheet. Higher interest rates are likely to pressure valuation levels going forward.
The large outperformance of growth stocks compared to value stocks continued during the past six months as the Russell 1000 Growth Index rose 15.45% compared to 6.95% for the Russell 1000 Value Index. The Fund lagged the S&P 500’s return primarily due to the drag from holding some cash in a rising market and stock selection. The Information Technology and Industrials sectors were the most challenging sectors for stock selection as our holdings did not fully keep up with the strong performance generated across those two sectors. Strong stock selection in the Financials and Consumer Discretionary sectors partially offset this impact, as did being underweight in the Utilities, Consumer Staples, and Real Estate sectors.
At the end of September 2018, the greatest sector overweights in the portfolio, relative to benchmark weightings, were in the Consumer Discretionary, Financials, Energy and Industrials sectors. The largest sector underweights in the Fund remain in the Utilities, Health Care, Consumer Staples, and the newly broadened Communications Services sectors.
The Jamestown Tax Exempt Virginia Fund
For the six-month period ended September 30, 2018, The Jamestown Tax Exempt Virginia Fund (the “Fund”) returned 0.22%. By comparison, the Bloomberg Barclays 1-10 Year Municipal Blend Index returned 0.74%. Net investment income from coupon interest was mostly offset by a decline in market value of bonds due to rising interest rates, which are a drag on returns for fixed income funds. At the end of the period, the Fund’s 30-day SEC yield was 2.20%, which is a taxable equivalent yield of 3.72% for investors subject to the maximum 40.8% federal income tax bracket.
1
U.S. economic growth strengthened as real GDP expanded 4.2% in Q2 followed by a solid 3.5% in Q3. Growth was led by the strongest consumer spending in four years, bolstered by tax cuts and robust employment conditions. Higher government spending also added to GDP growth in the period. Inflation has drifted upward, as the Consumer Price Index edged up 2.3% year-over-year as of September, yet inflation expectations remain well anchored. The Federal Reserve increased short-term rates by a quarter percentage point in June and September, lifting the federal funds rate to a range of 2.00% to 2.25%. In addition, the wind-down of quantitative easing continued as the central bank is permitting an increasing amount of portfolio runoff from its balance sheet. Monetary policy is no longer accommodative according to the Fed.
As a consequence of the Fed’s actions and projected further hikes, yields increased across all maturities. The greatest jump was seen in the 2-year maturity, which climbed about 55 basis points during the six-month period. In comparison, the yield on the 30-year Treasury bond rose about 23 basis points, resulting in more flattening of the yield curve. For most of the period, tax-exempt bond yields remained in a narrow range, until climbing in September. During the period, the tax-exempt yield of AAA-rated general obligations with a 1-year maturity increased 35 basis points to 1.89%, while the 10-year maturity rose 16 basis points to 2.58%, according to Municipal Market Data.
The Fund’s duration, yield curve positioning, and sector distributions were little changed during the period. At the end of September, the effective duration was 3.8 years, unchanged from the start of the period. During the six-month period, the performance of shorter maturity bonds in the 1- to 5-year range lagged that of longer maturity bonds. Higher quality bonds underperformed lower quality bonds as investors continued to reach down in credit to earn extra yield, thus compressing quality spreads. The Fund is invested predominantly in bonds in the top two credit rating categories and lacks exposure to the mid and lower rated credits.
This report reflects our views, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. These views are subject to change at any time based upon market or other conditions. The Funds are distributed by Ultimus Fund Distributors, LLC.
2
THE JAMESTOWN EQUITY FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in
The Jamestown Equity Fund
and the Standard & Poor’s 500® Index
Average Annual Total Returns | ||||
1 Year | 5 Years | 10 Years | ||
The Jamestown Equity Fund(a) | 16.81% | 10.39% | 9.19% | |
Standard & Poor’s 500® Index | 17.91% | 13.95% | 11.97% |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
3
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in
The Jamestown Tax Exempt Virginia Fund
and the Bloomberg Barclays 1-10 Year Municipal Blend Index*
Average Annual Total Returns | ||||
1 Year | 5 Years | 10 Years | ||
The Jamestown Tax Exempt Virginia Fund(a) | (1.19%) | 1.14% | 2.36% | |
Bloomberg Barclays 1-10 Year Municipal Blend Index | (0.19%) | 2.15% | 3.44% |
* | The Bloomberg Barclays 1-10 Year Municipal Blend Index is an unmanaged, market value-weighted index which covers the short and intermediate components of the U.S. investment-grade tax-exempt bond market. |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. Returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
4
THE JAMESTOWN EQUITY FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Asset Allocation (% of Net Assets) | |
| |
Ten Largest Equity Holdings | % of Net Assets |
Apple, Inc. | 4.0% |
Amazon.com, Inc. | 3.6% |
JPMorgan Chase & Company | 3.0% |
Cisco Systems, Inc. | 2.9% |
Lowe's Companies, Inc. | 2.5% |
Microsoft Corporation | 2.5% |
Discover Financial Services | 2.4% |
Norfolk Southern Corporation | 2.4% |
Chevron Corporation | 2.4% |
Aetna, Inc. | 2.4% |
Sector Concentration vs. the S&P 500® Index |
5
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO INFORMATION
September 30, 2018 (Unaudited)
Characteristics (Portfolio) | |
30-day SEC Yield | 2.20% |
Tax-Equivalent Yield * | 3.72% |
Weighted Average Maturity (years) | 4.3 |
Weighted Average Duration (years) | 3.8 |
Average Quality | AA+ |
Number of Issues | 58 |
* Assumes a maximum 40.8% federal tax rate. |
Credit Quality (% of Bonds) |
Maturity Breakdown (% of Bonds) | |
Sector Diversification (% of Bonds) |
6
THE JAMESTOWN EQUITY FUND | ||||||||
COMMON STOCKS — 94.7% | Shares | Value | ||||||
Consumer Discretionary — 16.7% | ||||||||
Amazon.com, Inc. (a) | 700 | $ | 1,402,100 | |||||
Booking Holdings, Inc. (a) | 235 | 466,240 | ||||||
BorgWarner, Inc. | 11,500 | 491,970 | ||||||
Comcast Corporation - Class A | 18,300 | 648,003 | ||||||
Dollar Tree, Inc. (a) | 7,000 | 570,850 | ||||||
Home Depot, Inc. (The) | 3,000 | 621,450 | ||||||
Lowe's Companies, Inc. | 8,500 | 975,970 | ||||||
PulteGroup, Inc. | 23,680 | 586,553 | ||||||
TJX Companies, Inc. (The) | 7,000 | 784,140 | ||||||
6,547,276 | ||||||||
Consumer Staples — 4.0% | ||||||||
J.M. Smucker Company (The) | 1,400 | 143,654 | ||||||
PepsiCo, Inc. | 5,800 | 648,440 | ||||||
Walmart, Inc. | 8,300 | 779,453 | ||||||
1,571,547 | ||||||||
Energy — 8.0% | ||||||||
Chevron Corporation | 7,700 | 941,556 | ||||||
Exxon Mobil Corporation | 5,500 | 467,610 | ||||||
Hess Corporation | 13,000 | 930,540 | ||||||
Total S.A. - ADR | 12,700 | 817,753 | ||||||
3,157,459 | ||||||||
Financials — 14.9% | ||||||||
Ameriprise Financial, Inc. | 5,200 | 767,832 | ||||||
Chubb Ltd. | 2,800 | 374,192 | ||||||
Discover Financial Services | 12,500 | 955,625 | ||||||
Invesco Ltd. | 18,500 | 423,280 | ||||||
JPMorgan Chase & Company | 10,500 | 1,184,820 | ||||||
KeyCorp | 37,000 | 735,930 | ||||||
Morgan Stanley | 14,900 | 693,893 | ||||||
PNC Financial Services Group, Inc. (The) | 5,300 | 721,807 | ||||||
5,857,379 | ||||||||
Health Care — 14.0% | ||||||||
Aetna, Inc. | 4,600 | 933,110 | ||||||
Amgen, Inc. | 2,200 | 456,038 | ||||||
Gilead Sciences, Inc. | 7,800 | 602,238 | ||||||
McKesson Corporation | 2,600 | 344,890 | ||||||
Merck & Company, Inc. | 10,000 | 709,400 | ||||||
Pfizer, Inc. | 15,695 | 691,679 | ||||||
Thermo Fisher Scientific, Inc. | 3,500 | 854,280 | ||||||
UnitedHealth Group, Inc. | 3,400 | 904,536 | ||||||
5,496,171 |
7
THE JAMESTOWN EQUITY FUND | ||||||||
COMMON STOCKS — 94.7% (Continued) | Shares | Value | ||||||
Industrials — 11.4% | ||||||||
Delta Air Lines, Inc. | 14,200 | $ | 821,186 | |||||
Eaton Corporation plc | 9,500 | 823,935 | ||||||
Ingersoll-Rand plc | 8,330 | 852,159 | ||||||
Nielsen Holdings plc | 9,000 | 248,940 | ||||||
Norfolk Southern Corporation | 5,230 | 944,015 | ||||||
United Technologies Corporation | 5,600 | 782,936 | ||||||
4,473,171 | ||||||||
Information Technology — 21.8% | ||||||||
Alphabet, Inc. - Class A (a) | 550 | 663,894 | ||||||
Alphabet, Inc. - Class C (a) | 600 | 716,082 | ||||||
Apple, Inc. | 7,000 | 1,580,180 | ||||||
Cisco Systems, Inc. | 23,500 | 1,143,275 | ||||||
eBay, Inc. (a) | 17,500 | 577,850 | ||||||
Intel Corporation | 8,840 | 418,043 | ||||||
International Business Machines Corporation | 2,500 | 378,025 | ||||||
Microsoft Corporation | 8,500 | 972,145 | ||||||
Oracle Corporation | 13,100 | 675,436 | ||||||
QUALCOMM, Inc. | 10,000 | 720,300 | ||||||
TE Connectivity Ltd. | 8,000 | 703,440 | ||||||
8,548,670 | ||||||||
Materials — 2.0% | ||||||||
Eastman Chemical Company | 8,100 | 775,332 | ||||||
Real Estate — 1.9% | ||||||||
American Tower Corporation - Class A | 5,300 | 770,090 | ||||||
Total Common Stocks (Cost $20,228,182) | $ | 37,197,095 |
| ||||||||
EXCHANGE-TRADED FUNDS — 2.1% | Shares | Value | ||||||
Vanguard Information Technology ETF (Cost $519,453) | 4,000 | $ | 810,240 |
8
THE JAMESTOWN EQUITY FUND | ||||||||
MONEY MARKET FUNDS — 3.3% | Shares | Value | ||||||
Federated Government Obligations Fund - Institutional Class, 1.89% (b) (Cost $1,290,684) | 1,290,684 | $ | 1,290,684 | |||||
Total Investments at Value — 100.1% (Cost $22,038,319) | $ | 39,298,019 | ||||||
Liabilities in Excess of Other Assets — (0.1%) | (34,089 | ) | ||||||
Net Assets — 100.0% | $ | 39,263,930 |
ADR - American Depositary Receipt. | |
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements. |
9
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND | ||||||||
VIRGINIA REVENUE AND GENERAL | Par Value | Value | ||||||
Albemarle Co., Virginia, Economic Dev. Authority, Revenue, | ||||||||
5.00%, due 06/01/2026 | $ | 350,000 | $ | 409,343 | ||||
Chesterfield Co., Virginia, GO, | ||||||||
5.00%, due 01/01/2024 | 250,000 | 272,305 | ||||||
5.00%, due 01/01/2025 | 460,000 | 522,017 | ||||||
4.00%, due 01/01/2030 | 400,000 | 434,196 | ||||||
Fairfax Co., Virginia, Industrial Dev. Authority, Revenue, | ||||||||
5.00%, due 05/15/2022, | ||||||||
prerefunded 05/15/2019 @ 100 | 750,000 | 764,190 | ||||||
5.00%, due 05/15/2026 | 250,000 | 290,848 | ||||||
4.00%, due 05/15/2030 | 100,000 | 107,090 | ||||||
Fairfax Co., Virginia, Sewer, Revenue, | ||||||||
4.50%, due 07/15/2030, | ||||||||
prerefunded 07/15/2021 @ 100 | 250,000 | 266,708 | ||||||
Fairfax Co., Virginia, Water, Revenue, | ||||||||
5.00%, due 04/01/2027 | 500,000 | 547,585 | ||||||
5.00%, due 04/01/2029 | 400,000 | 471,768 | ||||||
Hampton Roads Sanitation District, Virginia, Wastewater, Revenue, | ||||||||
5.00%, due 07/01/2026 | 500,000 | 568,235 | ||||||
Hampton Roads Sanitation District, Virginia, Wastewater, Series A, Revenue, | ||||||||
5.00%, due 01/01/2027, | ||||||||
prerefunded 01/01/2021 @ 100 | 400,000 | 426,228 | ||||||
Hampton, Virginia, GO, | ||||||||
5.00%, due 04/01/2025 | 500,000 | 547,940 | ||||||
Harrisonburg, Virginia, GO, | ||||||||
5.00%, due 07/15/2022 | 350,000 | 385,535 | ||||||
Henrico Co., Virginia, Public Improvements, GO, | ||||||||
5.00%, due 08/01/2027 | 350,000 | 417,102 | ||||||
Henrico Co., Virginia, Water & Sewer, Revenue, | ||||||||
5.00%, due 05/01/2020, | ||||||||
prerefunded 05/01/2019 @ 100 | 350,000 | 356,107 | ||||||
5.00%, due 05/01/2022, | ||||||||
prerefunded 05/01/2019 @ 100 | 430,000 | 437,504 | ||||||
James City, Virginia, Water & Sewer, Revenue, | ||||||||
5.00%, due 01/15/2026 | 250,000 | 290,483 | ||||||
Louisa, Virginia, Industrial Dev. Authority, Pollution Control, Revenue, | ||||||||
2.15%, due 11/01/2035 | 200,000 | 199,254 |
10
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND | ||||||||
VIRGINIA REVENUE AND GENERAL | Par Value | Value | ||||||
Lynchburg, Virginia, GO, | ||||||||
5.00%, due 08/01/2024 | $ | 310,000 | $ | 354,507 | ||||
Lynchburg, Virginia, Public Improvement, Series A, GO, | ||||||||
5.00%, due 08/01/2019 | 625,000 | 640,825 | ||||||
Manassas, Virginia, Public Improvement, Series D, GO, | ||||||||
5.00%, due 07/01/2019 | 250,000 | 255,735 | ||||||
Newport News, Virginia, GO, | ||||||||
5.00%, due 07/15/2025 | 350,000 | 405,237 | ||||||
Norfolk, Virginia, Series A, GO, | ||||||||
5.00%, due 10/01/2026 | 200,000 | 234,772 | ||||||
Northern Virginia Transportation Authority, Special Tax, Revenue, | ||||||||
5.00%, due 06/01/2026 | 400,000 | 454,756 | ||||||
Prince William Co., Virginia, Lease Participation Certificates, | ||||||||
5.00%, due 10/01/2020 | 500,000 | 528,820 | ||||||
Rappahannock, Virginia, Regional Jail Authority, Revenue, | ||||||||
5.00%, due 10/01/2024 | 300,000 | 341,349 | ||||||
Roanoke, Virginia, Public Improvement, Series A, GO, | ||||||||
5.00%, due 07/15/2025 | 400,000 | 449,248 | ||||||
Spotsylvania Co., Virginia, Economic Dev. Authority, Revenue, | ||||||||
5.00%, due 06/01/2021 | 300,000 | 321,933 | ||||||
Spotsylvania Co., Virginia, GO, | ||||||||
5.00%, due 01/15/2023 | 400,000 | 446,600 | ||||||
Stafford Co., Virginia, Public Improvement, GO, | ||||||||
5.00%, due 08/01/2026 | 375,000 | 435,052 | ||||||
Suffolk, Virginia, Public Improvement, GO, | ||||||||
5.00%, due 02/01/2022 | 400,000 | 437,520 | ||||||
Upper Occoquan, Virginia, Sewer Authority, Revenue, | ||||||||
5.15%, due 07/01/2020 | 110,000 | 113,927 | ||||||
5.00%, due 07/01/2027 | 350,000 | 403,301 | ||||||
Virginia Beach, Virginia, Dev. Authority, Series A, Revenue, | ||||||||
5.00%, due 11/01/2020 | 300,000 | 318,309 | ||||||
Virginia Beach, Virginia, GO, | ||||||||
5.00%, due 03/01/2023 | 300,000 | 335,547 | ||||||
Virginia Beach, Virginia, Public Improvement, GO, | ||||||||
5.00%, due 06/01/2021, | ||||||||
prerefunded 06/01/2019 @ 100 | 250,000 | 255,132 | ||||||
Virginia Beach, Virginia, Public Improvement, Series A, GO, | ||||||||
4.00%, due 04/01/2027 | 205,000 | 218,210 | ||||||
Virginia Biotechnology Research Partnership Authority, Lease Revenue, | ||||||||
5.00%, due 09/01/2020 | 500,000 | 528,215 |
11
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND | ||||||||
VIRGINIA REVENUE AND GENERAL | Par Value | Value | ||||||
Virginia College Building Authority, Revenue, | ||||||||
5.00%, due 02/01/2029 | $ | 300,000 | $ | 344,955 | ||||
Virginia College Building Authority, Educational Facilities, Revenue, | ||||||||
5.00%, due 03/01/2019 | 250,000 | 253,215 | ||||||
4.00%, due 09/01/2026 | 500,000 | 530,670 | ||||||
Virginia Commonwealth Transportation Board, Federal Grant Anticipation Notes, Revenue, | ||||||||
5.00%, due 03/15/2025 | 375,000 | 431,992 | ||||||
Virginia Commonwealth Transportation Board, Federal Grant Anticipation Notes, Series A, Revenue, | ||||||||
5.00%, due 03/15/2023 | 500,000 | 548,570 | ||||||
5.00%, due 03/15/2025 | 500,000 | 559,970 | ||||||
Virginia Commonwealth University Health System, Revenue, | ||||||||
5.00%, due 07/01/2031 | 400,000 | 460,800 | ||||||
Virginia State Housing Dev. Authority, Revenue, | ||||||||
3.05%, due 07/01/2021 | 200,000 | 204,342 | ||||||
Virginia State Public Building Authority, Revenue, | ||||||||
5.00%, due 08/01/2029 | 400,000 | 468,412 | ||||||
Virginia State Public School Authority, Revenue, | ||||||||
5.00%, due 08/01/2023 | 500,000 | 549,985 | ||||||
5.00%, due 07/15/2026 | 300,000 | 342,240 | ||||||
Virginia State Resources Authority, Clean Water, Revenue, | ||||||||
5.00%, due 10/01/2021, | ||||||||
prerefunded 10/01/2019 @ 100 | 500,000 | 515,140 | ||||||
Virginia State Resources Authority, Infrastructure, Revenue, | ||||||||
5.00%, due 11/01/2024, | ||||||||
prerefunded 11/01/2018 @ 100 | 465,000 | 466,223 | ||||||
Virginia State Resources Authority, Infrastructure, Series B, Revenue, | ||||||||
5.00%, due 11/01/2024, | ||||||||
prerefunded 11/01/2018 @ 100 | 35,000 | 35,092 | ||||||
5.00%, due 11/01/2024 | 150,000 | 166,676 | ||||||
Washington Co., Virginia, Revenue, | ||||||||
4.00%, due 12/01/2025 | 350,000 | 381,353 | ||||||
Western Virginia Regional Jail Authority, Revenue, | ||||||||
5.00%, due 12/01/2023 | 250,000 | 281,125 | ||||||
Winchester, Virginia, GO, | ||||||||
5.00%, due 09/01/2027 | 125,000 | 143,039 | ||||||
4.00%, due 09/01/2029 | 250,000 | 271,460 | ||||||
Total Virginia Revenue and General Obligation (GO) Bonds (Cost $22,243,798) | $ | 22,148,692 |
12
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND | ||||||||
WASHINGTON, D.C. REVENUE BONDS — 2.1% | Par Value | Value | ||||||
Metropolitan Washington Airports Authority, Series C, Revenue, | ||||||||
5.00%, due 10/01/2022 (Cost $500,000) | $ | 500,000 | $ | 500,000 |
| ||||||||
MONEY MARKET FUNDS — 3.9% | Shares | Value | ||||||
Federated Government Obligations Fund - Institutional Class, 1.89% (a) (Cost $937,337) | 937,337 | $ | 937,337 | |||||
Total Investments at Value — 99.0% (Cost $23,681,135) | $ | 23,586,029 | ||||||
Other Assets in Excess of Liabilities — 1.0% | 244,198 | |||||||
Net Assets — 100.0% | $ | 23,830,227 |
(a) | The rate shown is the 7-day effective yield as of September 30, 2018. |
See accompanying notes to financial statements. |
13
THE JAMESTOWN FUNDS | ||||||||
| The | The | ||||||
ASSETS | ||||||||
Investments in securities: | ||||||||
At cost | $ | 22,038,319 | $ | 23,681,135 | ||||
At value (Note 2) | $ | 39,298,019 | $ | 23,586,029 | ||||
Cash | 4,415 | — | ||||||
Receivable for capital shares sold | 736 | — | ||||||
Dividends and interest receivable | 29,076 | 275,377 | ||||||
Other assets | 9,781 | 9,520 | ||||||
TOTAL ASSETS | 39,342,027 | 23,870,926 | ||||||
LIABILITIES | ||||||||
Distributions payable | 5,920 | 1,816 | ||||||
Payable for capital shares redeemed | 40,474 | 27,712 | ||||||
Accrued investment advisory fees (Note 4) | 24,768 | 1,571 | ||||||
Payable to administrator (Note 4) | 5,700 | 5,700 | ||||||
Other accrued expenses | 1,235 | 3,900 | ||||||
TOTAL LIABILITIES | 78,097 | 40,699 | ||||||
NET ASSETS | $ | 39,263,930 | $ | 23,830,227 | ||||
Net assets consist of: | ||||||||
Paid-in capital | $ | 21,642,945 | $ | 23,944,216 | ||||
Accumulated earnings (deficit) | 17,620,985 | (113,989 | ) | |||||
Net assets | $ | 39,263,930 | $ | 23,830,227 | ||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, $0.01 par value) | 1,719,132 | 2,451,102 | ||||||
Net asset value, offering price and redemption price per share (Note 2) | $ | 22.84 | $ | 9.72 |
See accompanying notes to financial statements. |
14
THE JAMESTOWN FUNDS | ||||||||
| The | The | ||||||
INVESTMENT INCOME | ||||||||
Dividends | $ | 393,459 | $ | 7,587 | ||||
Foreign withholding taxes on dividends | (2,982 | ) | — | |||||
Interest | — | 301,109 | ||||||
TOTAL INVESTMENT INCOME | 390,477 | 308,696 | ||||||
EXPENSES | ||||||||
Investment advisory fees (Note 4) | 124,314 | 48,442 | ||||||
Administration fees (Note 4) | 30,000 | 30,000 | ||||||
Professional fees | 12,032 | 12,782 | ||||||
Trustees’ fees and expenses (Note 4) | 6,384 | 6,384 | ||||||
Compliance service fees (Note 4) | 4,200 | 4,200 | ||||||
Printing of shareholder reports | 5,132 | 1,741 | ||||||
Pricing costs | 809 | 5,415 | ||||||
Custodian and bank service fees | 3,102 | 2,613 | ||||||
Account maintenance fees | 2,298 | 3,282 | ||||||
Registration and filing fees | 3,232 | 1,846 | ||||||
Insurance expense | 670 | 457 | ||||||
Other expenses | 1,251 | 3,886 | ||||||
TOTAL EXPENSES | 193,424 | 121,048 | ||||||
Fees voluntarily waived by the Adviser (Note 4) | (6,000 | ) | (37,177 | ) | ||||
Expenses reimbursed through a directed brokerage arrangement (Note 5) | (6,000 | ) | — | |||||
NET EXPENSES | 181,424 | 83,871 | ||||||
NET INVESTMENT INCOME | 209,053 | 224,825 | ||||||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||||||
Net realized gains (losses) on investment transactions | 435,738 | (18,575 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | 2,694,971 | (147,561 | ) | |||||
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | 3,130,709 | (166,136 | ) | |||||
NET INCREASE IN NET ASSETS FROM OPERATIONS | $ | 3,339,762 | $ | 58,689 |
See accompanying notes to financial statements. |
15
THE JAMESTOWN EQUITY FUND | ||||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 209,053 | $ | 331,394 | ||||
Net realized gains on investment transactions | 435,738 | 2,945,830 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 2,694,971 | 1,471,878 | ||||||
Net increase in net assets from operations | 3,339,762 | 4,749,102 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (2,007,066 | ) | (2,598,570 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 157,767 | 511,589 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 1,886,805 | 2,454,310 | ||||||
Payments for shares redeemed | (1,683,236 | ) | (5,006,101 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | 361,336 | (2,040,202 | ) | |||||
TOTAL INCREASE IN NET ASSETS | 1,694,032 | 110,330 | ||||||
NET ASSETS | ||||||||
Beginning of period | 37,569,898 | 37,459,568 | ||||||
End of period | $ | 39,263,930 | $ | 37,569,898 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 7,095 | 23,196 | ||||||
Shares reinvested | 88,877 | 114,954 | ||||||
Shares redeemed | (77,096 | ) | (231,056 | ) | ||||
Net increase (decrease) in shares outstanding | 18,876 | (92,906 | ) | |||||
Shares outstanding, beginning of period | 1,700,256 | 1,793,162 | ||||||
Shares outstanding, end of period | 1,719,132 | 1,700,256 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, Distributions to Shareholders were from net investment income of $322,082 and net realized gains on investment transactions of $2,266,488. As of March 31, 2018, undistributed net investment income was $1,137. |
See accompanying notes to financial statements. |
16
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND | ||||||||
| Six Months | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 224,825 | $ | 436,053 | ||||
Net realized gains (losses) on investment transactions | (18,575 | ) | 8,369 | |||||
Net change in unrealized appreciation (depreciation) on investments | (147,561 | ) | (418,320 | ) | ||||
Net increase in net assets from operations | 58,689 | 26,102 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (225,682 | ) | (440,821 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 185,024 | 1,274,197 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 211,611 | 416,116 | ||||||
Payments for shares redeemed | (961,477 | ) | (1,914,264 | ) | ||||
Net decrease in net assets from capital share transactions | (564,842 | ) | (223,951 | ) | ||||
TOTAL DECREASE IN NET ASSETS | (731,835 | ) | (638,670 | ) | ||||
NET ASSETS | ||||||||
Beginning of period | 24,562,062 | 25,200,732 | ||||||
End of period | $ | 23,830,227 | $ | 24,562,062 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 18,889 | 127,364 | ||||||
Shares reinvested | 21,653 | 41,784 | ||||||
Shares redeemed | (98,231 | ) | (191,198 | ) | ||||
Net decrease in shares outstanding | (57,689 | ) | (22,050 | ) | ||||
Shares outstanding, beginning of period | 2,508,791 | 2,530,841 | ||||||
Shares outstanding, end of period | 2,451,102 | 2,508,791 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended March 31, 2018, Distributions to Shareholders were from net investment income of $436,053 and net realized gains on investment transactions of $4,768. As of March 31, 2018, undistributed net investment income was $549. |
See accompanying notes to financial statements. |
17
THE JAMESTOWN EQUITY FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
| Six Months | Years Ended March 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 22.10 | $ | 20.89 | $ | 19.57 | $ | 21.91 | $ | 22.47 | $ | 19.60 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.12 | 0.19 | 0.19 | 0.16 | 0.16 | 0.15 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 1.81 | 2.51 | 2.12 | (1.18 | ) | 1.96 | 4.30 | |||||||||||||||||
Total from investment operations | 1.93 | 2.70 | 2.31 | (1.02 | ) | 2.12 | 4.45 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.12 | ) | (0.19 | ) | (0.20 | ) | (0.16 | ) | (0.16 | ) | (0.15 | ) | ||||||||||||
Distributions from net realized gains | (1.07 | ) | (1.30 | ) | (0.79 | ) | (1.16 | ) | (2.52 | ) | (1.43 | ) | ||||||||||||
Total distributions | (1.19 | ) | (1.49 | ) | (0.99 | ) | (1.32 | ) | (2.68 | ) | (1.58 | ) | ||||||||||||
Net asset value at end of period | $ | 22.84 | $ | 22.10 | $ | 20.89 | $ | 19.57 | $ | 21.91 | $ | 22.47 | ||||||||||||
Total return (a) | 9.20 | %(b) | 13.35 | % | 12.14 | % | (4.96 | %) | 10.14 | % | 23.55 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 39,264 | $ | 37,570 | $ | 37,460 | $ | 37,682 | $ | 29,596 | $ | 30,746 | ||||||||||||
Ratio of total expenses to average net assets | 1.01 | %(c) | 1.03 | % | 1.03 | % | 1.03 | % | 1.09 | % | 1.07 | % | ||||||||||||
Ratio of net expenses to average net assets (d) | 0.95 | %(c)(e) | 0.95 | %(e) | 0.95 | %(e) | 1.00 | % | 1.05 | % | 1.03 | % | ||||||||||||
Ratio of net investment income to average net assets (d) | 1.09 | %(c)(e) | 0.87 | %(e) | 0.96 | %(e) | 0.82 | % | 0.71 | % | 0.72 | % | ||||||||||||
Portfolio turnover rate | 3 | %(b) | 18 | % | 27 | % | 50 | % | 29 | % | 21 | % |
(a) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or realized capital gains distributions are reinvested in shares of the Fund. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | Not annualized. |
(c) | Annualized. |
(d) | Ratios were determined based on net expenses after expense reimbursements through a directed brokerage arrangement (Note 5). |
(e) | Ratio was determined after voluntary advisory fee waivers by the Adviser (Note 4). |
See accompanying notes to financial statements. |
18
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND | ||||||||||||||||||||||||
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
| Six Months | Years Ended March 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net asset value at beginning of period | $ | 9.79 | $ | 9.96 | $ | 10.21 | $ | 10.18 | $ | 10.16 | $ | 10.47 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.09 | 0.17 | 0.18 | 0.21 | 0.24 | 0.26 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | (0.07 | ) | (0.17 | ) | (0.25 | ) | 0.03 | 0.02 | (0.30 | ) | ||||||||||||||
Total from investment operations | 0.02 | 0.00 | (a) | (0.07 | ) | 0.24 | 0.26 | (0.04 | ) | |||||||||||||||
Less distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.09 | ) | (0.17 | ) | (0.18 | ) | (0.21 | ) | (0.24 | ) | (0.26 | ) | ||||||||||||
Distributions from net realized gains | — | (0.00 | )(a) | — | — | — | (0.01 | ) | ||||||||||||||||
Total distributions | (0.09 | ) | (0.17 | ) | (0.18 | ) | (0.21 | ) | (0.24 | ) | (0.27 | ) | ||||||||||||
Net asset value at end of period | $ | 9.72 | $ | 9.79 | $ | 9.96 | $ | 10.21 | $ | 10.18 | $ | 10.16 | ||||||||||||
Total return (b) | 0.22 | %(c) | 0.04 | % | (0.66 | %) | 2.40 | % | 2.61 | % | (0.37 | %) | ||||||||||||
Net assets at end of period (000’s) | $ | 23,830 | $ | 24,562 | $ | 25,201 | $ | 25,647 | $ | 26,695 | $ | 26,284 | ||||||||||||
Ratio of total expenses to average net assets | 1.00 | %(d) | 0.97 | % | 0.94 | % | 0.90 | % | 0.88 | % | 0.88 | % | ||||||||||||
Ratio of net expenses to average net assets (e) | 0.69 | %(d) | 0.69 | % | 0.69 | % | 0.69 | % | 0.69 | % | 0.69 | % | ||||||||||||
Ratio of net investment income to average net assets (e) | 1.86 | %(d) | 1.74 | % | 1.82 | % | 2.08 | % | 2.38 | % | 2.59 | % | ||||||||||||
Portfolio turnover rate | 5 | %(c) | 8 | % | 13 | % | 11 | % | 16 | % | 1 | % |
(a) | Amount rounds to less than $0.01 per share. |
(b) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or realized capital gains distributions are reinvested in shares of the Fund. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(c) | Not annualized. |
(d) | Annualized. |
(e) | Ratios were determined after voluntary advisory fee waivers by the Adviser (Note 4). |
See accompanying notes to financial statements. |
19
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 2018 (Unaudited)
1. Organization
The Jamestown Equity Fund and The Jamestown Tax Exempt Virginia Fund (individually, a “Fund,” and, collectively, the “Funds”) are each a no-load series of Williamsburg Investment Trust (the “Trust”), an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Jamestown Equity Fund is a diversified fund and The Jamestown Tax Exempt Virginia Fund is a non-diversified fund. The Trust was organized as a Massachusetts business trust on July 18, 1988. Other series of the Trust are not included in this report.
The Jamestown Equity Fund’s investment objective is long-term growth of capital.
The Jamestown Tax Exempt Virginia Fund’s investment objectives are to provide current income exempt from federal income taxes and from the personal income taxes of Virginia, to preserve capital, to limit credit risk and to take advantage of opportunities to increase and enhance the value of a shareholder’s investment.
2. Significant Accounting Policies
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted regulations that eliminated or amended disclosure requirements that were redundant or outdated in light of changes in SEC requirements, accounting principles generally accepted in the United States of America (“GAAP”), International Financial Reporting Standards or changes in technology or the business environment. These regulations were effective November 5, 2018, and the Funds are complying with them effective with these financial statements.
Each Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.” The following is a summary of the Funds’ significant accounting policies. These policies are in conformity with GAAP.
New Accounting Pronouncement — On August 28, 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820, “Fair Value Measurement” (“ASC 820”). ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration of entities when evaluating disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. Management is evaluating what, if any, impact the adoption of ASU 2018-13 will have on the Funds’ financial statements.
Securities valuation — The Funds’ portfolio securities are valued as of the close of business of the regular session of the New York Stock Exchange (normally 4:00 p.m., Eastern time). Securities traded on a national stock exchange, including common stocks and exchange-traded funds, are generally valued based upon the closing price on the principal exchange where the security is traded, if available, otherwise, at the last quoted bid price. Securities that are quoted
20
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
by NASDAQ are valued at the NASDAQ Official Closing Price. Investments representing shares of other open-end investment companies, including money market funds, are valued at their net asset value (“NAV”) as reported by such companies. When using a quoted price and when the market is considered active, securities will be classified as Level 1 within the fair value hierarchy (see below).
Fixed income securities, including municipal bonds, are typically valued on the basis of prices provided by an independent pricing service. The prices provided by the pricing service are determined with consideration given to institutional bid and last sale prices and take into account securities prices, yields, maturities, call features, ratings, institutional trading in similar groups of securities, and developments related to specific securities. Given the inputs used by the pricing service, these securities are classified as Level 2 within the fair value hierarchy.
When market quotations are not readily available, if a pricing service cannot provide a price, or if the investment adviser believes the price received from the pricing service is not indicative of market value, securities will be valued in good faith at fair value using methods consistent with procedures adopted by the Board of Trustees and will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. Such methods of fair valuation may include, but are not limited to: multiple of earnings, multiple of book value, discount from market of a similar freely traded security, purchase price of the security, subsequent private transactions in the security or related securities, or a combination of these and other factors.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below:
● | Level 1 – quoted prices in active markets for identical securities |
● | Level 2 – other significant observable inputs |
● | Level 3 – significant unobservable inputs |
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
21
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The following is a summary of the inputs used to value each Fund’s investments as of September 30, 2018, by security type:
The Jamestown Equity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 37,197,095 | $ | — | $ | — | $ | 37,197,095 | ||||||||
Exchange-Traded Funds | 810,240 | — | — | 810,240 | ||||||||||||
Money Market Funds | 1,290,684 | — | — | 1,290,684 | ||||||||||||
Total | $ | 39,298,019 | $ | — | $ | — | $ | 39,298,019 |
The Jamestown Tax Exempt Virginia Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Revenue and General Obligation Municipal Bonds | $ | — | $ | 22,648,692 | $ | — | $ | 22,648,692 | ||||||||
Money Market Funds | 937,337 | — | — | 937,337 | ||||||||||||
Total | $ | 937,337 | $ | 22,648,692 | $ | — | $ | 23,586,029 |
Refer to The Jamestown Equity Fund’s Schedule of Investments for a listing of the common stocks by sector type. As of September 30, 2018, the Funds did not have any transfers into or out of any Level. There were no Level 3 securities or derivative instruments held by the Funds as of September 30, 2018. It is the Funds’ policy to recognize transfers into or out of any Level at the end of the reporting period.
Share valuation — The NAV per share of each Fund is calculated daily by dividing the total value of its assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Fund is equal to the NAV per share.
Investment income — Interest income is accrued as earned. Discounts and premiums on fixed income securities purchased are amortized using the interest method. Dividend income is recorded on the ex-dividend date. Withholding taxes on foreign dividends received by The Jamestown Equity Fund, if any, have been recorded in accordance with the Trust’s understanding of the applicable country’s rules and tax rates.
Distributions to shareholders — Dividends arising from net investment income, if any, are declared and paid quarterly to shareholders of The Jamestown Equity Fund. Dividends arising from net investment income are declared daily and paid monthly to shareholders of The Jamestown Tax Exempt Virginia Fund. Net realized short-term capital gains, if any, may be distributed throughout the year and net realized long-term capital gains, if any, are distributed at least once each year. The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are permanent in nature and are primarily due to differing treatments of net short-term capital gains. Dividends and distributions are recorded on the ex-dividend date.
22
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The tax character of distributions paid during the periods ended September 30, 2018 and March 31, 2018 was as follows:
| Periods | Ordinary | Long-Term | Exempt- | Total | |||||||||||||||
The Jamestown Equity Fund | 9/30/2018 | $ | 221,692 | $ | 1,785,374 | $ | — | $ | 2,007,066 | |||||||||||
3/31/2018 | $ | 402,813 | $ | 2,195,757 | $ | — | $ | 2,598,570 | ||||||||||||
The Jamestown Tax Exempt Virginia Fund | 9/30/2018 | $ | 4,976 | $ | — | $ | 220,706 | $ | 225,682 | |||||||||||
3/31/2018 | $ | 13,114 | $ | 4,744 | $ | 422,963 | $ | 440,821 |
Investment transactions — Investment transactions are accounted for on trade date for financial reporting purposes. Realized gains and losses on investment securities sold are determined on a specific identification basis.
Common expenses — Common expenses of the Trust are allocated among the series of the Trust based on relative net assets of each series or the nature of the services performed and the relative applicability to each series.
Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Federal income tax — Each Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Funds of liability for federal income taxes to the extent 100% of their net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
23
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The tax character of accumulated earnings (deficit) at September 30, 2018 was as follows:
| The Jamestown | The Jamestown | ||||||
Tax cost of portfolio investments | $ | 22,112,871 | $ | 23,681,135 | ||||
Gross unrealized appreciation | $ | 17,786,975 | $ | 112,001 | ||||
Gross unrealized depreciation | (601,827 | ) | (207,107 | ) | ||||
Net unrealized appreciation (depreciation) | 17,185,148 | (95,106 | ) | |||||
Accumulated ordinary income | 6,124 | — | ||||||
Accumulated tax exempt income | — | 1,508 | ||||||
Accumulated capital and other gains (losses) | 435,633 | (18,575 | ) | |||||
Distributions payable | (5,920 | ) | (1,816 | ) | ||||
Accumulated earnings (deficit) | $ | 17,620,985 | $ | (113,989 | ) |
The difference between the federal income tax cost of portfolio investments and the financial statement cost of portfolio investments for The Jamestown Equity Fund is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are primarily due to the tax deferral of losses on wash sales.
The Funds recognize the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions taken on Federal income tax returns for the current and all open tax years (tax years ended March 31, 2015 through March 31, 2018) of each Fund and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements.
3. Investment Transactions
Investment transactions, other than short-term investments and U.S. government securities, were as follows for the six months ended September 30, 2018:
| The Jamestown | The Jamestown | ||||||
Purchase of investment securities | $ | 1,216,580 | $ | 1,233,191 | ||||
Proceeds from sales and maturities of investment securities | $ | 2,864,409 | $ | 1,829,408 |
24
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENTS
Each Fund’s investments are managed by Lowe, Brockenbrough & Company, Inc. (the “Adviser”) under the terms of an Investment Advisory Agreement. The Jamestown Equity Fund pays the Adviser a fee, which is computed and accrued daily and paid monthly, at annual rates of 0.65% of its average daily net assets up to $500 million and 0.55% of such assets in excess of $500 million. The Jamestown Tax Exempt Virginia Fund pays the Adviser a fee, which is computed and accrued daily and paid monthly, at annual rates of 0.40% of its average daily net assets up to $250 million, 0.35% of the next $250 million of such assets and 0.30% of such assets in excess of $500 million. Certain officers of the Trust are also officers of the Adviser.
During the six months ended September 30, 2018, the Adviser voluntarily limited the total annual operating expenses of The Jamestown Equity Fund and The Jamestown Tax Exempt Virginia Fund to 0.95% and 0.69%, respectively, of each Fund’s average daily net assets; accordingly, the Adviser voluntarily waived $6,000 and $37,177 of its investment advisory fees during the six months ended September 30, 2018 for The Jamestown Equity Fund and The Jamestown Tax Exempt Virginia Fund, respectively. These amounts are not subject to recapture in future periods.
OTHER SERVICE PROVIDERS
Ultimus Fund Solutions, LLC (“Ultimus”) provides administration, fund accounting, compliance and transfer agent services to the Funds. The Funds pay Ultimus fees in accordance with the agreements for such services. Certain officers of the Trust are also officers of Ultimus, or of Ultimus Fund Distributors, LLC (the “Distributor”), the principal underwriter of the Funds and an affiliate of Ultimus. The Distributor is compensated by the Adviser (not the Funds) for acting as principal underwriter.
COMPENSATION OF TRUSTEES
Trustees and officers affiliated with the Adviser or Ultimus are not compensated by the Trust for their services. Each Trustee who is not an affiliated person of the Adviser or Ultimus receives from the Trust an annual retainer of $20,000, payable quarterly; a fee of $2,000 for attendance at each meeting of the Board of Trustees (except that such fee is $3,000 for the independent chair); and a fee of $1,000 for attendance at each meeting of any committee of the Board (except that such fee is $1,500 for the committee chair); plus reimbursement of travel and other expenses incurred in attending meetings. Each series of the Trust pays its proportionate share of such fees.
5. Brokerage Arrangement
In order to reduce the total operating expenses of The Jamestown Equity Fund, a portion of the Fund’s operating expenses have been paid through an arrangement with a third-party broker-dealer who is compensated through commission trades. Payment of expenses by the broker-dealer is based on a percentage of commissions earned. Expenses reimbursed through the brokerage arrangement totaled $6,000 for The Jamestown Equity Fund for the six months ended September 30, 2018.
25
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Contingencies and Commitments
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from the performance of their duties to the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Trust expects the risk of loss to be remote.
7. Concentration of Credit Risk
The Jamestown Tax Exempt Virginia Fund invests primarily in debt instruments of municipal issuers in the Commonwealth of Virginia. The issuers’ abilities to meet their obligations may be affected by economic developments in the Commonwealth of Virginia or its region, as well as disruptions in the credit markets and the economy, generally.
8. Subsequent Events
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events, except as reflected in the following paragraph:
At a meeting of the Board of Trustees held on November 27, 2018, the Trustees, in consultation with the Funds’ investment adviser, determined that it was in the best interest of The Jamestown Tax Exempt Virginia Fund and its shareholders to discontinue the Fund’s operations and to liquidate and close the Fund. All outstanding shares of the Fund will be redeemed on or before January 11, 2019.
26
THE JAMESTOWN FUNDS
ABOUT YOUR FUNDS’ EXPENSES (Unaudited)
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of the Funds, you incur ongoing costs, including management fees and other expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The expenses in the table below are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (April 1, 2018 through September 30, 2018).
The table below illustrates each Fund’s costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from each Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Funds. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, 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 given for the Funds under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare each Fund’s ongoing costs with those of other mutual funds. It assumes that each Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the returns used are not the Funds’ actual returns, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess each Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Funds do not charge sales loads or redemption fees.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
More information about the Funds’ expenses, including annual expense ratios for the prior five fiscal years, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Funds’ prospectus.
27
THE JAMESTOWN FUNDS
ABOUT YOUR FUNDS’ EXPENSES (Unaudited) (Continued)
Beginning | Ending | Net | Expenses | |
The Jamestown Equity Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,092.00 | 0.95% | $4.98 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,020.31 | 0.95% | $4.81 |
The Jamestown Tax Exempt Virginia Fund | ||||
Based on Actual Fund Return | $1,000.00 | $1,002.20 | 0.69% | $3.46 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,021.61 | 0.69% | $3.50 |
(a) | Annualized, based on each Fund’s most recent one-half year expenses. |
(b) | Expenses are equal to each Fund’s annualized net expense ratio multiplied by the average account value over the period, muliplied by 183/365 (to reflect the one-half year period). |
28
THE JAMESTOWN FUNDS
OTHER INFORMATION (Unaudited)
A description of the policies and procedures that the Funds use to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-866-738-1126, or on the SEC’s website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available without charge upon request by calling toll-free 1-866-738-1126, or on the SEC’s website at http://www.sec.gov.
The Trust files a complete listing of portfolio holdings of the Funds with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. The filings are available upon request, by calling 1-866-738-1126. Furthermore, you may obtain a copy of these filings on the SEC’s website at http://www.sec.gov.
29
THE JAMESTOWN FUNDS
www.jamestownfunds.com
Investment Adviser Lowe, Brockenbrough & Company, Inc. 1802 Bayberry Court Suite 400 Richmond, Virginia 23226
Administrator Ultimus Fund Solutions, LLC P.O. Box 46707 Cincinnati, Ohio 45246-0707 (Toll-Free) 1-866-738-1126
Independent Registered Cohen & Company, Ltd. 1350 Euclid Avenue Suite 800 Cleveland, Ohio 44115
Legal Counsel Sullivan & Worcester LLP 1666 K Street, N.W. Washington, DC 20006
Board of Trustees John P. Ackerly, IV John T. Bruce George K. Jennison Robert S. Harris, Ph.D. Harris V. Morrissette Elizabeth W. Robertson
|
Item 2. | Code of Ethics. |
Not required
Item 3. | Audit Committee Financial Expert. |
Not required
Item 4. | Principal Accountant Fees and Services. |
Not required
Item 5. | Audit Committee of Listed Registrants. |
Not applicable
Item 6. | Schedule of Investments. |
(a) | Schedule filed with Item 1 |
(b) | Not applicable |
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable
Item 10. | Submission of Matters to a Vote of Security Holders. |
The registrant’s Governance, Nominating, Compensation and QLCC Committee shall review shareholder recommendations to fill vacancies on the registrant’s board of trustees if such recommendations are submitted in writing, addressed to the Committee at the registrant’s offices and meet any minimum qualifications adopted by the Committee. The Committee may adopt, by resolution, a policy regarding its procedures for considering candidates for the board of trustees, including any recommended by shareholders.
Item 11. | Controls and Procedures. |
(a) Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officers and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable
Item 13. | Exhibits. |
File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not required
(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)): Attached hereto
(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
(a)(4) Change in the registrant’s independent public accountants: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)): Attached hereto
Exhibit 99.CERT | Certifications required by Rule 30a-2(a) under the Act |
Exhibit 99.906CERT | Certifications required by Rule 30a-2(b) under the Act |
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) | Williamsburg Investment Trust | ||
By (Signature and Title)* | /s/ David James | ||
David James, Secretary | |||
Date | December 4, 2018 | ||
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/ John T. Bruce | ||
John T. Bruce, President | |||
(FBP Equity & Dividend Plus Fund and FBP Appreciation & Income Opportunities Fund) | |||
Date | December 4, 2018 | ||
By (Signature and Title)* | /s/ Thomas W. Leavell | ||
Thomas W. Leavell, President | |||
(The Government Street Equity Fund, The Government Street Mid-Cap Fund and The Alabama Tax Free Bond Fund) | |||
Date | December 4, 2018 | ||
By (Signature and Title)* | /s/ Charles M. Caravati III | ||
Charles M. Caravati III, President | |||
(The Jamestown Equity Fund) | |||
Date | December 4, 2018 | ||
By (Signature and Title)* | /s/ Joseph A. Jennings III | ||
Joseph A. Jennings III, President | |||
(The Jamestown Tax Exempt Virginia Fund) | |||
Date | December 4, 2018 | ||
By (Signature and Title)* | /s/ John P. Ackerly IV | ||
John P. Ackerly IV, President | |||
(The Davenport Core Fund, Davenport Value & Income Fund, Davenport Equity Opportunities Fund, Davenport Small Cap Focus Fund and the Davenport Balanced Income Fund) | |||
Date | December 4, 2018 | ||
By (Signature and Title)* | /s/ Mark J. Seger | ||
Mark J. Seger, Treasurer and Principal Financial Officer | |||
Date | December 4, 2018 |
* | Print the name and title of each signing officer under his or her signature. |