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THE
GOVERNMENT STREET
FUNDS
NO-LOAD MUTUAL FUNDS
PROSPECTUS
AUGUST 1, 2000
REVISED NOVEMBER 6, 2000
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T. LEAVELL & ASSOCIATES, INC.
INVESTMENT ADVISER
Founded 1979
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THE GOVERNMENT STREET BOND FUND
THE GOVERNMENT STREET EQUITY FUND
THE ALABAMA TAX FREE BOND FUND
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
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TABLE OF CONTENTS
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Risk/Return Summary ......................................................... 3
Synopsis of Costs and Expenses .............................................. 10
How to Purchase Shares....................................................... 11
How to Redeem Shares ........................................................ 12
How Net Asset Value is Determined ........................................... 14
Management of the Funds ..................................................... 15
Dividends, Distributions and Taxes .......................................... 17
Additional Investment Information ........................................... 20
Financial Highlights ........................................................ 23
INVESTMENT ADVISER
T. LEAVELL & ASSOCIATES, INC.
MOBILE, ALABAMA
PORTFOLIO MANAGERS
Thomas W. Leavell,
The Government Street Equity Fund
Mary Shannon Hope,
The Government Street Bond Fund
Timothy S. Healey,
The Alabama Tax Free Bond Fund
BOARD OF TRUSTEES
Richard Mitchell, President
Austin Brockenbrough III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Erwin H. Will, Jr.
Samuel B. Witt III
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RISK/RETURN SUMMARY
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WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The investment objective of THE GOVERNMENT STREET EQUITY FUND is to seek capital
appreciation through the compounding of dividends and of capital gains, both
realized and unrealized. The Fund will seek to attain its objective by investing
in common stocks.
The investment objectives of THE GOVERNMENT STREET BOND FUND are to preserve
capital, to provide current income and to protect the value of the portfolio
against the effects of inflation.
The investment objectives of THE ALABAMA TAX FREE BOND FUND are to provide
current income exempt from federal income taxes and from the personal income
taxes of Alabama and to preserve capital.
WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
THE GOVERNMENT STREET EQUITY FUND
The Equity Fund's portfolio consists primarily of the common stocks of medium to
large capitalization companies which are broadly diversified among economic
sectors and industries. The Fund generally will remain fully invested in common
stocks.
The Equity Fund is governed by an investment philosophy that seeks to reduce
risk (the variability of returns) in the portfolio while increasing compounded
returns. The Adviser combines quantitative analysis of securities with more
basic fundamental analysis to construct an efficiently diversified portfolio.
The selection process begins with a stock list of approximately 550 common
stocks. This list is the S&P 500 plus "special consideration" stocks. The stocks
on this list are screened monthly for fundamental strength based on balance
sheet quality and financial ratios (including but not limited to debt/equity,
return on equity, return on assets and net worth). The net result is a stock
universe of approximately 350 stocks.
Stocks in the universe are then characterized by their diversification
characteristics. Stocks are grouped into either "growth" or "value" stocks
(depending upon their respective price/book values). Each group ("growth" or
"value") is then sorted into capitalization sectors (small, medium or large)
using the capitalization sector weightings of the S&P 500 as benchmarks. These 6
sectors are the basis for the diversification that is inherent in the portfolio.
To ensure broad diversification, a target representation for each sector is
established. There is equal representation of "growth"
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and "value" stocks. The capitalization distribution is based on the sector
weightings of the S&P 500.
An optimization program is then employed to suggest the most efficient
combination of stocks in terms of risk and return. The optimization program is
based upon the expected return of each stock, the historical variability of each
stock and the statistical relationships between all stock pairs in the universe.
The optimization process is subject to constraints that limit the amount of
exposure of any one stock to no more than approximately 4% of the cost basis of
the portfolio. The result of the optimization is a portfolio that is broadly
diversified.
The performance of the Equity Fund and of its individual securities is monitored
on an ongoing basis. To maintain the quality and diversification that is
desired, the portfolio is continuously evaluated, and it is re-balanced
periodically.
THE GOVERNMENT STREET BOND FUND
In seeking to achieve its investment objectives, the Bond Fund will emphasize
preservation of capital by limiting investments in the portfolio to fixed income
securities rated in the 4 highest quality ratings by any of the nationally
recognized statistical rating organizations ("NRSROs"). These securities are
referred to as "investment grade."
Under normal circumstances, approximately 40% of the Bond Fund's total assets
will be invested in U.S. Government Securities. These include U.S. Treasury
Securities and securities issued or guaranteed as to interest and principal by
agencies or instrumentalities of the U.S. Government. The Fund may also invest
in corporate debt securities.
The maturities of securities in the portfolio will range from less than 1 year
to 15 years from the date of purchase. The Fund will be adjusted from time to
time to maintain an average maturity of between 3 and 7 years, depending upon
the Adviser's market interest rate forecasts.
The Adviser will select corporate bonds and/or notes based on the overall credit
quality of the issuer, the bonds' relative interest rate spread over U.S.
Treasury Securities of comparable maturity, and call features. In the event that
a corporate fixed income security held by the Fund is downgraded and it is no
longer rated among the 4 highest ratings by at least two of the NRSROs, the
Adviser has the discretion to determine whether the security will be sold or
retained by the Fund. The corporate fixed income securities selected for the
portfolio may include floating rate securities that adjust their effective
interest rate at predetermined periodic intervals.
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THE ALABAMA TAX FREE BOND FUND
The Alabama Tax Free Bond Fund invests primarily (i.e., at least 80% of its
assets under normal conditions) in municipal bonds and notes and other debt
instruments, the interest on which is exempt from federal income taxes and from
the personal income taxes of Alabama and not subject to the alternative minimum
tax. These obligations are issued primarily by Alabama, its political
subdivisions, municipalities, agencies, instrumentalities or public authorities
and other qualifying issuers.
The securities will be rated in the 3 highest quality ratings by any of the
NRSROs (or unrated municipal securities that the Adviser determines are of
comparable quality). Under normal circumstances, the Fund's average maturity is
expected to be 3 to 10 years.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
THE GOVERNMENT STREET EQUITY FUND
The return on and value of an investment in the Equity Fund will fluctuate in
response to stock market movements. Stocks and other equity securities are
subject to market risks and fluctuations in value due to general economic
conditions, political stability and other factors. The Fund's portfolio might
also decrease in value in response to the activities and financial prospects of
an individual company in the Fund's portfolio. As a result, there is a risk that
you could lose money by investing in the Equity Fund.
While medium-sized companies generally have potential for rapid growth, they
often involve higher risks because they lack the management experience,
financial resources, product diversification and competitive strengths of larger
corporations. In addition, in many instances, the securities of medium-sized
companies are traded only over-the-counter or on a regional securities exchange,
and the frequency and volume of their trading is substantially less than is
typical of larger companies. Therefore, the securities of medium sized companies
may be subject to wider price fluctuations.
THE GOVERNMENT STREET BOND FUND
The fixed income securities in which the Bond Fund will invest are subject to
fluctuation in value. Fluctuations may be based on movements in interest rates
or from changes in creditworthiness of the issuers, which may result from
adverse business and economic developments or proposed corporate transactions,
such as a leveraged buy-out or recapitalization of the issuer. Consequently,
should interest rates increase or the creditworthiness of an issuer deteriorate,
the value of the Bond Fund's fixed income securities would decrease in value,
and the Fund's net asset value would decrease.
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Securities rated in the lower end of the "investment grade" category are
considered speculative in certain respects. Changes in economic or other
conditions are more likely to lead to a weakened capacity to make interest and
principal payments than with higher grade securities. Although the Adviser
utilizes the ratings of various credit rating services as a factor in
establishing creditworthiness, it relies primarily upon its own analysis of
factors establishing creditworthiness.
While obligations of some U.S. Government sponsored entities are supported by
the full faith and credit of the U.S. Government, several are supported by the
right of the issuer to borrow from the U.S. Government, and still others are
supported only by the credit of the issuer itself. The guarantee of the U.S.
Government does not extend to the yield or value of the U.S. Government
Securities held by the Bond Fund or to the Bond Fund's shares.
The Fund is not intended to be a complete investment program and you could lose
money by investing in the Bond Fund.
THE ALABAMA TAX FREE BOND FUND
The net asset value of the shares of The Alabama Tax Free Bond Fund will change
as the general levels of interest rates fluctuate. When interest rates rise, the
value of the Fund's portfolio can be expected to decline. There is also the risk
that the issuer of a bond may not be able to make interest and principal
payments when due.
Because the Fund invests primarily in bonds from the State of Alabama, it is
particularly sensitive to political and economic factors that negatively affect
Alabama. In addition, there is the risk that substantial changes in federal
income tax law could cause municipal bond prices to decline. This is because the
demand for municipal bonds is strongly influenced by the value of tax-exempt
income to investors.
As a non-diversified fund, The Alabama Tax Free Bond Fund may be invested in
fewer issuers than a diversified fund. If the Fund concentrates in a particular
segment of the bond market, economic or political factors affecting one bond in
that segment may affect other bonds within the same segment. These factors may
cause greater fluctuations in the Fund's value and may make the Fund more
susceptible to any single risk.
PERFORMANCE SUMMARY
The bar charts and performance tables shown below provide an indication of the
risks of investing in each Fund by showing the changes in the performance of the
Fund from year to year since its inception and by showing how the average annual
returns of each Fund compare to those of a broad-based securities market index.
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How each Fund has performed in the past is not necessarily an indication of how
it will perform in the future.
THE GOVERNMENT STREET EQUITY FUND
[GRAPHIC OMITTED]
1992 1993 1994 1995 1996 1997 1998 1999
6.04% 3.15% -2.78% 27.42% 21.48% 27.84% 23.73% 17.71%
During the period shown in the bar chart, the highest return for a quarter was
20.92% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -9.05% during the quarter ended September 30, 1998.
The year-to-date return through September 30, 2000 is 2.24%.
THE GOVERNMENT STREET BOND FUND
[GRAPHIC OMITTED]
1992 1993 1994 1995 1996 1997 1998 1999
6.34% 8.80% -2.69% 15.46% 3.67% 7.83% 7.43% -1.02%
During the period shown in the bar chart, the highest return for a quarter was
5.24% during the quarter ended June 30, 1995 and the lowest return for a quarter
was -2.38% during the quarter ended March 31, 1994.
The year-to-date return through September 30, 2000 is 6.15%.
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THE ALABAMA TAX FREE BOND FUND
[GRAPHIC OMITTED]
1994 1995 1996 1997 1998 1999
-3.18% 12.42% 3.77% 6.32% 5.13% -0.98%
During the period shown in the bar chart, the highest return for a quarter was
4.67% during the quarter ended March 31, 1995 and the lowest return for a
quarter was -3.17% during the quarter ended March 31, 1994.
The year-to-date return through September 30, 2000 is 4.88%.
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AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED
DECEMBER 31, 1999
Since Inception
One Year Five Years (June 3, 1991)
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The Government Street
Equity Fund ............................ 17.71% 23.58% 15.46%
Standard & Poor's
500 Index1 ............................. 21.04% 28.56% 19.91%
Since Inception
One Year Five Years (June 3, 1991)
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The Government Street
Bond Fund .............................. -1.02% 6.54% 6.31%
Lehman Government/Corporate
Intermediate Bond Index2 ............... 0.38% 7.10% 6.89%
90-Day Treasury
Bill Index3 ............................ 4.85% 5.35% 4.84%
Since Inception
(January 15,
One Year Five Years 1993)
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The Alabama Tax Free
Bond Fund .............................. -0.98% 5.24% 4.38%
Lipper Intermediate Municipal
Bond Fund Index4 ....................... -1.53% 5.19% 4.20%
Lehman 7-Year G.O. Municipal
Bond Index.5 ........................... -0.16% 6.50% 5.57%
Lehman 3-Year
Municipal Bond Index6 .................. 1.97% 5.17% 4.64%
1 The Standard & Poor's 500 Index is a widely recognized, unmanaged index of
common stock prices.
2 The Lehman Government/Corporate Intermediate Bond Index is an unmanaged
index generally representative of intermediate-term bonds.
3 The 90-Day Treasury Bill Index is an unmanaged index generally
representative of the average yield of 90-day Treasury bills.
4 The Lipper Intermediate Municipal Bond Fund Index is an index of
intermediate-term municipal bond funds tracked by Lipper Analytical
Services, Inc.
5 The Lehman 7-Year G.O. Municipal Bond Index is an unmanaged index generally
representative of 7-year general obligation tax-exempt bonds.
6 The Lehman 3-Year Municipal Bond Index is an unmanaged index generally
representative of 3-year tax-exempt bonds.
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SYNOPSIS OF COSTS AND EXPENSES
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This table describes the fees and expenses that you will pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment).......None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
The The The
Government Government Alabama
Street Street Tax Free
Equity Fund Bond Fund Bond Fund
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Management Fee ....................... 0.60% 0.50% 0.35%
Administrator's Fees ................. 0.17% 0.08% 0.15%
Other Expenses ....................... 0.06% 0.12% 0.22%
----- ----- -----
Total Annual Fund
Operating Expenses ................... 0.83% 0.70% 0.72%(1)
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(1) The Adviser has voluntarily agreed to waive all or a portion of its fee and
to reimburse certain expenses of The Alabama Tax Free Bond Fund necessary
to limit total operating expenses to 0.65% of the Fund's average net
assets. The Adviser reserves the right to terminate this waiver or any
reimbursement at any time in the Adviser's sole discretion.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in a Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
The The The
Government Government Alabama
Street Street Tax Free
Equity Fund Bond Fund Bond Fund
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1 year ...................... $ 85 $ 72 $ 74
3 years ..................... 265 224 230
5 years ..................... 460 390 401
10 years .................... 1,025 871 894
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HOW TO PURCHASE SHARES
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There are no sales commissions charged to investors. You may obtain assistance
in opening accounts from Ultimus Fund Solutions, LLC (the "Administrator") by
calling toll-free 1-866- 738-1125, or by writing to the Funds at the address
shown below for regular mail orders. You may also obtain assistance through any
broker-dealer authorized to sell shares of the Funds. The broker-dealer may
charge you a fee for its services.
Your investment will purchase shares at each Fund's net asset value ("NAV") next
determined after your order is received by the Fund in proper order as indicated
herein. The minimum initial investment in each Fund is $5,000; however, the
minimum is $1,000 for an individual retirement account ("IRA") or self-employed
retirement plan ("Keogh") investment in The Government Street Equity Fund or The
Government Street Bond Fund. The Funds may, in the Adviser's sole discretion,
accept certain accounts with less than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. If your order is received by the Administrator, whether by mail,
bank wire or facsimile order from a qualified broker-dealer, prior to the close
of the regular session of trading on the New York Stock Exchange (the
"Exchange"), generally 4:00 p.m. Eastern time, you will purchase shares at the
NAV determined on that business day. If your order is not received by the close
of the regular session of trading on the Exchange, your order will purchase
shares at the NAV determined on the next business day.
You should be aware that the Funds' account application contains provisions in
favor of the Funds, the Administrator and certain of their affiliates, excluding
such entities from certain liabilities (including, among others, losses
resulting from unauthorized shareholder transactions) relating to the various
services made available to investors.
If an order to purchase shares is cancelled because your check does not clear,
you will be responsible for any resulting losses or fees incurred by a Fund or
the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
appropriate Fund, to:
The Government Street Funds
c/o Shareholder Services
P.O. Box 46707
Cincinnati, Ohio 45246-0707
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BANK WIRE ORDERS. You may invest directly by bank wire. To establish a new
account or add to an existing account by wire, please call the Funds at
1-866-738-1125 before wiring to advise the Funds of the investment, the dollar
amount and the account registration. For initial purchases, you should be
prepared to provide us, by mail or facsimile, with a completed, signed Account
Application. This will ensure prompt and accurate handling of your investment.
Please have your bank use the following wiring instructions to purchase by wire:
Firstar Bank, N.A.
ABA# 042000013
For The Government Street Funds #19945-6682
For The [name of fund]
For [Shareholder name and account number or tax
identification number]
It is important that the wire contain all the information and that the Funds
receive prior telephone notification to ensure proper credit.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire at any time
by purchasing shares at the then current NAV as aforementioned. The minimum
additional investment allowed for The Government Street Equity Fund or The
Government Street Bond Fund is $500. Before making additional investments by
bank wire, please call the Funds at 1-866-738-1125 to alert the Funds that your
wire is to be sent. Follow the wire instructions above to send your wire. When
calling for any reason, please have your account number ready, if known. Mail
orders should include, when possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, be sure to identify
your account in your letter.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables you to make
regular monthly or quarterly investment in shares through automatic charges to
your checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
NAV on or about the 15th day and/or the last business day of the month or both.
You may change the amount of the investment or discontinue the plan at any time
by writing to the Administrator.
HOW TO REDEEM SHARES
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You may redeem shares of a Fund on each day that the Fund is open for business
by sending a written request to the Funds. The Funds are open for business on
each day the Exchange is open for business. Any redemption may be for more or
less than the purchase price of
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your shares depending on the market value of the applicable Fund's portfolio
securities. All redemption orders received in proper form, as indicated herein,
by the Administrator prior to the close of the regular session of trading on the
Exchange, generally 4:00 p.m., Eastern time, will redeem shares at the NAV
determined as of that business day's close of trading. Otherwise, your order
will redeem shares on the next business day. You may also redeem your shares
through a broker-dealer who may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $1,000 (due to redemptions or transfers,
but not due to market action) upon 60 days' written notice. If the shareholder
brings his account value up to $1,000 or more during the notice period, the
account will not be redeemed. Redemptions from retirement plans may be subject
to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Funds at 1-866-738-1125 or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to:
The Government Street Funds
c/o Shareholder Services
P.O. Box 46707
Cincinnati, Ohio 45246-0707
Your request for redemption must include:
1) your letter of instruction or a stock assignment specifying the account
number, and the number of shares or dollar amount to be redeemed. This
request must be signed by all registered shareholders in the exact names in
which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within 3 business days after
receipt of your redemption request. However, a Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. You may reduce or avoid such delay (which may
take up to 15 days) if you purchase by certified check, government check or wire
transfer. In such cases, the NAV next determined after receipt of the request
for redemption will be used in processing the redemption and your redemption
proceeds will be mailed to you upon clearance of your check to purchase shares.
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You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Funds
may not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Funds. You can change your
redemption instructions any time you wish by filing a letter including your new
redemption instructions with the Funds.
SIGNATURE GUARANTEES. To protect your account and the Funds from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a redemption in an amount over $25,000, or a change in registration
or standing instructions for your account. Signature guarantees are required for
(1) requests to redeem shares having a value of greater than $25,000, (2) change
of registration requests, (3) requests to establish or change redemption
services other than through your initial account application and (4) if the
name(s) or the address on your account has been changed within 30 days of your
redemption request. Signature guarantees are acceptable from a member bank of
the Federal Reserve System, a savings and loan institution, credit union,
registered broker-dealer or a member firm of a U.S. Stock Exchange, and must
appear on the written request for redemption or change of registration.
SYSTEMATIC WITHDRAWAL PLAN. If your Fund shares are valued at $10,000 or more at
the current offering price you may establish a Systematic Withdrawal Plan to
receive a monthly or quarterly check in a stated amount not less than $100. Each
month or quarter as specified, the Funds will automatically redeem sufficient
shares from your account to meet the specified withdrawal amount. You may
establish this service whether dividends and distributions are reinvested or
paid in cash. Systematic withdrawals may be deposited directly to your bank
account by completing the applicable section on the Account Application form
accompanying this Prospectus, or by writing the Funds.
HOW NET ASSET VALUE IS DETERMINED
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The NAV of the Fund is determined on each business day that the Exchange is open
for trading, as of the close of the Exchange (currently 4:00 p.m., Eastern
time). NAV per share is determined by dividing the total value of all Fund
securities (valued at market value) and other assets, less liabilities, by the
total number of shares then outstanding. NAV includes interest on fixed income
securities, which is accrued daily. See the Statement of Additional Information
for further details.
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Securities which are traded over-the-counter are priced at the last sale price,
if available; otherwise, at the last quoted bid price. Securities traded on a
national stock exchange will be valued based upon the closing price on the
valuation date on the principal exchange where the security is traded. Fixed
income securities will ordinarily be traded in the over-the-counter market. When
market quotations are not readily available, fixed income securities may be
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.
The Trustees will satisfy themselves that such pricing services consider all
appropriate factors relevant to the value of such securities in determining
their fair value. Securities and other assets for which no quotations are
readily available will be valued in good faith at fair value using methods
determined by the Board of Trustees.
MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISER. Subject to the authority of the Board of Trustees, T.
Leavell & Associates, Inc., 150 Government Street, P.O. Box 1307, Mobile,
Alabama 36633 (the "Adviser"), provides a continuous program of supervision of
each Fund's assets, including the composition of its portfolio, and furnishes
advice and recommendations with respect to investments, investment policies and
the purchase and sale of securities, pursuant to Investment Advisory Agreements
with the Trust. The Adviser is also responsible for the selection of
broker-dealers through which each Fund executes portfolio transactions, subject
to brokerage policies established by the Trustees, and provides certain
executive personnel to each Fund. The Adviser also provides investment advice to
corporations, trusts, pension and profit sharing plans, other business and
institutional accounts and individuals.
THE GOVERNMENT STREET EQUITY FUND
Thomas W. Leavell is primarily responsible for managing the portfolio of the
Equity Fund. Mr. Leavell, who has served as portfolio manager since the Equity
Fund's inception, has been a principal of the Adviser since the founding of the
firm in 1979. Mr. Leavell holds a B.S. degree from Auburn University and an
M.B.A. from the University of Kentucky.
Compensation of the Adviser with respect to the Equity Fund, based upon the
Fund's average daily net assets, is at the following annual rates: On the first
$100 million, 0.60%; on assets over $100 million, 0.50%.
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THE GOVERNMENT STREET BOND FUND
Mary Shannon Hope is primarily responsible for managing the portfolio of the
Bond Fund and has acted in this capacity since July, 1997. Mrs. Hope has been
employed by the Adviser since 1987. Mrs. Hope holds a B.S. degree from the
University of Alabama and an M.B.A. from the University of South Alabama.
Compensation of the Adviser with respect to the Bond Fund, based upon the Fund's
average daily net assets, is at the following annual rates: On the first $100
million, 0.50%; on assets over $100 million, 0.40%.
THE ALABAMA TAX FREE BOND FUND
Timothy S. Healey is primarily responsible for managing the portfolio of The
Alabama Tax Free Bond Fund and has acted in this capacity since the Fund's
inception. Mr. Healey is a Vice President of the Adviser and has been a
portfolio manager with the firm since 1986. Prior to joining the Adviser, Mr.
Healey served as second Vice President at Torchmark Advisory Co., Inc. in
Birmingham, Alabama. He holds a BS, Finance from the University of Alabama and
has been continuously engaged in the investment management business since 1975.
Compensation of the Adviser with respect The Alabama Tax Free Bond Fund, based
upon the Fund's average daily net assets, is at the following annual rates: on
the first $100 million, 0.35%; on assets over $100 million, 0.25%. The Adviser
currently intends to waive its invest-ment Advisory fees to the extent necessary
to limit the total operating expenses of the Fund to 0.65% per annum of its
average daily net assets. However, there is no assurance that any voluntary fee
waivers will continue in the current or future fiscal years, and expenses of the
Fund may therefore exceed 0.65% of its average daily net assets.
BOARD OF TRUSTEES. The Government Street Funds are each a series of Williamsburg
Investment Trust. The Trust is governed by a Board of Trustees which oversees
all operations of the Funds. A majority of the Trustees are independent and not
affiliated with the Adviser.
Richard Mitchell, President, The Government Street Funds; Executive Vice
President, T. Leavell & Associates, Inc. (since 1983). Education: B.A.,
University of Alabama, 1971; J.D., The College of William & Mary, 1974.
Austin Brockenbrough, III, President and Founding Partner, Lowe, Brockenbrough &
Co., Inc. (since 1970). Director, Tredegar Industries, Inc. Education: B.S.,
University of Richmond, 1962.
John T. Bruce, C.F.A., Principal, Flippin, Bruce & Porter, Inc.. Education:
B.S., Finance, Virginia Polytechnic Institute and State University, 1976.
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Charles M. Caravati, Jr., M.D., Physician. Education: B.S., University of
Virginia, 1959; M.D., University of Virginia, 1963.
J. Finley Lee, Jr., Julian Price Professor of Business Administration, Emeritus,
University of North Carolina. Director, Montgomery Indemnity Insurance Company.
Education: A.B., Davidson College, 1961; M.A., University of Florida, 1962;
Ph.D., University of Pennsylvania, 1965.
Richard L. Morrill, Chancellor and Distinguished University Professor of Ethics
and Democratic Values, University of Richmond. Director, Tredegar Industries.
Education: A.B., Brown University, 1961; B.D., Yale University, 1964; Ph.D.,
Duke University, 1967.
Harris V. Morrissette, President, Marshall Biscuit Company. Director, Energy
South, Inc., South Alabama Bank Corporation. Education: B.S., University of
Alabama, 1982.
Erwin H. Will, Jr., C.F.A., Chief Investment Officer, Virginia Retirement System
(Retired). Education: B.S., University of Virginia, 1956.
Samuel B. Witt, III, Sr. Vice President & General Counsel, Stateside Associates
Inc. Director, The Swiss Helvetia Fund. Education: B.A., Virginia Military
Institute, 1958; L.L.B., University of Virginia, 1964.
DIVIDENDS, DISTRIBUTIONS AND TAXES
================================================================================
THE GOVERNMENT STREET EQUITY FUND AND THE GOVERNMENT STREET BOND FUND
Each Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue code of 1986 and will distribute all of its
net income and realized capital gains to shareholders. Shareholders are liable
for taxes on distributions of net income and realized capital gains of the Funds
but, of course, shareholders who are not subject to tax on their income will not
be required to pay taxes on amounts distributed to them. The Equity Fund intends
to declare dividends quarterly payable in March, June, September and December,
on a date selected by the Trustees. The Bond Fund intends to declare and pay
dividends on the last business day of each month. In addition, distributions may
be made annually in December out of any net short-term or long-term capital
gains derived from the sale of securities realized through October 31 of that
year. Each Fund may make a supplemental distribution of capital gains at the end
of its fiscal year. The nature and amount of all dividends and distributions
will be identified separately when tax information is distributed by the Funds
at the end of each year. Each Fund
17
<PAGE>
intends to withhold 30% on taxable dividends and any other payments that are
subject to such withholding and are made to persons who are neither citizens nor
residents of the United States. The Equity Fund expects that its distributions
will consist primarily of capital gains. The Bond Fund expects that its
distributions will consist primarily of income.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. Current practice of the Equity
Fund, subject to the discretion of the Board of Trustees, is for declaration and
payment of income dividends during the last week of each calendar quarter. All
dividends and capital gains distributions are reinvested in additional shares of
the Fund unless the shareholder requests in writing to receive dividends and/or
capital gains distributions in cash. That request must be received by the Funds
prior to the record date to be effective as to the next dividend. Tax
consequences to shareholders of dividends and distributions are the same if
received in cash or if received in additional shares of a Fund.
THE ALABAMA TAX FREE BOND FUND
Each month The Alabama Tax Free Bond Fund distributes a dividend substantially
equal to all the net investment income of the Fund. The Fund's net investment
income consists of non-capital gain income, less expenses. The Fund will declare
one or more long-term capital gain distributions to the shareholders of the Fund
during the calendar year if the Fund's profits from the sale of securities held
for longer than the applicable period exceed losses from these transactions
together with any net capital losses carried forward from prior years (to the
extent not used to offset short-term capital gains). If the Fund realizes net
short-term capital gains, they will also be distributed at that time. You may
elect to receive dividends and capital gain distributions in either cash or
additional shares. The Fund expects that its distributions will consist
primarily of investment income.
Because The Alabama Tax Free Bond Fund intends to distribute to shareholders
substantially all of its net investment income and net realized capital gains in
accordance with the timing requirements imposed by the Code, it is expected that
the Fund will not be required to pay any federal income or excise taxes. The
Fund also expects the dividends it pays to shareholders of the Fund from
interest on municipal obligations generally to be exempt from federal income tax
because the Trust intends the Fund to satisfy certain requirements of the Code.
One such requirement is that at the close of each quarter of the taxable year of
the Fund, at least 50% of the value of its total assets consists of obligations
whose interest is exempt from federal income tax. Distributions of income from
investments in taxable securities and from certain other investments of the Fund
(including capital gains from the sale of
18
<PAGE>
securities) will be taxable to the shareholder, whether distributed in cash or
in additional shares. However, it is expected that such amounts would not be
substantial in relation to the tax-exempt interest received by the Fund.
A statement will be sent to each shareholder of The Alabama Tax Free Bond Fund
promptly after the end of each calendar year setting forth the federal income
tax status of all distributions for each calendar year, including the portion
exempt from federal income taxes as "exempt-interest dividends;" the portion, if
any, that is a tax preference item under the federal alternative minimum tax;
the portion taxable as ordinary income; the portion taxable as capital gains;
and the portion representing a return of capital (which is free of current taxes
but results in a basis reduction). The Fund intends to withhold 30% on taxable
dividends and any other payments that are subject to such withholding and are
made to persons who are neither citizens nor residents of the U.S.
Current federal tax law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest and makes interest on certain
tax-exempt bonds and distributions by the Fund of such interest a tax preference
item for purposes of the individual and corporate alternative minimum tax. In
addition, all exempt-interest dividends may affect a corporate shareholder's
alternative minimum tax liability. Applicable tax law and changes therein may
also affect the availability of municipal obligations for investment by the Fund
and the value of the Fund's portfolio.
Under existing Alabama tax laws, as long as the Fund qualifies as a "regulated
investment company" under the Code, and provided the Fund is invested in
obligations the interest on which would be exempt from Alabama personal income
taxes if held directly by an individual shareholder (such as obligations of
Alabama or its political subdivisions, of the United States or of certain
territories or possessions of the United States), dividends received from the
Fund that represent interest received by the Fund on such obligations will be
exempt from Alabama personal income taxes. To the extent that distributions by
the Fund are derived from long-term or short-term capital gains on such
obligations, or from dividends or capital gains on other types of obligations,
such distributions will not be exempt from Alabama personal income tax.
Capital gains or losses realized from a redemption of shares of the Fund by an
Alabama resident will be taxable for Alabama personal income tax purposes.
Interest on indebtedness incurred (directly or indirectly) by a shareholder of
the Fund to purchase or carry shares of the Fund will not be deductible for
Alabama income tax purposes.
This discussion of the federal and state income tax consequences of an
investment in the Fund is not exhaustive on the subject. Consequently, investors
should seek qualified tax advice.
19
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
================================================================================
Money market instruments will typically represent a portion of each Fund's
portfolio, as funds awaiting investment, to accumulate cash for anticipated
purchases of portfolio securities and to provide for shareholder redemptions and
operational expenses of the Fund. Money market instruments mature in 13 months
or less from the date of purchase and include U.S. Government Securities and
corporate debt securities (including those subject to repurchase agreements),
bankers' acceptances and certificates of deposit of domestic branches of U.S.
banks, and commercial paper (including variable amount demand master note). At
the time of purchase, money market instruments will have a short-term rating in
the highest category by any NRSRO or, if not rated, will have been issued by a
corporation having an outstanding unsecured debt issue rated in the 3 highest
categories of any NRSRO or, if not so rated, of equivalent quality in the
Adviser's opinion.
THE GOVERNMENT STREET EQUITY FUND
Money market instruments may be purchased by the Equity Fund for temporary
defensive purposes when the Adviser believes the prospect for capital
appreciation in the equity securities markets is not attractive. As a result of
engaging in these temporary measures, the Fund may not achieve its investment
objective.
THE GOVERNMENT STREET BOND FUND
Obligations of GNMA, FNMA and FHLMC may include direct pass-through
"certificates" representing undivided ownership interests in pools of mortgages.
Such certificates are guaranteed as to payment of principal and interest (but
not as to price and yield) by the issuer. In the case of securities issued by
GNMA, the payment of principal and interest would be backed by the full faith
and credit of the U.S. Government. Mortgage pass-through certificates issued by
FNMA or FHLMC would be guaranteed as to payment of principal and interest by the
credit of the issuing U.S. Government agency. Securities issued by other
non-governmental entities (such as commercial banks or mortgage bankers) may
offer credit enhancement such as guarantees, insurance, or letters of credit.
Mortgage pass-through certificates are subject to more rapid prepayment than
their stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates or increased property
transfers and, as a result, the proceeds from such prepayments may be reinvested
in instruments which have lower yields. To the extent such securities were
purchased at a premium, such prepayments could result in capital losses. The
issuer of a pass-through mortgage certificate does not guarantee premiums or
market value of its issue.
20
<PAGE>
Money market instruments may be purchased by the Bond Fund when the Adviser
believes interest rates are rising, the prospect for capital appreciation in the
longer term fixed income securities markets is not attractive, or when the
"yield curve" favors short-term fixed income securities versus longer term fixed
income securities.
THE ALABAMA TAX FREE BOND FUND
The Alabama Tax Free Bond Fund invests primarily in:
(a) Tax-exempt securities which are rated AAA, AA, or A by Standard & Poor's
Ratings Group ("S&P") or are rated Aaa, Aa, or A by Moody's Investors
Service, Inc. ("Moody's") (or of equivalent rating by any of the NRSROs.)
or which are considered by the Adviser to have essentially the same
characteristics and quality as securities having such ratings; and
(b) Notes of issuers having an issue of outstanding municipal obligations rated
AAA, AA or A by S&P or Aaa, Aa or A by Moody's or which are guaranteed by
the U.S. Government or which are rated MIG-1 or MIG-2 by Moody's.
Although the Fund normally invests all of its assets in obligations exempt from
federal and Alabama state income taxes, market conditions may from time to time
limit availability. During periods when the Fund is unable to purchase such
obligations, the Fund will invest the assets of the Fund in municipal
obligations the interest on which is exempt from federal income taxes, but which
is subject to the personal income taxes of Alabama.
As a temporary defensive measure during times of adverse market conditions, up
to 50% of the assets of The Alabama Tax Free Fund may be held in cash or
invested in taxable short-term obligations. These may include:
(a) Obligations issued or guaranteed as to interest and principal by the U.S.
Government or its agencies or instrumentalities, which may be subject to
repurchase agreements; and
(b) Commercial paper which is rated A-1 or A-2 by S&P or P-1 or P-2 by Moody's
(or which is unrated but which is considered to have essentially the same
characteristics and qualities as commercial paper having such ratings),
obligations of banks with $1 billion of assets (including certificates of
deposit, bankers' acceptances and repurchase agreements), securities of
other investment companies, and cash.
Interest income from these short-term obligations may be taxable to shareholders
as ordinary income for federal and state income tax purposes. As a result of
engaging in these temporary measures, the Fund may not achieve its investment
objective.
21
<PAGE>
The Fund may purchase municipal obligations, the interest on which may be
subject to the alternative minimum tax (for purposes of this Prospectus, the
interest thereon is nonetheless considered to be tax-exempt).
With respect to those municipal obligations which are not rated by an NRSRO, the
Fund will be more reliant on the Adviser's judgment, analysis and experience
than would be the case if such municipal obligations were rated. In evaluating
the creditworthiness of an issue, whether rated or unrated, the Adviser may take
into consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, the operating history of and the
community support for the facility financed by the issue, the ability of the
issuer's management and regulatory matters.
22
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in each
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Tait, Weller & Baker, whose report, along with
each Fund's financial statement, are included in its Statement of Additional
Information, which is available upon request.
THE GOVERNMENT STREET EQUITY FUND
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 48.10 $ 43.79 $ 32.59 $ 29.41 $ 23.87
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........... 0.18 0.27 0.32 0.37 0.40
Net realized and unrealized
gains on investments ......... 9.39 6.01 12.28 4.50 5.75
--------- --------- --------- --------- ---------
Total from investment operations ... 9.57 6.28 12.60 4.87 6.15
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net
investment income ............ (0.18) (0.27) (0.32) (0.36) (0.40)
Distributions from net
realized gains ............... (0.42) (1.70) (1.08) (1.33) (0.21)
--------- --------- --------- --------- ---------
Total distributions ................ (0.60) (1.97) (1.40) (1.69) (0.61)
--------- --------- --------- --------- ---------
Net asset value at end of year ..... $ 57.07 $ 48.10 $ 43.79 $ 32.59 $ 29.41
========= ========= ========= ========= =========
Total return ....................... 19.93% 14.81% 39.31% 16.94% 25.96%
========= ========= ========= ========= =========
Net assets at end of year (000's) .. $ 116,447 $ 90,707 $ 75,643 $ 49,629 $ 41,421
========= ========= ========= ========= =========
Ratio of net expenses to
average net assets .............. 0.83% 0.85% 0.86% 0.89% 0.94%
Ratio of net investment income
to average net assets ........... 0.35% 0.61% 0.82% 1.17% 1.50%
Portfolio turnover rate ............ 17% 22% 18% 20% 31%
</TABLE>
23
<PAGE>
THE GOVERNMENT STREET BOND FUND
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year .... $ 20.90 $ 21.06 $ 20.47 $ 20.87 $ 20.33
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income ................ 1.23 1.27 1.32 1.34 1.35
Net realized and unrealized
gains (losses) on investments ..... (1.11) (0.16) 0.60 (0.40) 0.54
--------- --------- --------- --------- ---------
Total from investment operations ........ 0.12 1.11 1.92 0.94 1.89
--------- --------- --------- --------- ---------
Dividends from net investment income .... (1.23) (1.27) (1.33) (1.34) (1.35)
--------- --------- --------- --------- ---------
Net asset value at end of year .......... $ 19.79 $ 20.90 $ 21.06 $ 20.47 $ 20.87
========= ========= ========= ========= =========
Total return ............................ 0.67% 5.38% 9.61% 4.60% 9.43%
========= ========= ========= ========= =========
Net assets at end of year (000's) ....... $ 45,156 $ 43,041 $ 36,908 $ 29,442 $ 28,718
========= ========= ========= ========= =========
Ratio of net expenses to average
net assets ........................... 0.70% 0.73% 0.74% 0.75% 0.76%
Ratio of net investment income
to average net assets ................ 6.12% 6.01% 6.35% 6.44% 6.38%
Portfolio turnover rate ................. 20% 17% 10% 20% 10%
</TABLE>
24
<PAGE>
THE ALABAMA TAX FREE BOND FUND
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year .... $ 10.54 $ 10.49 $ 10.18 $ 10.23 $ 9.96
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income ................ 0.44 0.44 0.44 0.43 0.42
Net realized and unrealized
gains (losses) on investments ..... (0.41) 0.05 0.31 (0.05) 0.27
--------- --------- --------- --------- ---------
Total from investment operations ........ 0.07 0.49 0.75 0.38 0.69
--------- --------- --------- --------- ---------
Dividends from net investment
income ............................... (0.44) (0.44) (0.44) (0.43) (0.42)
--------- --------- --------- --------- ---------
Net asset value at end of year .......... $ 10.13 $ 10.54 $ 10.49 $ 10.18 $ 10.23
========= ========= ========= ========= =========
Total return ............................ 0.34% 4.73% 7.44% 3.82% 7.02%
========= ========= ========= ========= =========
Net assets at end of year (000's) ....... $ 23,048 $ 21,560 $ 19,938 $ 16,801 $ 15,480
========= ========= ========= ========= =========
Ratio of net expenses to average
net assets(a) ........................ 0.65% 0.65% 0.65% 0.66% 0.75%
Ratio of net investment income
to average net assets ................ 4.32% 4.16% 4.19% 4.24% 4.11%
Portfolio turnover rate ................. 19% 7% 2% 6% 4%
</TABLE>
(a) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been
0.72%, 0.76%, 0.75%, 0.78% and 0.86% for the years ended March 31, 2000,
1999, 1998, 1997, and 1996, respectively.
25
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
THE GOVERNMENT STREET FUNDS
INVESTMENT ADVISER
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, Alabama 36633
www.tleavell.com
ADMINISTRATOR
Ultimus Fund Solutions, LLC
P.O. Box 46707
Cincinnati, Ohio 45246-0707
(Toll-Free) 1-866-738-1125
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
================================================================================
FOR MORE INFORMATION
Additional information about the Funds is included in the Statement of
Additional Information ("SAI"), which is incorporated by refer-ence in its
entirety. Additional information about the Funds' invest-ments is available in
the Funds' annual and semiannual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and strategies that
significantly affected the Funds' performance during its last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Funds, or to make inquiries about the Funds, please call
Toll-Free
1-866-738-1125
Information about the Funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. Information about the opera-tion of the public reference room can be
obtained by calling the Commission at 1-202-942-8090. Reports and other
information about the Funds are available on the Edgar Database on the
Commission's Internet site at http://www.sec.gov. Copies of information on the
Commission's Internet site may be obtained, upon payment of a duplicating fee,
by electronic request at the following e-mail address: [email protected], or by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-0102.
File No. 811-5685
================================================================================
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
Send completed application to:
THE GOVERNMENT STREET FUNDS
c/o Shareholder Services
FUND SHARES APPLICATION P.O. Box 46707
(Please type or print clearly) Cincinnati, OH 45246-0707
=================================================================================================================================
<S> <C>
ACCOUNT REGISTRATION
/ / Individual ______________________________________________________________________________________________________
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
/ / Joint* ______________________________________________________________________________________________________
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right of survivorship unless otherwise
indicated.
/ / UGMA/UTMA _____________________________________________ under the ________ Uniform Gifts/Transfers to Minors Act
(First Name) (Middle Initial) (Last Name) (State)
_________________________________________________________________________________________ as Custodian
(First Name) (Middle Name) (Last Name)
______________________________________________________________________________________________________
(Birthdate of Minor) (SS # of Minor)
/ / For Corporations, ______________________________________________________________________________________________________
Partnerships, Trusts, Name of Corporation or Partnership. If a Trust, include the name(s) of Trustees in which account will
Retirement Plans and be registered, and the date of the Trust instrument.
Third Party IRAs.
______________________________________________________________________________________________________
(Taxpayer Identification Number)
---------------------------------------------------------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box ______________________________________________________________________________________________________________
City _____________________________________________________________________________________State______________Zip ________________
Telephone ________________________________________U.S. Citizen ____Resident Alien ____Non Resident (Country of Residence)________
---------------------------------------------------------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name ____________________________________________________________________________________________________________________________
Street or P.O. Box ______________________________________________________________________________________________________________
City _____________________________________________________________________________________State______________Zip ________________
---------------------------------------------------------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $5,000; $1,000 minimum for tax qualified account)
/ / Enclosed is a check payable to THE GOVERNMENT STREET FUNDS for $ ____________________ (Please indicate Fund(s) below)
/ / Funds were wired to Firstar Bank on _____________________ in the amount of $ ________________ (Please indicate Fund(s) below)
/ / GOVERNMENT STREET EQUITY FUND $________________
/ / GOVERNMENT STREET BOND FUND $________________
/ / ALABAMA TAX FREE BOND FUND $________________
By Mail: You may purchase shares by mail by completing and signing this application. Please mail with your check to the address
above.
By Wire: You may purchase shares by wire. PRIOR TO SENDING THE WIRE, PLEASE CONTACT THE FUNDS (TOLL-FREE) AT 1-866-738-1125 SO
THAT YOUR WIRE TRANSFER IS PROPERLY CREDITED TO YOUR ACCOUNT. Please forward your completed application by mail
immediately thereafter to the Funds. The wire should be routed as follows:
FIRSTAR BANK, N.A.
ABA #042000013
FOR CREDIT TO GOVERNMENT STREET FUNDS #19945-6682
FOR THE [NAME OF FUND]
FOR [SHAREHOLDER NAME AND SOCIAL SECURITY OR TAXPAYER ID NUMBER]
---------------------------------------------------------------------------------------------------------------------------------
DIVIDEND AND DISTRIBUTION INSTRUCTIONS
/ / Reinvest all dividends and capital gains distributions
/ / Reinvest all capital gain distributions; dividends to be paid in cash
/ / Pay all dividends and capital gain distributions in cash
/ / By Check / / By ACH to my bank checking or savings account. PLEASE ATTACH A VOIDED CHECK.
<PAGE>
---------------------------------------------------------------------------------------------------------------------------------
SIGNATURE AUTHORIZATION FOR USE BY CORPORATIONS, TRUSTS, PARTNERSHIPS AND OTHER INSTITUTIONS
Please retain a copy of this document for your files. Any modification of the information contained in this section will require
an Amendment to this Application Form.
/ / New Application / / Amendment to previous Application dated________________________________Account No.____________________
Name of Registered Owner_________________________________________________________________________________________________________
The following named person(s) are currently authorized signatories of the Registered Owner. Any________________ of them is/are
authorized under the applicable governing document to act with full power to sell, assign or transfer securities of THE
GOVERNMENT STREET FUNDS for the Registered Owner and to execute and deliver any instrument necessary to effectuate the authority
hereby conferred:
Name Title Signature
_____________________________________ _____________________________________ _________________________________________
_____________________________________ _____________________________________ _________________________________________
_____________________________________ _____________________________________ _________________________________________
THE GOVERNMENT STREET FUNDS, or any agent of the Funds may, without inquiry, rely upon the instruction of any person(s)
purporting to be an authorized person named above, or in any Amendment received by the Funds or their agent. The Funds and their
Agent shall not be liable for any claims, expenses or losses resulting from having acted upon any instruction reasonably believed
to be genuine.
---------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile believed to be authentic.
/ / Please mail redemption proceeds to the name and address of record
/ / Please wire redemptions to the commercial bank account indicated below (subject to a minimum wire transfer of $5,000)
SYSTEMATIC WITHDRAWAL
Please redeem sufficient shares from this account at the then net asset value, in accordance with the instructions below:
(subject to a minimum $100 per distribution)
Dollar amount of each withdrawal $ ______________________________________ beginning the last business day of ____________________
Withdrawals to be made: / / Monthly / / Quarterly
/ / Please DEPOSIT DIRECTLY the proceeds to the bank account below
/ / Please mail redemption proceeds to the name and address of record
AUTOMATIC INVESTMENT
Please purchase shares of THE GOVERNMENT STREET FUNDS by withdrawing from the commercial bank account below, per the instructions
below:
Amount (minimum $100) $ ____________________________ Please make my automatic investment on:
$________________________ Government Street Equity Fund / / the last business day of each month
$________________________ Government Street Bond Fund / / the 15th day of each month
$________________________ Alabama Tax Free Bond Fund / / both the 15th and last business day
__________________________________________________________________
(Name of Bank)
is hereby authorized to charge to my account the bank draft amount here indicated. I understand the payment of this draft is
subject to all provisions of the contract as stated on my bank account signature card.
__________________________________________________________________
(Signature as your name appears on the bank account to be drafted)
Name as it appears on the account _____________________________________________________________________
Commercial bank account # _____________________________________________________________________________
ABA Routing # _________________________________________________________________________________________
City, State and Zip in which bank is located __________________________________________________________
For AUTOMATIC INVESTMENT or SYSTEMATIC WITHDRAWAL please attach a voided check from the above account.
---------------------------------------------------------------------------------------------------------------------------------
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase shares of the Funds and affirm that I have received
a current prospectus and understand the invest-ment objectives and policies stated therein. The investor hereby ratifies any
instructions given pursuant to this Application and for himself and his successors and assigns does hereby release Ultimus Fund
Solutions, LLC, Williamsburg Investment Trust, T. Leavell & Associates, Inc., and their respective officers, employees, agents
and affiliates from any and all liability in the performance of the acts instructed herein provided that such entities have
exercised due care to determine that the instructions are genuine. I certify under the penalties of perjury that (1) the Social
Security Number or Tax Identification Number shown is correct and (2) I am not subject to backup withholding. The certifica-tions
in this paragraph are required from all non-exempt persons to prevent backup withholding of 31% of all taxable distributions and
gross redemption proceeds under the fed-eral income tax law. The Internal Revenue Service does not require my consent to any
provision of this document other than the certifications required to avoid backup with-holding. (Check here if you are subject to
backup withholding) / /.
_____________________________________________________________ ______________________________________________________________
APPLICANT DATE JOINT APPLICANT DATE
_____________________________________________________________ ______________________________________________________________
OTHER AUTHORIZED SIGNATORY DATE OTHER AUTHORIZED SIGNATORY DATE
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE
GOVERNMENT STREET
FUNDS
THE GOVERNMENT STREET EQUITY FUND
THE GOVERNMENT STREET BOND FUND
AUGUST 1, 2000
REVISED NOVEMBER 6, 2000
SERIES OF
WILLIAMSBURG INVESTMENT TRUST
135 MERCHANT STREET, SUITE 230
CINCINNATI, OHIO 45246
TELEPHONE 1-866-738-1125
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES........................................... 2
DESCRIPTION OF BOND RATINGS.................................................. 5
INVESTMENT LIMITATIONS....................................................... 7
TRUSTEES AND OFFICERS........................................................ 9
INVESTMENT ADVISER........................................................... 13
ADMINISTRATOR................................................................ 14
OTHER SERVICES............................................................... 14
BROKERAGE.................................................................... 15
SPECIAL SHAREHOLDER SERVICES................................................. 16
PURCHASE OF SHARES........................................................... 17
REDEMPTION OF SHARES......................................................... 18
NET ASSET VALUE DETERMINATION................................................ 19
ALLOCATION OF TRUST EXPENSES................................................. 19
ADDITIONAL TAX INFORMATION................................................... 19
CAPITAL SHARES AND VOTING.................................................... 20
CALCULATION OF PERFORMANCE DATA.............................................. 22
FINANCIAL STATEMENTS AND REPORTS............................................. 24
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Government Street Equity Fund and
The Government Street Bond Fund (the "Funds") dated August 1, 2000. The
Prospectus may be obtained from the Funds, at the address and phone number shown
above, at no charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both The Government Street Equity
Fund (the "Equity Fund") and The Government Street Bond Fund (the "Bond Fund")
unless otherwise noted.
The investment objectives and policies of the Funds are described in the Funds'
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
FOREIGN SECURITIES. Because of the inherent risk of foreign securities over
domestic issues, the Funds will not invest in foreign investments except those
traded domestically as American Depository Receipts (ADRs). ADRs are foreign
securities denominated in U.S. Dollars and traded on U.S. securities markets.
The Fund will invest only in sponsored ADRs on foreign equities. The Funds may
invest in foreign securities if the Adviser believes such investment would be
consistent with the Funds' investment objectives. The same factors would be
considered in selecting foreign securities as with domestic securities, as
discussed in the Prospectus. Foreign securities investment presents special
considerations not typically associated with investments in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuation in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial or social instability or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
SHARES OF OTHER INVESTMENT COMPANIES. The Equity Fund may invest up to 5% of its
net assets in shares of other investment companies, including Standard & Poor's
Depository Receipts ("SPDRs") and shares of the DIAMONDS Trust ("DIAMONDs").
SPDRs are exchange-traded securities that represent ownership in the SPDR Trust,
a long-term unit investment trust which has been established to accumulate and
hold a portfolio of common stocks that is intended to track the price
performance and dividend yield of the Standard & Poor's Composite Stock Price
Index. Holders of SPDRs are entitled to receive proportionate quarterly
distributions corresponding to the dividends which accrue on the S&P 500 stocks
in the underlying portfolio, less accumulated expenses of the SPDR Trust.
DIAMONDs operate similarly to SPDRs, except that the DIAMONDS Trust is intended
to track the price performance and dividend yield of the Dow Jones Industrial
Average. SPDRs and DIAMONDs are unlike traditional mutual funds in that they are
available for purchase or sale during the trading day like a share of stock,
rather than at closing net asset value per share. This characteristic of SPDRs
and DIAMONDs is a risk separate and distinct from the risk that its net asset
value will decrease.
To the extent the Equity Fund invests in securities of other investment
companies, Fund
2
<PAGE>
shareholders would indirectly pay a portion of the operating costs of such
companies. These costs include management, brokerage, shareholder servicing and
other operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time a
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Funds' risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Funds hold a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Adviser will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Funds' custodian either directly or through a securities depository.
MONEY MARKET INSTRUMENTS. Money market instruments may include U.S. Government
Securities or corporate debt obligations (including those subject to repurchase
agreements) as described herein, provided that they mature in thirteen months or
less from the date of acquisition and are otherwise eligible for purchase by the
Funds. Money market instruments also may include Bankers' Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). BANKERS' ACCEPTANCES are
time drafts drawn on and "accepted" by a bank, are the customary means of
effecting payment for merchandise sold in import-export transactions and are a
source of financing used extensively in international trade. When a bank
"accepts" such a time draft, it assumes liability for its payment. When the
Funds acquire a Bankers' Acceptance, the bank which "accepted" the time draft is
liable for payment of interest and principal when due. The Bankers' Acceptance,
therefore, carries the full faith and credit of such bank. A CERTIFICATE OF
DEPOSIT ("CD") is an unsecured interest-bearing debt obligation of a bank. CDs
acquired by the Funds would generally be in amounts of $100,000 or more.
COMMERCIAL PAPER is an unsecured, short term debt obligation of a bank,
corporation or other borrower. Commercial Paper maturity generally ranges from
two to 270 days and is usually sold on a discounted basis rather than as an
3
<PAGE>
interest-bearing instrument. Commercial Paper may include Master Notes of the
same quality. MASTER NOTES are unsecured obligations which are redeemable upon
demand of the holder and which permit the investment of fluctuating amounts at
varying rates of interest. Master Notes are acquired by the Funds only through
the Master Note program of the Funds' custodian, acting as administrator
thereof. The Adviser will monitor, on a continuous basis, the earnings power,
cash flow and other liquidity ratios of the issuer of a Master Note held by the
Funds. At the time of purchase, money market instruments will have a short-term
rating in the highest category from any nationally recognized statistical rating
organization ("NRSRO") or, if not rated, issued by a corporation having an
outstanding unsecured debt issue rated in the three highest categories of any
NRSRO or, if not so rated, of equivalent quality in the Adviser's opinion.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Bond Fund may purchase
securities on a when-issued basis or for settlement at a future date if the Fund
holds sufficient assets to meet the purchase price. In such purchase
transactions the Fund will not accrue interest on the purchased security until
the actual settlement. Similarly, if a security is sold for a forward date, the
Bond Fund will accrue the interest until the settlement of the sale. When-issued
security purchases and forward commitments have a higher degree of risk of price
movement before settlement due to the extended time period between the execution
and settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Bond Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Adviser felt such action was appropriate. In such a case
the Fund could incur a short-term gain or loss.
BORROWING. Each Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 33.3% of its total assets
to meet redemption requests, which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. Neither Fund will not make
any additional investments while its outstanding borrowings exceed 5% of the
current value of its total assets.
UNSEASONED ISSUERS. Each Fund may invest in the securities of unseasoned
issuers, that is, companies having an operating history of less than three years
(including predecessors and, in the case of fixed income securities,
guarantors). The management of such companies frequently does not have
substantial business experience. Furthermore, they may be competing with other
companies who are well established, more experienced and better financed. The
securities of unseasoned companies may have a limited trading market, which may
adversely affect disposition. If other investors attempt to dispose of such
holdings when a Fund desires to do so, the Fund could receive lower prices than
might otherwise be obtained. Because of these and other risks, investment in
unseasoned issuers is restricted by each Fund to no more than 5% of its net
assets.
4
<PAGE>
DESCRIPTION OF BOND RATINGS
In order to achieve its objectives, the Bond Fund invests in fixed income
securities in the four highest classifications (often called "investment grade")
by any of the nationally recognized statistical rating organizations ("NRSROs")
- Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps ("D&P"). For
S&P, Fitch and D&P those ratings are AAA, AA, A and BBB. For Moody's those
ratings are Aaa, Aa, A and Baa.
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Adviser believes that the quality of fixed-income securities in which the Bond
Fund may invest should be continuously reviewed and that individual analysts
give different weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one NRSRO, each
rating is evaluated independently. Ratings are based on current information
furnished by the issuer or obtained by the NRSROs from other sources that they
consider reliable. Ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of such information, or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS:
Aaa: Bonds rated Aaa are judged to be of the best quality. These bonds
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large in Aa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements that make the long term
risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present that suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
5
<PAGE>
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S BOND RATINGS:
AAA: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated AA also qualify as high quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S BOND RATINGS:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment.
6
<PAGE>
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
DESCRIPTION OF DUFF & PHELPS' CREDIT RATING CO.'S BOND RATINGS:
AAA: This is the highest rating credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average protection factors. However risk factors are
more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
INVESTMENT LIMITATIONS
The Funds have adopted the following investment limitations, which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Funds. A "majority" for this purpose, means the lesser of (i) 67%
of a Fund's outstanding shares represented in person or by proxy at a meeting at
which more than 50% of its outstanding shares are represented, or (ii) more than
50% of its outstanding shares.
Under these limitations, each Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting
securities or of any class of securities of any one issuer;
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Adviser who own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5% of the
outstanding securities of such issuer;
(4) Invest for the purpose of exercising control or management of another
issuer;
7
<PAGE>
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Funds
may invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things.
(6) Underwrite securities issued by others, except to the extent a Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Funds may obtain such short-term
credits as may be necessary for the clearance of transactions);
(8) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short);
(9) Participate on a joint or joint and several basis in any trading account in
securities;
(10) Make loans of money or securities, except that the Funds may invest in
repurchase agreements (but repurchase agreements having a maturity of
longer than seven days, together with other securities which are not
readily marketable, are limited to 10% of the Fund's net assets);
(11) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors), if more than 5% of its total assets would be invested
in such securities;
(12) Write, purchase or sell puts, calls or combinations thereof, or purchase or
sell commodities, commodities contracts, futures contracts or related
options;
(13) Invest in restricted securities; or
(14) Invest more than 5% of its total assets in the securities of any one issuer
or hold more than 10% of the voting securities of any one issuer.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation. However, in the case of the
borrowing limitation (the first restriction in the Prospectus) each Fund will,
to the extent necessary, reduce its existing borrowings to comply with the
limitation.
While the Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Adviser has no present intention of engaging
in such transactions at this time or during the coming year.
8
<PAGE>
TRUSTEES AND OFFICERS
The Board of Trustees supervises the activities of the Williamsburg Investment
Trust (the "Trust"). Following are the Trustees and executive officers of the
Trust, their present position with the Trust or Funds, age, principal occupation
during the past 5 years and their aggregate compensation from the Trust for the
fiscal year ended March 31, 2000:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
--------------- -------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 63) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 46) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 63) Physician $12,500
Trustee** Dermatology Associates of
931 Broad Street Road Virginia, P.C.,
Manakin Sabot, Virginia 23103 Richmond, Virginia
J. Finley Lee (age 60) Julian Price Professor Emeritus of $12,500
Trustee Business Administration
105 Gristmill Lane University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 51) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
9
<PAGE>
Richard L. Morrill (age 61) Chancellor of $12,500
Trustee University of Richmond,
University of Richmond Richmond, Virginia;
G19 Boatright Library Director of Tredegar
Richmond, Virginia 23173 Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 40) President of $12,500
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling)
Erwin H. Will, Jr. (age 67) Chief Investment Officer of $12,500
Trustee Virginia Retirement System,
1200 East Main Street Richmond, Virginia
Richmond, Virginia 23219
Samuel B. Witt III (age 64) Senior Vice President and $13,500
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 37) Portfolio Manager of None
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 55) Executive Vice President of None
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Charles M. Caravati III (age 34) Assistant Portfolio Manager of None
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
The Jamestown International Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Robert G. Dorsey (age 43) Managing Director of Ultimus Fund None
Vice President Solutions, LLC and Ultimus Fund
135 Merchant Street, Suite 230 Distributors, LLC, Cincinnati, Ohio.
Cincinnati, Ohio 45246 Prior to March, 1999, President of
Countrywide Fund Services, Inc.
10
<PAGE>
John M. Flippin (age 58) Principal of None
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 47) Principal of None
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
600 Luckie Drive
Luckie Building, Suite 305
Birmingham, Alabama 35223
J. Lee Keiger III (age 45) First Vice President and Chief Financial None
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter III (age 59) Principal of None
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 38) Managing Director of Ultimus Fund None
Treasurer Solutions, LLC and Ultimus Fund
135 Merchant Street, Suite 230 Distributors, LLC, Cincinnati, Ohio.
Cincinnati, Ohio 45246 Prior to March 1999, First Vice President
of Countrywide Fund Services, Inc.
Henry C. Spalding, Jr. (age 62) Executive Vice President of None
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street, Suite 300
Richmond, Virginia 23230
John F. Splain (age 44) Managing Director of Ultimus Fund None
Secretary Solutions, LLC and Ultimus Fund
135 Merchant Street, Suite 230 Distributors, LLC, Cincinnati, Ohio.
Cincinnati, Ohio 45246 Prior to March 1999, First Vice President
and Secretary of Countrywide Fund
Services, Inc. and affiliated companies
11
<PAGE>
Connie R. Taylor (age 49) Administrator of None
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 41) Portfolio Manager of None
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 54) President and Chief Executive None
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
-----------------------------
** Indicates that Trustee is an Interested Person for purposes of the
Investment Company Act of 1940. Charles M. Caravati, Jr. is the father of
Charles M. Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee and Audit Committee. The Audit Committee reviews annually
the nature and cost of the professional services rendered by the Trust's
independent accountants, the results of their year-end audit and their findings
and recommendations as to accounting and financial matters, including the
adequacy of internal controls. On the basis of this review the Audit Committee
makes recommendations to the Trustees as to the appointment of independent
accountants for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 7, 2000, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then-outstanding shares of both the Equity
Fund and the Bond Fund. On that same date, Charles Schwab & Co., Inc., 101
Montgomery Street, San Francisco, California 94104, owned of record 47.4% of the
then-outstanding shares of the Equity Fund and 38.8% of the then-outstanding
shares of the Bond Fund. As a result, Charles Schwab & Co., Inc. may be deemed
to control the Bond Fund and the Equity Fund. As of July 7, 2000, First Alabama
Bank, Successor Trustee of the Mobile Paint Manufacturing Co., Mobile, Alabama
36622, owned of record 7.5% of the then-outstanding shares of the Bond Fund;
Saltco, P.O. Box 469, Brewton, Alabama 36427, owned of record 16.7% of the
then-outstanding shares of the Equity Fund and 10.5% of the then-outstanding
shares of the Bond Fund; and Sterne Agee & Leach, Inc., CMT Plaza, Suite 100 B,
813 Shades Creek Parkway, Birmingham, Alabama 35209, owned of record 5.2% of the
then-outstanding shares of the Bond Fund.
12
<PAGE>
INVESTMENT ADVISER
T. Leavell & Associates, Inc. (the "Adviser") supervises each Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement is effective until April 1,
2001 and will be renewed thereafter for one year periods only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees or by vote of a majority of the Funds' outstanding voting
securities, provided the continuance is also approved by a majority of the
Trustees who are not "interested persons" of the Trust or the Adviser by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement is terminable without penalty on sixty days notice by the
Board of Trustees of the Trust or by the Adviser. The Advisory Agreement
provides that it will terminate automatically in the event of its assignment.
Compensation of the Adviser with respect to the Equity Fund, based upon the
Fund's average daily net assets, is at the following annual rates: On the first
$100 million, 0.60%; and on assets over $100 million, 0.50%. For the fiscal
years ended March 31, 2000, 1999 and 1998, the Equity Fund paid the Adviser
Advisory fees of $606,159, $478,172 and $375,712, respectively.
Compensation of the Adviser with respect to the Bond Fund, based upon the Fund's
average daily net assets, is at the following annual rates: On the first $100
million, 0.50%; and on assets over $100 million, 0.40%. For the fiscal years
ended March 31, 2000, 1999 and 1998, the Bond Fund paid the Adviser Advisory
fees of $221,781, $197,590 and $164,236, respectively.
The Adviser, organized as an Alabama corporation in 1979, is controlled by its
shareholders, Thomas W. Leavell, Richard Mitchell, Dorothy G. Gambill and
Timothy S. Healey. In addition to acting as Adviser to the Funds, the Adviser
also provides investment advice to corporations, trusts, pension and profit
sharing plans, other business and institutional accounts and individuals.
The Adviser provides a continuous investment program for the Funds, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Funds. The Adviser determines what securities
and other investments will be purchased, retained or sold by the Funds, and does
so in accordance with the investment objectives and policies of the Funds as
described herein and in the Prospectus. The Adviser places all securities orders
for the Funds, determining with which broker, dealer, or issuer to place the
orders. The Adviser must adhere to the brokerage policies of the Funds in
placing all orders, the substance of which policies are that the Adviser must
seek at all times the most favorable price and execution for all securities
brokerage transactions. The Adviser also provides, at its own expense, certain
Executive Officers to the Trust, and pays the entire cost of distributing Fund
shares.
The Adviser may compensate dealers or others based on sales of shares of the
Funds to clients of such dealers or others or based on the average balance of
all accounts in the Funds for which such dealers or others are designated as the
person responsible for the account.
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ADMINISTRATOR
The Fund has retained Ultimus Fund Solutions, LLC (the "Administrator") , 135
Merchant Street, Suite 230, Cincinnati, Ohio 45246, to provide administrative,
pricing, accounting, dividend disbursing, shareholder servicing and transfer
agent services. The Administrator maintains the records of each shareholder's
account, answers shareholders' inquiries concerning their accounts, processes
purchases and redemptions of each Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service functions.
The Administrator also provides accounting and pricing services to the Funds and
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services. The
Administrator supervises the preparation of tax returns, reports to shareholders
of the Funds, reports to and filings with the Securities and Exchange Commission
and state securities commissions, and materials for meetings of the Board of
Trustees.
For the performance of these administrative services, the Bond Fund pays the
Administrator a fee at the annual rate of 0.075% of the average value of its
daily net assets up to $200,000,000 and 0.05% of such assets in excess of
$200,000,000 and the Equity Fund pays the Administrator a fee at the annual rate
of 0.15% of the average value of its daily net assets up to $25,000,000, 0.125%
of such assets from $25,000,000 to $50,000,000 and 0.10% of such assets in
excess of $50,000,000. In addition, the Funds pay out-of-pocket expenses,
including but not limited to, postage, envelopes, checks, drafts, forms,
reports, record storage and communication lines.
Prior to November 6, 2000, Integrated Fund Services, Inc. ("Integrated"), P.O.
Box 5354, Cincinnati, Ohio 45201, provided the Funds with administrative,
pricing, accounting, dividend disbursing, shareholder servicing and transfer
agent services. Integrated is a wholly-owned indirect subsidiary of The Western
and Southern Life Insurance Company. For the fiscal years ended March 31, 2000,
1999 and 1998, Integrated received fees of $170,044, $138,379 and $112,821,
respectively, from the Equity Fund and $33,179, $29,702 and $25,069,
respectively, from the Bond Fund.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103 has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Funds' federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
The Custodian of the Funds' assets is Firstar Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Funds
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Funds.
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BROKERAGE
It is the Funds' practice to seek the best price and execution for all portfolio
securities transactions. The Adviser (subject to the general supervision of the
Board of Trustees) directs the execution of the Funds' portfolio transactions.
Subject to the requirements of the 1940 Act and procedures adopted by the Board
of Trustees, the Fund may execute portfolio transactions through any broker or
dealer and pay brokerage commissions to a broker (i) which is an affiliated
person of the Trust, or (ii) which is an affiliated person of such person, or
(iii) an affiliated person of which is an affiliated person of the Trust or the
Adviser.
The Bond Fund's fixed income portfolio transactions will normally be principal
transactions executed in over-the-counter markets and will be executed on a
"net" basis, which may include a dealer markup. The Equity Fund's common stock
portfolio transactions will normally be exchange traded and will be effected
through broker-dealers who will charge brokerage commissions. With respect to
securities traded only in the over-the-counter market, orders will be executed
on a principal basis with primary market makers in such securities except where
better prices or executions may be obtained on an agency basis or by dealing
with other than a primary market maker.
For the fiscal years ended March 31, 2000, 1999 and 1998, the total amount of
brokerage commissions paid by the Equity Fund was $32,348, $40,921 and $20,136,
respectively. No brokerage commissions were paid by the Bond Fund for the last
three fiscal years.
While there is no formula, agreement or undertaking to do so, the Fund has
adopted brokerage policies which allow the Adviser to allocate a portion of
either Fund's brokerage commissions to persons or firms providing the Adviser
with research services, which may typically include, but are not limited to,
investment recommendations, financial, economic, political, fundamental and
technical market and interest rate data, and other statistical or research
services. Much of the information so obtained may also be used by the Adviser
for the benefit of the other clients it may have. Conversely, the Funds may
benefit from such transactions effected for the benefit of other clients. In all
cases, the Adviser is obligated to effect transactions for the Funds based upon
obtaining the most favorable price and execution. Factors considered by the
Adviser in determining whether the Funds will receive the most favorable price
and execution include, among other things: the size of the order, the broker's
ability to effect and settle the transaction promptly and efficiently and the
Adviser's perception of the broker's reliability, integrity and financial
condition.
As of March 31, 2000, the Bond Fund held securities issued by the following of
the Trust's "regular broker-dealers" (as defined in the 1940 Act) or their
parents:
1. Merrill Lynch, Pierce, Fenner & Smith, Inc. (the market value of which was
$1,700,488);
2. Salomon, Inc. (the market value of which was $506,893);
3. Bear Stearns & Company (the market value of which was $173,348); and
4. J.P. Morgan & Co. (the market value of which was $943,146).
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As of March 31, 2000, the Equity Fund held securities issued by the following of
the Trust's "regular broker-dealers" (as defined in the 1940 Act) or their
parents:
1. Charles Schwab & Co. (the market value of which was $1,074,000)
CODE OF ETHICS. The Trust and the Adviser have adopted Codes of Ethics under
Rule 17j-1 of the 1940 Act which permit personnel subject to the Codes to invest
in securities, including securities that may be purchased or held by the Funds.
The Codes of Ethics adopted by the Trust and the Adviser are on public file
with, and are available from, the SEC.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Funds offer the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Funds, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see the Prospectus under the heading "Signature
Guarantees"). A corporation (or partnership) must also submit a "Corporate
Resolution" (or "Certification of Partnership") indicating the names, titles and
required number of signatures authorized to act on its behalf. The application
must be signed by a duly authorized officer(s) and the corporate seal affixed.
No redemption fees are charged to shareholders under this plan. Costs in
conjunction with the administration of the plan are borne by the Funds.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely their initial investment and may result in realized long-term or
short-term capital gains or losses. The Systematic Withdrawal Plan may be
terminated at any time by the Funds upon sixty days' written notice or by a
shareholder upon written notice to the Funds. Applications and further details
may be obtained by calling the Funds at 1-866-738-1125, or by writing to:
The Government Street Funds
Shareholder Services
P.O. Box 46707
Cincinnati, Ohio 45246-0707
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PURCHASES IN KIND. The Funds may accept securities in lieu of cash in payment
for the purchase of shares of the Funds. The acceptance of such securities is at
the sole discretion of the Adviser based upon the suitability of the securities
accepted for inclusion as a long term investment of the Funds, the marketability
of such securities, and other factors which the Adviser may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Funds. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election may be filed under
Rule 18f-1 of the 1940 Act, wherein each Fund commits itself to pay redemptions
in cash, rather than in kind, to any shareholder of record of the Funds who
redeems during any ninety day period, the lesser of (a) $250,000 or (b) one
percent (1%) of a Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Funds at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (see the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Funds.
PURCHASE OF SHARES
The purchase price of shares of each of the Funds is the net asset value next
determined after the order is received. An order received prior to the close of
the regular session of trading on the New York Stock Exchange (the "Exchange"),
generally 4:00 p.m., Eastern time, will be executed at the price computed on the
date of receipt; and an order received after that time will be executed at the
price computed on the next Business Day. An order to purchase shares is not
binding on the particular Fund until confirmed in writing (or unless other
arrangements have been made with the Fund, for example in the case of orders
utilizing wire transfer of funds) and payment has been received.
Due to Internal Revenue Service ("IRS") regulations, the Fund will not accept
applications without social security or tax identification numbers. If, however,
you have already applied for a social security or tax identification number at
the time of completing your account application, you should indicate this on the
application. The Fund is required to, and will, withhold taxes on all
distributions and redemption proceeds if the number is not delivered to the Fund
within 60 days.
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An order to purchase shares is not binding on the Funds until confirmed in
writing (or unless other arrangements have been made with the Funds, for example
in the case of orders utilizing wire transfer of funds) and payment has been
received.
Each Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUNDS. The Funds have adopted initial investment
minimums for the purpose of reducing the cost to the Funds (and consequently to
the shareholders) of communicating with and servicing their shareholders.
However, a reduced minimum initial investment requirement of $1,000 applies to
Trustees, officers and employees of the Funds, the Adviser and certain parties
related thereto, including clients of the Adviser or any sponsor, officer,
committee member thereof, or the immediate family of any of them. In addition,
accounts having the same mailing address may be aggregated for purposes of the
minimum investment if they consent in writing to share a single mailing of
shareholder reports, proxy statements (but each such shareholder would receive
his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
Each Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the Exchange is closed, or trading on the Exchange is
restricted as determined by the Securities and Exchange Commission (the
"Commission"), (ii) during any period when an emergency exists as defined by the
rules of the Commission as a result of which it is not reasonably practicable
for the Fund to dispose of securities owned by it, or to fairly determine the
value of its assets, and (iii) for such other periods as the Commission may
permit.
No charge is made by the Fund for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Fund.
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
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NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Funds, and they have
adopted procedures to do so, as follows. The net asset value of each Fund is
determined as of the close of the regular session of trading on the Exchange
(currently 4:00 p.m. Eastern time) on each "Business Day." A Business Day means
any day, Monday through Friday, except for the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Fourth of July, Labor Day, Thanksgiving Day and Christmas. Net asset value per
share is determined by dividing the total value of all Fund securities and other
assets, less liabilities, by the total number of shares then outstanding. Net
asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Adviser
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the Trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Funds. General Trust expenses are allocated among
the series, or funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, each Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, each Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities' loans, gains from the disposition of stock or securities, and
certain other income.
While the above requirements are aimed at qualification of the Funds as
regulated investment companies under Subchapter M of the Code, the Funds also
intend to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Funds remain qualified under Subchapter M,
they will not be subject to federal income tax to the extent they distribute
their taxable net investment income and net realized capital gains. A
nondeductible 4% federal excise tax will be imposed on each Fund to the extent
it does not distribute at least 98% of its ordinary taxable income for a
calendar year, plus 98% of its capital gain net taxable income for the one year
period ending each October 31, plus certain undistributed amounts from prior
years. While each Fund intends to distribute its taxable income and capital
gains in a manner so as to avoid imposition of the federal excise and income
taxes, there can be no assurance that the Funds indeed will make sufficient
distributions to avoid entirely imposition of federal excise or income taxes.
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As of March 31, 2000, the Bond Fund had capital loss carryforwards for federal
income tax purposes of $760,308 which expire through the year 2008. In addition,
the Bond Fund had net realized capital losses of $145,238 during the period from
November 1, 1999 through March 31, 2000, which are treated for federal income
tax purposes as arising during the Fund's tax year ending March 31, 2001. These
capital loss carryforwards and "post-October" losses may be utilized in future
years to offset net realized capital gains prior to distributing such gains to
shareholders.
Should additional series, or funds, be created by the Trustees, each Fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUNDS' DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the
Funds derived from net investment income or net short-term capital gains are
taxable to shareholders as ordinary income, whether received in cash or
reinvested in additional shares. Distributions, if any, of long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held. For information on "backup" withholding, see "Purchase of
Shares" above.
For corporate shareholders, the dividends received deduction, if applicable,
should apply to dividends from the Equity Fund. Each Fund will send shareholders
information each year on the tax status of dividends and disbursements. A
dividend or capital gains distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income taxation. Dividends from net investment income, along with capital gains,
will be taxable to shareholders, whether received in cash or shares and no
matter how long you have held Fund shares, even if they reduce the net asset
value of shares below your cost and thus in effect result in a return of a part
of your investment.
Shareholders should be aware that dividends from the Fund which are derived in
whole or in part from interest on U.S. Government Securities may not be taxable
for state income tax purposes. Other state income and federal income tax
implications may apply. You should consult your tax Adviser for further
information.
CAPITAL SHARES AND VOTING
The Bond Fund and the Equity Fund are each no-load, diversified, open-ended
series of the Williamsburg Investment Trust (the "Trust"), an investment company
organized as a Massachusetts business trust in July 1988. The Board of Trustees
has overall responsibility for management of the Funds under the laws of
Massachusetts governing the responsibilities of Trustees of business trusts.
Shares of the Funds, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or
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retire and (2) any Trustee may be removed with or without cause at any time (a)
by a written instrument, signed by at lease two-thirds of the number of Trustees
prior to such removal; or (b) by vote of shareholders holding not less than
two-thirds of the outstanding shares of the Trust, cast in person or by proxy at
a meeting called for that purpose; or (c) by a written declaration signed by
shareholders holding not less than two-thirds of the outstanding shares of the
Trust and filed with the Trust's custodian. Shareholders have certain rights, as
set forth in the Declaration of Trust, including the right to call a meeting of
the shareholders for the purpose of voting on the removal of one or more
Trustees. Shareholders holding not less than ten percent (10%) of the shares
then outstanding may require the Trustees to call such a meeting and the
Trustees are obligated to provide certain assistance to shareholders desiring to
communicate with other shareholders in such regard (e.g., providing access to
shareholder lists, etc.). In case a vacancy or an anticipated vacancy shall for
any reason exist, the vacancy shall be filled by the affirmative vote of a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act. The Trust does not expect to have an annual meeting of
shareholders.
The Declaration of Trust currently provides for the shares of ten funds, or
series, to be issued. Shares of all ten series have currently been issued, in
addition to the Funds: shares of the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund, which are managed by Flippin, Bruce & Porter, Inc. of
Lynchburg, Virginia; shares of The Jamestown Balanced Fund, The Jamestown Equity
Fund, The Jamestown International Equity Fund and The Jamestown Tax Exempt
Virginia Fund, which are managed by Lowe, Brockenbrough & Company, Inc. of
Richmond, Virginia; shares of The Davenport Equity Fund, which is managed by
Davenport & Company LLC of Richmond, Virginia; and shares of The Alabama Tax
Free Bond Fund, which is managed by T. Leavell & Associates, Inc. The Trustees
are permitted to create additional series, or funds, at any time.
Upon liquidation of the Trust or a particular Fund of the Trust, holders of the
outstanding shares of the Fund being liquidated shall be entitled to receive, in
proportion to the number of shares of the Fund held by them, the excess of that
Fund's assets over its liabilities. Each outstanding share is entitled to one
vote for each full share and a fractional vote for each fractional share, on all
matters which concern the Trust as a whole. On any matter submitted to a vote of
shareholders, all shares of the Trust then issued and outstanding and entitled
to vote, irrespective of the Fund, shall be voted in the aggregate and not by
Fund, except (i) when required by the 1940 Act, shares shall be voted by
individual Fund; and (ii) when the matter does not affect any interest of a
particular Fund, then only shareholders of the affected Fund or Funds shall be
entitled to vote thereon. Examples of matters which affect only a particular
Fund could be a proposed change in the fundamental investment objectives or
policies of that Fund or a proposed change in the investment advisory agreement
for a particular Fund. The shares of the Fund will have noncumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of Trustees can elect all of the Trustees if they so choose.
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Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability.
Stock Certificates will not be issued for your shares. Evidence of ownership
will be given by issuance of periodic account statements which will show the
number of shares owned.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
Each Fund may, from time to time, advertise certain total return and yield
information. The average annual total return of a Fund for a period is computed
by subtracting the net asset value per share at the beginning of the period from
the net asset value per share at the end of the period (after adjusting for the
reinvestment of any income dividends and capital gain distributions), and
dividing the result by the net asset value per share at the beginning of the
period. In particular, the average annual total return of a Fund ("T") is
computed by using the redeemable value at the end of a specified period of time
("ERV") of a hypothetical initial investment of $1,000 ("P") over a period of
time ("n") according to the formula P(l+T)n=ERV. The average annual total return
for the Equity Fund for the one and five year periods ended March 31, 2000, and
for the period since inception (June 3, 1991) to March 31, 2000 are 19.93%,
23.09% and 15.59%, respectively. The average annual total return for the Bond
Fund for the one and five year periods ended March 31, 2000, and for the period
since inception (June 3, 1991) to March 31, 2000 are 0.67%, 5.89% and 6.28%,
respectively.
In addition, each Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, each Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest
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earned (for the purpose of "a" above) on debt obligations is computed by
reference to the yield to maturity of each obligation held based on the market
value of the obligation (including actual accrued interest) at the close of
business on the last business day prior to the start of the 30-day (or one
month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The yields of the Equity Fund and the Bond Fund for the 30 days ended
March 31, 2000 were 0.22% and 6.67%, respectively.
The Funds' performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Equity Fund may compare its performance to the
S&P 500 Index, which is generally considered to be representative of the
performance of unmanaged common stocks that are publicly traded in the United
States securities markets, and the Bond Fund may compare its performance to the
Merrill Lynch 1-5 Year Government Corporate Index and the Lehman
Government/Corporate Intermediate Bond Index, which are generally considered to
be representative of the performance of a portfolio of domestic, taxable fixed
income securities of intermediate maturities. Comparative performance may also
be expressed by reference to a ranking prepared by a mutual fund monitoring
service, such as Lipper Analytical Services, Inc. or Morningstar, Inc. or by one
or more newspapers, newsletters or financial periodicals. Performance
comparisons may be useful to investors who wish to compare the Funds' past
performance to that of other mutual funds and investment products. Of course,
past performance is not a guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of the Funds' performance before investing. Of course, when
comparing the Funds' performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Funds may quote total returns that are calculated
on nonstandardized base periods. The total returns represent the historic change
in the value of an investment in the Funds based on monthly reinvestment of
dividends over a specified period of time.
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From time to time the Funds may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Funds may also disclose from time to
time information about their portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Funds may also depict the historical performance
of the securities in which the Funds may invest over periods reflecting a
variety of market or economic conditions either alone or in comparison with
alternative investments, performance indices of those investments, or economic
indicators. The Funds may also include in advertisements and in materials
furnished to present and prospective shareholders statements or illustrations
relating to the appropriateness of types of securities and/or mutual funds that
may be employed to meet specific financial goals, such as saving for retirement,
children's education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Funds will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published, and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Funds as of March 31, 2000, together with the report of the independent
accountants thereon, are included on the following pages.
24
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
------------------------------
No Load Mutual Funds
ANNUAL REPORT
MARCH 31, 2000
Investment Adviser
T. LEAVELL & ASSOCIATES, INC.
Founded 1979
<PAGE>
LETTER FROM THE PRESIDENT MAY 15, 2000
================================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the audited Annual Report of The
Government Street Funds and The Alabama Tax Free Bond Fund for the year ended
March 31, 2000.
THE GOVERNMENT STREET EQUITY FUND
---------------------------------
The Government Street Equity Fund achieved a total investment return of
19.93% for its fiscal year ended March 31, 2000. During this same period, the
S&P 500 Index achieved a total return of 17.94%. In addition, the average return
for the 968 "Large-Cap Blend Funds" included in Morningstar, Inc.'s universe was
19.64% for the same twelve month period. (The Government Street Equity Fund is
classified by Morningstar as a Large-Cap Blend Fund.)
Investment returns during the twelve months ended March 31, 2000 continued
to reflect the disproportionately high return of growth stocks (particularly
technology issues) compared to value stocks. New terms have even been coined -
"new economy" stocks and "old economy" stocks - to describe the phenomenon of
stock valuations (and investment returns) of technology oriented companies
defying more traditional methods of securities analysis and valuation.
The Government Street Equity Fund continues its blended portfolio
management style with approximately one-half of its investments in both growth
and value stocks. This approach equates the importance of risk management with
the pursuit of investment returns, and, ultimately, provides the portfolio
environment that we believe is most conducive for compounding investment returns
over time.
In last year's annual report, we stated that "It is unlikely that the U.S.
stock market will continue indefinitely to be driven by the narrow leadership of
a handful of large capitalization stocks; nor is it reasonable to expect that
growth stocks will continue to outperform value stocks as they have over the
past 18 months." This statement remains an appropriate one today, though the 18
month period now has grown to 30 months.
The future for "new economy" stocks is exciting. The technological
innovation and advances already achieved in computing, biotechnology,
electronics, the Internet, wireless technology, communications, and their
applications are nothing short of stunning. Still, creating profitable business
enterprises from their technological achievements remain challenges for many of
these companies. Until there is a clearer picture of which ventures will survive
and prosper, the result is likely to be a highly volatile market for common
stocks. At the same time, it is a market that is likely to see a narrowing of
the gap that currently exists between growth and value stocks.
The selection of those companies whose current (and future) stock prices
are (or will be) justified by future earnings growth remains a daunting task for
investment managers. A more immediate concern, however, is the current monetary
policy of the Federal Reserve Board. The Fed's zeal in fighting the threat of
inflation over the past 10 months has brought the general level of interest
rates close to a point at which strong economies historically have faltered.
Neither "new" nor "old" economy companies are likely to prosper in an economic
environment where the cost of debt capital is 9% - 10%. However, it is in just
such a hostile environment where The Government Street Equity Fund's broadly
diversified portfolio of quality companies is most likely to prove its merit.
At March 31, 2000, the Fund was invested in 118 companies. Net assets of
the Fund were $116,446,622; net asset value was $57.07.
THE GOVERNMENT STREET BOND FUND
-------------------------------
For the first time since 1976-78, the U.S. economy has expanded at a rate
of 4% or more for 3 consecutive years. With an eye toward controlling inflation,
the Federal Reserve Board has moved to curb this booming economy by raising
short-term interest rates a total of 1.25% over a 10 month period - 5 times
since June, 1999.
In addition to rising interest rates, inflation concerns and worry about
Y2K computer disruptions sent bond prices sliding in 1999. As a result, the bond
market suffered its worst year since 1994 and the second worst since 1973.
1
<PAGE>
Despite these difficulties and despite the fact that the Federal Reserve
seems poised to continue its tightening during 2000, the bond market staged a
modest recovery during the first calendar quarter of the new year. The
Government Street Bond Fund achieved a return of 1.31% for the quarter ended
March 31, 2000, and this was enough to lift its total return for the fiscal year
ended March 31, 2000 to 0.67%. These returns compare favorably to those of the
Lehman Government/Corporate Intermediate Bond Index which were 1.50% and 2.09%,
respectively. The Fund's ratio of net investment income to average net assets
was 6.12% at fiscal year end.
The Government Street Bond Fund continues its emphasis on holding quality
securities while maintaining an intermediate-term average maturity. At fiscal
year-end, the Fund's average maturity was slightly over 6 years; just over 61%
of the Fund was invested in securities rated AAA.
The net assets of the Fund at March 31, 2000 were $45,155,791; net asset
value was $19.79; and the ratio of expenses to average net assets was 0.70%.
THE ALABAMA TAX FREE BOND FUND
------------------------------
We are proud to report that The Alabama Tax Free Bond Fund has received a
four star rating from Morningstar, Inc. for its overall performance, as well as
for the past 3 and 5 year periods coinciding with the end of its fiscal year on
March 31, 2000. The Morningstar ratings reflect risk-adjusted performance and
are subject to change every month. Ratings are calculated for the Fund's total
annual return in excess of the 90-day T-bill return with fee adjustments and a
risk factor that reflects Fund performance below the 90-day T-bill return. A
four star rating places the fund in the top 32.5% of all municipal bond funds
measured. For the five-year period ended March 31, 2000, that universe consisted
of 1,682 municipal bond mutual funds.
These ratings, however, do not mean that the Fund was able to escape the
impact of sharply rising interest rates during the past 12 months. The annual
rate of inflation as measured by the consumer price index, increased from 1.7%
at the beginning of 1999 to 3.7% at the end of March, 2000. This steady increase
in the rate of inflation, though relatively low in absolute terms, has caused
investors to demand higher yields from fixed income securities. The resulting
decline in bond prices has actually generated negative returns for many fixed
income investments over the past 15 months.
During the last quarter of its fiscal year, however, The Alabama Tax Free
Bond Fund achieved a total return of 1.71%. This allowed the fund to achieve a
positive return of 0.34% for the entire year. These returns compare favorably to
those of the Lipper Intermediate Municipal Bond Index which were 1.76% and
-0.27%, respectively, for the same periods. The Fund's ratio of net investment
income to average net assets was 4.32% at year end.
The net assets of the fund as of March 31, 2000 were $23,048,340; net asset
value was $10.13. The weighted average maturity of the Fund's portfolio was 7.2
years -consistent with its intermediate-term objective. The average credit
quality of the portfolio was "AA", and almost 60% of the individual securities
were rated "AAA".
The Alabama Tax Free Bond Fund continues to provide an attractive option
for investors who are seeking stability of principal as well as income which is
sheltered from federal and Alabama state income taxes.
Thank you for your continued confidence in The Government Street Funds and
The Alabama Tax Free Bond Fund. Please call us if we can be of further service
to you.
Very truly yours,
/s/ Thomas W. Leavell /s/ Richard Mitchell
Thomas W. Leavell Richard Mitchell
President President
T. Leavell & Associates, Inc. The Government Street Funds
The Alabama Tax Free Bond Fund
2
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Equity Fund, the Standard & Poor's 500 Index and the Consumer Price Index
------------------------------------
The Government Street Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
19.93% 23.09% 15.59%
------------------------------------
[GRAPHIC OMITTED]
Mar 00
The Government Street Equity Fund $35,759
Standard & Poor's 500 Index $48,286
Consumer Price Index $12,535
Past performance is not predictive of future performance.
* Initial public offering of shares was June 3, 1991.
THE GOVERNMENT STREET BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Bond Fund, the Lehman Government/Corporate Intermediate Bond Index and
the 90-Day Treasury Bill Index
------------------------------------
The Government Street Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
0.67% 5.89%.4 6.28%
------------------------------------
[GRAPHIC OMITTED]
Mar 00
The Government Street Bond Fund $17,116
Lehman Government/Corporate Intermediate Bond Index $17,979
90-Day Treasury Bill Index $15,205
Past performance is not predictive of future performance.
* Initial public offering of shares was June 3, 1991.
3
<PAGE>
THE ALABAMA TAX FREE BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Alabama Tax
Free Bond Fund, the Lehman 7-Year G.O. Municipal Bond Index, the Lehman 3-Year
Municipal Bond Index and the Lipper Intermediate Municipal Fund Index
-----------------------------------
The Alabama Tax Free Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
0.34% 4.64% 4.47%
-----------------------------------
[GRAPHIC OMITTED]
Mar 00
The Alabama Tax Free Bond Fund $13,708
Lehman 7-Year G.O. Municipal Bond Index $14,807
Lehman 3-Year Municipal Bond Index $13,852
Lipper Intermediate Municipal Fund Index $13,553
Past performance is not predictive of future performance.
* Initial public offering of shares was January 15, 1993.
4
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2000
<TABLE>
<CAPTION>
=======================================================================================================
GOVERNMENT GOVERNMENT ALABAMA
STREET STREET TAX FREE
EQUITY BOND BOND
FUND FUND FUND
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost ............................. $ 60,100,244 $ 46,424,871 $ 22,792,699
============= ============= =============
At value (Note 1) ............................... $ 119,238,480 $ 44,512,863 $ 22,766,181
Interest receivable ................................ 15,997 723,356 300,166
Dividends receivable ............................... 66,389 -- --
Receivable for capital shares sold ................. 108,250 -- 11,188
Other assets ....................................... 6,462 4,007 1,857
------------- ------------- -------------
TOTAL ASSETS .................................... 119,435,578 45,240,226 23,079,392
------------- ------------- -------------
LIABILITIES
Dividends payable .................................. 1,367 15,271 9,644
Distributions payable .............................. 15,565 -- --
Payable for capital shares redeemed ................ 5,065 37,518 9,341
Payable for securities purchased ................... 2,885,903 -- --
Accrued investment advisory fees (Note 3) .......... 56,700 19,193 5,457
Accrued administration fees (Note 3) ............... 15,500 2,850 2,900
Other accrued expenses and liabilities ............. 8,856 9,603 3,710
------------- ------------- -------------
TOTAL LIABILITIES ............................... 2,988,956 84,435 31,052
------------- ------------- -------------
NET ASSETS ......................................... $ 116,446,622 $ 45,155,791 $ 23,048,340
============= ============= =============
Net assets consist of:
Paid-in capital .................................... $ 57,357,340 $ 47,973,345 $ 23,321,127
Distributions in excess of realized gains .......... (48,954) -- --
Accumulated net realized losses
from security transactions ...................... -- (905,546) (246,269)
Net unrealized appreciation (depreciation)
on investments .................................. 59,138,236 (1,912,008) (26,518)
------------- ------------- -------------
Net assets ......................................... $ 116,446,622 $ 45,155,791 $ 23,048,340
============= ============= =============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ...... 2,040,365 2,281,479 2,274,894
============= ============= =============
Net asset value, offering price and
redemption price per share (Note 1) ............. $ 57.07 $ 19.79 $ 10.13
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
=================================================================================================
GOVERNMENT GOVERNMENT ALABAMA
STREET STREET TAX FREE
EQUITY BOND BOND
FUND FUND FUND
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest ......................................... $ 50,372 $ 2,946,594 $ 1,079,194
Dividends ........................................ 1,141,189 73,921 28,794
----------- ----------- -----------
TOTAL INVESTMENT INCOME ....................... 1,191,561 3,020,515 1,107,988
----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 3) ................ 606,159 221,781 78,222
Administration fees (Note 3) ..................... 170,044 33,179 33,491
Professional fees ................................ 11,945 11,945 8,845
Pricing costs .................................... 2,844 11,663 14,637
Custodian fees ................................... 14,399 6,459 4,296
Trustees' fees and expenses ...................... 8,280 8,280 8,280
Printing of shareholder reports .................. 8,613 6,949 6,623
Postage and supplies ............................. 6,480 4,149 2,886
Registration fees ................................ 5,789 4,671 1,634
Other expenses ................................... 7,561 305 1,756
----------- ----------- -----------
TOTAL EXPENSES ................................ 842,114 309,381 160,670
Fees waived by the Adviser (Note 3) .............. -- -- (15,400)
----------- ----------- -----------
NET EXPENSES .................................. 842,114 309,381 145,270
----------- ----------- -----------
NET INVESTMENT INCOME ............................... 349,447 2,711,134 962,718
----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses)
from security transactions .................... 798,881 (352,285) (46,986)
Net change in unrealized appreciation/depreciation
on investments ................................ 17,790,895 (2,047,757) (844,115)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS ....................... 18,589,776 (2,400,042) (891,101)
----------- ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ............................... $18,939,223 $ 311,092 $ 71,617
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
==============================================================================================================
GOVERNMENT STREET GOVERNMENT STREET
EQUITY FUND BOND FUND
-----------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income ................. $ 349,447 $ 486,890 $ 2,711,134 $ 2,376,899
Net realized gains (losses)
from security transactions ......... 798,881 1,154,015 (352,285) (119,151)
Net change in unrealized appreciation/
depreciation on investments ........ 17,790,895 9,951,369 (2,047,757) (251,151)
------------- ------------- ------------- -------------
Net increase in net assets from operations 18,939,223 11,592,274 311,092 2,006,597
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............ (349,447) (487,774) (2,711,134) (2,380,755)
From net realized gains ............... (847,835) (3,083,650) -- --
------------- ------------- ------------- -------------
Decrease in net assets from
distributions to shareholders ......... (1,197,282) (3,571,424) (2,711,134) (2,380,755)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............. 16,032,742 10,535,714 9,164,881 7,618,281
Net asset value of shares issued in
reinvestment of distributions
to shareholders .................... 1,172,232 3,411,170 2,531,305 2,146,286
Payments for shares redeemed .......... (9,207,743) (6,903,321) (7,180,879) (3,257,836)
------------- ------------- ------------- -------------
Net increase in net assets from
capital share transactions ............ 7,997,231 7,043,563 4,515,307 6,506,731
------------- ------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS ............. 25,739,172 15,064,413 2,115,265 6,132,573
NET ASSETS
Beginning of year ..................... 90,707,450 75,643,037 43,040,526 36,907,953
------------- ------------- ------------- -------------
End of year ........................... $ 116,446,622 $ 90,707,450 $ 45,155,791 $ 43,040,526
============= ============= ============= =============
Capital share activity
Sold .................................. 312,261 233,010 452,679 359,195
Reinvested ............................ 21,194 77,139 126,050 101,333
Redeemed .............................. (178,843) (151,673) (356,474) (153,761)
------------- ------------- ------------- -------------
Net increase in shares outstanding .... 154,612 158,476 222,255 306,767
Shares outstanding, beginning of year . 1,885,753 1,727,277 2,059,224 1,752,457
------------- ------------- ------------- -------------
Shares outstanding, end of year ....... 2,040,365 1,885,753 2,281,479 2,059,224
============= ============= ============= =============
</TABLE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Alabama Tax Free
Bond Fund
----------------------------------
Year Year
Ended Ended
March 31, March 31,
2000 1999
--------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ................. $ 962,718 $ 830,266
Net realized gains (losses)
from security transactions ......... (46,986) (347)
Net change in unrealized appreciation/
depreciation on investments ........ (844,115) 86,422
------------- -------------
Net increase in net assets from operations 71,617 916,341
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............ (962,718) (830,266)
From net realized gains ............... -- --
------------- -------------
Decrease in net assets from
distributions to shareholders ......... (962,718) (830,266)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............. 5,417,544 3,032,760
Net asset value of shares issued in
reinvestment of distributions
to shareholders .................... 799,134 609,745
Payments for shares redeemed .......... (3,837,209) (2,106,904)
------------- -------------
Net increase in net assets from
capital share transactions ............ 2,379,469 1,535,601
------------- -------------
TOTAL INCREASE IN NET ASSETS ............. 1,488,368 1,621,676
NET ASSETS
Beginning of year ..................... 21,559,972 19,938,296
------------- -------------
End of year ........................... $ 23,048,340 $ 21,559,972
============= =============
Capital share activity
Sold .................................. 530,939 286,831
Reinvested ............................ 78,412 57,694
Redeemed .............................. (379,054) (199,887)
------------- -------------
Net increase in shares outstanding .... 230,297 144,638
Shares outstanding, beginning of year . 2,044,597 1,899,959
------------- -------------
Shares outstanding, end of year ....... 2,274,894 2,044,597
============= =============
See accompanying notes to financial statements.
7
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
============================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
============================================================================================================
YEARS ENDED MARCH 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ...... $ 48.10 $ 43.79 $ 32.59 $ 29.41 $ 23.87
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income .................. 0.18 0.27 0.32 0.37 0.40
Net realized and unrealized
gains on investments ................ 9.39 6.01 12.28 4.50 5.75
--------- --------- --------- --------- ---------
Total from investment operations .......... 9.57 6.28 12.60 4.87 6.15
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ... (0.18) (0.27) (0.32) (0.36) (0.40)
Distributions from net realized gains .. (0.42) (1.70) (1.08) (1.33) (0.21)
--------- --------- --------- --------- ---------
Total distributions ....................... (0.60) (1.97) (1.40) (1.69) (0.61)
--------- --------- --------- --------- ---------
Net asset value at end of year ............ $ 57.07 $ 48.10 $ 43.79 $ 32.59 $ 29.41
========= ========= ========= ========= =========
Total return .............................. 19.93% 14.81% 39.31% 16.94% 25.96%
========= ========= ========= ========= =========
Net assets at end of year (000's) ......... $ 116,447 $ 90,707 $ 75,643 $ 49,629 $ 41,421
========= ========= ========= ========= =========
Ratio of net expenses to average net assets 0.83% 0.85% 0.86% 0.89% 0.94%
Ratio of net investment income
to average net assets .................. 0.35% 0.61% 0.82% 1.17% 1.50%
Portfolio turnover rate ................... 17% 22% 18% 20% 31%
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
THE GOVERNMENT STREET BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
============================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
============================================================================================================
YEARS ENDED MARCH 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ...... $ 20.90 $ 21.06 $ 20.47 $ 20.87 $ 20.33
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income .................. 1.23 1.27 1.32 1.34 1.35
Net realized and unrealized
gains (losses) on investments ....... (1.11) (0.16) 0.60 (0.40) 0.54
--------- --------- --------- --------- ---------
Total from investment operations .......... 0.12 1.11 1.92 0.94 1.89
--------- --------- --------- --------- ---------
Dividends from net investment income ...... (1.23) (1.27) (1.33) (1.34) (1.35)
--------- --------- --------- --------- ---------
Net asset value at end of year ............ $ 19.79 $ 20.90 $ 21.06 $ 20.47 $ 20.87
========= ========= ========= ========= =========
Total return .............................. 0.67% 5.38% 9.61% 4.60% 9.43%
========= ========= ========= ========= =========
Net assets at end of year (000's) ......... $ 45,156 $ 43,041 $ 36,908 $ 29,442 $ 28,718
========= ========= ========= ========= =========
Ratio of net expenses to average net assets 0.70% 0.73% 0.74% 0.75% 0.76%
Ratio of net investment income
to average net assets .................. 6.12% 6.01% 6.35% 6.44% 6.38%
Portfolio turnover rate ................... 20% 17% 10% 20% 10%
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
THE ALABAMA TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
===============================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
===============================================================================================================
YEARS ENDED MARCH 31,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 10.54 $ 10.49 $ 10.18 $ 10.23 $ 9.96
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income ..................... 0.44 0.44 0.44 0.43 0.42
Net realized and unrealized
gains (losses) on investments .......... (0.41) 0.05 0.31 (0.05) 0.27
--------- --------- --------- --------- ---------
Total from investment operations ............. 0.07 0.49 0.75 0.38 0.69
--------- --------- --------- --------- ---------
Dividends from net investment income ......... (0.44) (0.44) (0.44) (0.43) (0.42)
--------- --------- --------- --------- ---------
Net asset value at end of year ............... $ 10.13 $ 10.54 $ 10.49 $ 10.18 $ 10.23
========= ========= ========= ========= =========
Total return ................................. 0.34% 4.73% 7.44% 3.82% 7.02%
========= ========= ========= ========= =========
Net assets at end of year (000's) ............ $ 23,048 $ 21,560 $ 19,938 $ 16,801 $ 15,480
========= ========= ========= ========= =========
Ratio of net expenses to average net assets(a) 0.65% 0.65% 0.65% 0.66% 0.75%
Ratio of net investment income
to average net assets ..................... 4.32% 4.16% 4.19% 4.24% 4.11%
Portfolio turnover rate ...................... 19% 7% 2% 6% 4%
</TABLE>
(a) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been
0.72%, 0.76%, 0.75%, 0.78% and 0.86% for the years ended March 31, 2000,
1999, 1998, 1997, and 1996, respectively (Note 3).
See accompanying notes to financial statements.
10
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
SHARES COMMON STOCKS - 95.6% VALUE
--------------------------------------------------------------------------------
ADVERTISING - 0.5%
6,000 Omnicom Group, Inc. ........................ $ 560,625
-------------
AEROSPACE - 0.2%
7,000 Boeing Company ............................. 265,563
-------------
AIR COURIER SERVICES - 1.0%
31,000 FedEx Corporation(a) ....................... 1,209,000
-------------
CHEMICALS AND DRUGS - 9.8%
40,000 Becton Dickinson & Company ................. 1,052,500
15,000 Biomet, Inc. ............................... 545,625
30,000 Cardinal Health, Inc. ...................... 1,376,250
18,000 du Pont (E.I.) de Nemours & Company ........ 951,750
17,000 Eli Lilly & Company ........................ 1,071,000
15,000 Johnson & Johnson .......................... 1,050,938
24,900 Merck & Company, Inc. ...................... 1,546,912
5,500 Monsanto Company ........................... 283,250
29,200 Pfizer, Inc. ............................... 1,067,625
40,000 Schering-Plough Corporation ................ 1,470,000
10,000 Waters Corporation(a) ...................... 952,500
-------------
11,368,350
-------------
CONSTRUCTION - 2.1%
14,000 Caterpiller, Inc. .......................... 552,125
5,000 Clayton Homes, Inc. ........................ 50,625
3,000 Florida Rock Industries, Inc. .............. 84,000
8,500 Kaufman & Broad Home Corporation ........... 182,219
10,000 Lowe's Companies, Inc. ..................... 583,750
7,000 Masco Corporation .......................... 143,500
23,000 Valspar Corporation ........................ 881,188
-------------
2,477,407
-------------
CONSUMER PRODUCTS - 6.6%
21,000 Belo (A.H.) Corporation - Class A .......... 375,375
17,500 Clorox Company (The) ....................... 568,750
13,000 General Motors Corporation ................. 1,076,562
14,000 Gillette Company ........................... 527,625
6,500 Hewlett-Packard Company .................... 861,656
5,300 Lexmark International Group, Inc. - Class A(a) 560,475
4,000 Macromedia, Inc.(a) ........................ 361,250
5,500 Maytag Corporation ......................... 182,188
20,500 Microsoft Corporation(a) ................... 2,178,125
6,000 OshKosh B'Gosh, Inc. - Class A ............. 108,000
15,000 Procter & Gamble Company ................... 843,750
-------------
7,643,756
-------------
DURABLE GOODS - 18.2%
160,000 Cisco Systems, Inc.(a) ..................... 12,370,000
13,000 Costco Wholesale Corporation(a) ............ 683,313
23,500 General Electric Company ................... 3,646,906
6,000 Ingersoll-Rand Company ..................... 265,500
21,800 Intel Corporation .......................... 2,876,238
6,000 International Business Machines Corporation (IBM) 708,000
5,118 SPX Corporation(a) ......................... 583,132
-------------
21,133,089
-------------
11
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
SHARES COMMON STOCKS - 95.6% (CONTINUED) VALUE
--------------------------------------------------------------------------------
ELECTRONICS - 5.2%
1,000 Broadcom Corporation(a) .................... $ 242,875
2,500 Harmonic Inc.(a) ........................... 208,125
4,000 KEMET Corporation(a) ....................... 253,000
15,640 Koninklijke (Royal) Philips Electronics N.V 2,679,328
11,000 Motorola, Inc. ............................. 1,566,125
1,600 Powertel, Inc.(a) .......................... 110,700
5,500 Seagate Technology, Inc.(a) ................ 331,375
9,000 Solectron Corporation(a) ................... 360,562
5,000 Tandy Corporation .......................... 253,750
-------------
6,005,840
-------------
FINANCIAL - 12.9%
6,000 Aegon N.V .................................. 483,375
26,000 AFLAC, Inc. ................................ 1,184,625
10,000 American Express Company ................... 1,489,375
19,000 Charles Schwab Corporation (The) ........... 1,079,438
6,000 Chase Manhattan Corporation ................ 523,125
20,000 Citigroup, Inc. ............................ 1,186,250
75,000 Firstar Corporation ........................ 1,720,312
22,000 FleetBoston Financial Corporation .......... 803,000
20,000 Freddie Mac ................................ 883,750
10,500 Marsh & McLennan Companies, Inc. ........... 1,158,281
17,000 MBNA Corporation ........................... 433,500
50,000 Mellon Financial Corporation ............... 1,475,000
20,000 Nasdaq-100 Shares(a) ....................... 2,192,500
21,000 Synovus Financial Corporation .............. 396,375
-------------
15,008,906
-------------
FOOD/BEVERAGES - 1.4%
10,000 Anheuser-Busch Companies, Inc. ............. 622,500
40,000 Coca-Cola Enterprises ...................... 862,500
3,500 SYSCO Corporation .......................... 124,906
-------------
1,609,906
-------------
HEALTH CARE - 0.4%
7,000 United HealthCare Corporation .............. 417,375
-------------
HOTELS - 0.2%
7,000 Marriott International, Inc. - Class A ..... 220,500
-------------
MANUFACTURING - 3.7%
5,000 Cooper Tire & Rubber Company ............... 62,813
8,387 Delphi Automotive Systems Corporation ...... 134,192
9,500 General Dynamics Corporation ............... 472,625
6,500 Honeywell International, Inc. .............. 342,469
12,200 Johnson Controls, Inc. ..................... 659,562
10,000 Leggett & Platt, Inc. ...................... 215,000
5,500 Mueller Industries, Inc.(a) ................ 167,062
14,000 Pall Corporation ........................... 314,125
38,786 Tyco International, Ltd. ................... 1,934,452
4,000 Worthington Industries, Inc. ............... 49,500
-------------
4,351,800
-------------
METAL AND MINING - 0.9%
12,000 Alcoa, Inc. ................................ 843,000
10,000 Newmont Mining Corporation ................. 224,375
-------------
1,067,375
-------------
MULTIMEDIA - 0.7%
8,000 Meredith Corporation ....................... 221,500
12,000 Viacom, Inc. - Class A(a) .................. 641,250
-------------
862,750
-------------
12
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
SHARES COMMON STOCKS - 95.6% (CONTINUED) VALUE
--------------------------------------------------------------------------------
OIL/ENERGY - 5.1%
33,082 BP Amoco Plc ............................... $ 1,755,414
10,000 Burlington Resources, Inc. ................. 370,000
13,000 Chevron Corporation ........................ 1,201,688
10,000 Enron Corporation .......................... 748,750
14,650 Exxon Mobil Corporation .................... 1,139,953
7,500 Halliburton Company ........................ 307,500
12,000 Nabors Industries, Inc.(a) ................. 465,750
-------------
5,989,055
-------------
PAPER AND FOREST PRODUCTS - 0.8%
11,455 International Paper Company ................ 489,701
5,000 Mead Corporation ........................... 174,687
8,000 Willamette Industries, Inc. ................ 321,000
-------------
985,388
-------------
RACETRACKS - 0.2%
11,000 Speedway Motorsports, Inc.(a) .............. 274,312
-------------
RETAIL STORES - 6.4%
7,000 Abercrombie & Fitch Company - Class A(a) ... 112,000
16,000 Circuit City Stores - Circuit City Group ... 974,000
49,500 Home Depot, Inc. ........................... 3,192,750
7,500 Target Corporation ......................... 560,625
32,000 Wal-Mart Stores, Inc. ...................... 1,776,000
33,000 Walgreen Company ........................... 849,750
-------------
7,465,125
-------------
SERVICES - COMPUTER - 5.4%
12,500 Adobe Systems, Inc. ........................ 1,391,406
12,500 America Online, Inc.(a) .................... 840,625
22,200 Automatic Data Processing, Inc. ............ 1,071,150
24,000 Computer Sciences Corporation(a) ........... 1,899,000
9,500 Electronic Data Systems Corporation ........ 609,781
2,500 Inktomi Corporation(a) ..................... 487,500
-------------
6,299,462
-------------
SERVICES - CONSUMER - 0.0%
9,000 HEALTHSOUTH Corporation(a) ................. 50,062
-------------
TELECOMMUNICATION EQUIPMENT - 8.1%
6,600 Applied Materials, Inc.(a) ................. 622,050
4,000 JDS Uniphase Corporation(a) ................ 482,250
7,000 Lucent Technologies, Inc. .................. 425,250
4,000 Nokia Oyj .................................. 869,000
24,000 Nortel Networks Corporation ................ 3,024,000
36,000 Scientific-Atlanta, Inc. ................... 2,283,750
22,000 Tellabs, Inc.(a) ........................... 1,385,656
6,000 Titan Corporation(a) ....................... 306,000
-------------
9,397,956
-------------
UTILITIES - 5.8%
14,000 AT&T Corporation ........................... 787,500
24,000 BellSouth Corporation ...................... 1,128,000
18,490 Duke Energy Corporation .................... 970,725
59,900 SBC Communications, Inc. ................... 2,515,800
18,000 US WEST, Inc. .............................. 1,307,250
-------------
6,709,275
-------------
TOTAL COMMON STOCKS - 95.6% (COST $52,234,641) $111,372,877
-------------
13
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS - 6.8% VALUE
--------------------------------------------------------------------------------
7,865,603 Firstar Stellar Treasury Fund (Cost $7,865,603) $ 7,865,603
-------------
TOTAL INVESTMENTS AT VALUE - 102.4%
(COST $60,100,244) ......................... $119,238,480
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.4%) (2,791,858)
-------------
NET ASSETS - 100.0% ........................... $116,446,622
============
(a) Non-income producing security.
See accompanying notes to financial statements.
14
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
PAR VALUE U.S. TREASURY AND AGENCY OBLIGATIONS - 30.3%
--------------------------------------------------------------------------------
U.S. TREASURY NOTES - 5.8%
$ 20,000 8.75%, due 08/15/2000 ...................... $ 20,212
50,000 8.50%, due 11/15/2000 ...................... 50,641
140,000 8.00%, due 05/15/2001 ...................... 142,319
125,000 7.875%, due 08/15/2001 ..................... 127,227
850,000 5.75%, due 04/30/2003 ...................... 833,000
750,000 5.875%, due 11/15/2005 ..................... 734,297
750,000 5.50%, due 02/15/2008 ...................... 715,312
-------------
2,623,008
-------------
FEDERAL FARM CREDIT BANK BONDS - 1.7%
500,000 6.00%, due 01/07/2008 ...................... 465,726
325,000 6.06%, due 05/28/2013 ...................... 294,537
-------------
760,263
-------------
FEDERAL HOME LOAN BANK BONDS - 5.7%
500,000 7.57%, due 08/19/2004 ...................... 508,702
500,000 6.045%, due 12/10/2004 ..................... 479,370
750,000 5.925%, due 04/09/2008 ..................... 692,728
500,000 5.52%, due 09/23/2008 ...................... 446,906
500,000 5.42%, due 09/23/2008 ...................... 443,766
-------------
2,571,472
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION BONDS - 4.7%
500,000 6.345%, due 11/01/2005 ..................... 482,823
895,000 7.44%, due 09/20/2006 ...................... 881,969
800,000 7.04%, due 01/09/2007 ...................... 777,006
-------------
2,141,798
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BONDS - 12.4%
500,000 6.63%, due 06/20/2005 ...................... 489,996
650,000 7.65%, due 10/06/2006 ...................... 642,975
500,000 7.36%, due 02/07/2007 ...................... 486,353
500,000 7.125%, due 3/15/2007 ...................... 499,564
400,000 7.70%, due 04/10/2007 ...................... 393,466
500,000 6.62%, due 06/25/2007 ...................... 486,013
500,000 7.16%, due 06/26/2007 ...................... 483,306
500,000 7.00%, due 07/17/2007 ...................... 482,930
750,000 6.08%, due 12/15/2010 ...................... 689,060
400,000 6.80%, due 08/27/2012 ...................... 380,208
600,000 6.875%, due 09/01/2012 ..................... 569,093
-------------
5,602,964
-------------
TOTAL U.S. TREASURY AND AGENCY OBLIGATIONS
(Cost $14,549,929) ......................... $ 13,699,505
-------------
15
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE MORTGAGE-BACKED SECURITIES - 15.8%
--------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 15.8%
$ 12,671 Pool #15032, 7.50%, due 02/15/2007 ......... $ 12,560
384,211 Pool #438434, 6.50%, due 01/15/2013 ........ 371,032
569,950 Pool #470177, 7.00%, due 03/15/2014 ........ 561,800
389,575 Pool #518403, 7.00%, due 09/15/2014 ........ 384,004
10,852 Pool #176413, 7.50%, due 09/15/2016 ........ 10,757
14,872 Pool #170784, 8.00%, due 12/15/2016 ........ 15,040
11,855 Pool #181540, 8.00%, due 02/15/2017 ........ 11,989
483,398 Pool #493659, 6.50%, due 12/15/2018 ........ 455,894
404,119 Pool #476695, 6.50%, due 10/15/2023 ........ 381,126
370,794 Pool #366710, 6.50%, due 02/15/2024 ........ 349,697
493,291 Pool #453826, 7.25%, due 09/15/2027 ........ 485,679
695,862 Pool #412360, 7.00%, due 11/15/2027 ........ 673,951
581,989 Pool #454162, 7.00%, due 05/15/2028 ........ 563,664
978,026 Pool #2617, 7.50%, due 07/20/2028 .......... 963,656
463,712 Pool #158794, 7.00%, due 09/15/2028 ........ 449,111
469,481 Pool #48760, 6.50%, due 12/15/2028 ......... 442,769
970,737 Pool #506618, 7.00%, due 03/15/2029 ........ 940,171
-------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $7,363,455) .......................... $ 7,072,900
-------------
================================================================================
PAR VALUE CORPORATE BONDS - 47.2% VALUE
--------------------------------------------------------------------------------
FINANCE - 22.9%
AmSouth Bancorp,
$ 550,000 7.75%, due 05/15/2004 ...................... $ 549,482
-------------
Banc One Corporation,
600,000 7.00%, due 07/15/2005 ...................... 580,922
500,000 6.875%, due 08/01/2006 ..................... 480,026
-------------
1,060,948
-------------
Bank of America Corporation,
496,000 8.375%, due 03/15/2002 ..................... 504,257
750,000 7.125%, due 03/01/2009 ..................... 727,602
-------------
1,231,859
-------------
Bear Stearns Company,
170,000 9.375%, due 06/01/2001 ..................... 173,348
-------------
Duke Capital Corporation,
750,000 7.50%, due 10/01/2009 ...................... 736,626
-------------
General Electric Capital Corporation,
100,000 7.24%, due 01/15/2002 ...................... 100,268
150,000 7.50%, due 03/15/2002 ...................... 151,054
-------------
251,322
-------------
J.P. Morgan & Company,
500,000 7.25%, due 01/15/2002 ...................... 498,152
500,000 6.00%, due 01/15/2009 ...................... 444,994
-------------
943,146
-------------
Merrill Lynch & Company, Inc.,
745,000 7.375%, due 08/17/2002 ..................... 742,989
1,000,000 7.00%, due 04/27/2008 ...................... 957,499
-------------
1,700,488
-------------
16
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS - 47.2% (CONTINUED) VALUE
--------------------------------------------------------------------------------
NationsBank,
$ 550,000 7.625%, due 04/15/2005 ..................... $ 548,578
-------------
Regions Financial Corporation,
350,000 7.80%, due 12/01/2002 ...................... 350,700
-------------
Salomon, Inc.,
507,000 7.50%, due 02/01/2003 ...................... 506,893
-------------
Sears Roebuck Acceptance Corporation,
700,000 6.00%, due 03/20/2003 ...................... 670,710
-------------
SouthTrust Bank of Alabama, N.A.,
665,000 7.00%, due 11/15/2008 ...................... 637,881
-------------
Transamerica Financial Corporation,
1,000,000 7.50%, due 03/15/2004 ...................... 986,990
-------------
TOTAL FINANCE CORPORATE BONDS ................. 10,348,971
-------------
INDUSTRIAL - 19.4%
BP America, Inc.,
265,000 8.50%, due 04/15/2001 ...................... 268,815
-------------
Coca-Cola Company,
600,000 6.625%, due 08/01/2004 ..................... 582,636
-------------
Conoco, Inc.,
750,000 6.35%, due 04/15/2009 ...................... 698,798
-------------
duPont (E.I.) de Nemours & Company,
150,000 9.15%, due 04/15/2000 ...................... 150,086
425,000 6.75%, due 10/15/2002 ...................... 420,345
-------------
570,431
-------------
Ford Motor Company,
1,000,000 7.25%, due 10/01/2008 ...................... 985,710
-------------
General Motors Corporation,
565,000 7.10%, due 03/15/2006 ...................... 554,726
-------------
Hanson Overseas,
1,100,000 7.375%, due 01/15/2003 ..................... 1,090,914
-------------
International Business Machines Corporation,
1,000,000 7.25%, due 11/01/2002 ...................... 1,003,604
-------------
Kimberly-Clark Corporation,
240,000 8.625%, due 05/01/2001 ..................... 243,930
-------------
Mobil Corporation,
100,000 8.375%, due 02/12/2001 ..................... 101,095
-------------
Philip Morris Companies, Inc.,
700,000 7.125%, due 10/01/2004 ..................... 657,017
-------------
Raytheon Company,
800,000 6.50%, due 07/15/2005 ...................... 754,045
-------------
17
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS - 47.2% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Wal-Mart Stores, Inc.,
$ 170,000 9.10%, due 07/15/2000 ...................... $ 171,000
100,000 8.625%, due 04/01/2001 ..................... 101,492
1,000,000 7.50%, due 05/15/2004 ...................... 1,015,667
-------------
1,288,159
-------------
TOTAL INDUSTRIAL CORPORATE BONDS .............. 8,799,880
-------------
UTILITY - 4.9%
AT&T Corporation,
1,000,000 6.00%, due 03/15/2009 ...................... 903,787
-------------
BellSouth Corporation,
250,000 7.75%, due 02/15/10 ........................ 253,850
-------------
Emerson Electric Company,
587,000 6.30%, due 11/01/2005 ...................... 558,380
-------------
Scana Corporation,
500,000 6.05%, due 01/13/2003 ...................... 482,744
-------------
TOTAL UTILITY CORPORATE BONDS ................. 2,198,761
-------------
TOTAL CORPORATE BONDS
(Amortized Cost $22,123,380) ............... $ 21,347,612
-------------
================================================================================
PAR VALUE MUNICIPAL OBLIGATIONS - 2.2% VALUE
--------------------------------------------------------------------------------
Alabama State Public School & College Auth.,
$ 1,000,000 7.15%, due 09/01/2009 (Cost $972,490) ...... $ 977,229
-------------
================================================================================
SHARES MONEY MARKETS - 3.1% VALUE
--------------------------------------------------------------------------------
1,415,617 Firstar Stellar Treasury Fund (Cost $1,415,617) $ 1,415,617
-------------
TOTAL INVESTMENTS AT VALUE - 98.6%
(COST $46,424,871) ......................... $ 44,512,863
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.4% .. 642,928
-------------
NET ASSETS - 100.0% ........................... $ 45,155,791
============
See accompanying notes to financial statements.
18
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% VALUE
--------------------------------------------------------------------------------
Alabama Mental Health Finance Auth. Special Tax,
$ 300,000 5.00%, due 05/01/2006 ...................... $ 299,988
-------------
Alabama Special Care Facilities Financing Auth. Rev.,
400,000 5.375%, due 11/01/2012 ..................... 401,588
-------------
Alabama State, GO,
100,000 5.70%, due 12/01/2002 ...................... 102,522
-------------
Alabama State Industrial Access Road & Bridge Corp., GO,
100,000 5.25%, due 06/01/2003 ...................... 100,862
-------------
Alabama State Mun. Elec. Auth. Power Supply Rev.,
150,000 5.625%, due 09/01/2000 ..................... 150,856
400,000 6.50%, due 09/01/2005, prerefunded
09/01/2001 at 101 ....................... 414,708
340,000 5.75%, due 09/01/2001 ...................... 344,991
-------------
910,555
-------------
Alabama State Public School & College Auth. Rev.,
100,000 4.40%, due 12/01/2000 ...................... 100,190
205,000 5.00%, due 12/01/2005 ...................... 205,588
250,000 5.25%, due 11/01/2005 ...................... 253,852
200,000 5.125%, due 11/01/2010 ..................... 199,586
300,000 5.00%, due 11/01/2012 ...................... 291,261
225,000 5.125%, due 11/01/2013 ..................... 219,319
-------------
1,269,796
-------------
Alabama Water Pollution Control Rev.,
190,000 6.25%, due 08/15/2004 ...................... 199,971
-------------
Anniston, AL, GO,
250,000 5.50%, due 01/01/2004 ...................... 255,920
-------------
Anniston, AL, Regional Medical Center Board Hospital Rev.,
20,000 7.375%, due 07/01/2006, ETM ................ 21,211
-------------
Athens, AL, School Warrants,
335,000 5.05%, due 08/01/2015 ...................... 318,096
-------------
Auburn University, Alabama, Rev.,
150,000 5.20%, due 06/01/2004 ...................... 151,893
325,000 5.25%, due 04/01/2005 ...................... 329,417
-------------
481,310
-------------
Baldwin Co., AL, GO,
200,000 5.85%, due 08/01/2003 ...................... 206,508
400,000 5.00%, due 02/01/2007 ...................... 399,056
200,000 4.55%, due 02/01/2009 ...................... 181,604
-------------
787,168
-------------
Baldwin Co., AL, Board of Education Rev.,
300,000 5.90%, due 12/01/2001 ...................... 303,279
-------------
Birmingham, AL, GO,
100,000 5.80%, due 04/01/2002 ...................... 102,115
200,000 5.90%, due 04/01/2003 ...................... 206,170
-------------
308,285
-------------
19
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Birmingham, AL, Industrial Water Board Rev.,
$ 100,000 5.00%, due 03/01/2001 ...................... $ 100,700
100,000 6.00%, due 07/01/2007 ...................... 106,197
-------------
206,897
-------------
Birmingham, AL, Medical Clinic Board Rev.,
60,000 7.30%, due 07/01/2005, ETM ................. 63,625
-------------
Birmingham, AL, Waterworks & Sewer Board Rev.,
50,000 5.90%, due 01/01/2003 ...................... 51,914
400,000 6.15%, due 01/01/2006 ...................... 416,976
-------------
468,890
-------------
Birmingham-Southern College, AL, Private Education
Bldg. Auth. Rev.,
500,000 5.10%, due 12/01/2012 ...................... 480,215
-------------
DCH Health Care Auth. of Alabama Rev.,
55,000 5.00%, due 06/01/2004 ...................... 54,976
-------------
Decatur, AL, GO,
300,000 5.00%, due 06/01/2009 ...................... 298,020
-------------
Decatur, AL, Water Rev.,
100,000 5.00%, due 05/01/2014 ...................... 95,233
-------------
Dothan, AL, GO,
500,000 5.50%, due 09/01/2014 ...................... 504,620
-------------
Fairhope, AL, Public Improvements Warrants,
295,000 5.10%, due 06/01/2014 ...................... 281,126
-------------
Fairhope, AL, Utility Rev.,
200,000 5.10%, due 12/01/2008 ...................... 200,150
-------------
Florence, AL, School Warrants,
200,000 4.65%, due 12/01/2012 ...................... 185,208
400,000 5.75%, due 09/01/2015 ...................... 406,404
-------------
591,612
-------------
Greenville, AL, GO,
300,000 5.10%, due 12/01/2009 ...................... 299,751
-------------
Hoover, AL, Board of Education Special Tax,
200,000 6.625%, due 02/01/2010, prerefunded
02/01/2001 at 102 ....................... 207,812
-------------
Hoover, AL, Board of Education, GO,
400,000 6.00%, due 02/15/2006 ...................... 420,524
-------------
Houston Co., AL, GO,
250,000 5.00%, due 07/01/2002 ...................... 251,512
300,000 5.60%, due 10/15/2014 ...................... 305,352
-------------
556,864
-------------
Huntsville, AL, GO,
115,000 5.15%, due 08/01/2000 ...................... 115,399
100,000 5.20%, due 11/01/2000 ...................... 100,630
500,000 5.50%, due 11/01/2002 ...................... 509,845
100,000 5.90%, due 11/01/2005 ...................... 104,589
250,000 5.25%, due 11/01/2011 ...................... 250,592
300,000 5.40%, due 02/01/2010 ...................... 303,714
-------------
1,384,769
-------------
20
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Huntsville, AL, Electric Systems Rev.,
$ 150,000 6.10%, due 12/01/2000 ...................... $ 151,866
150,000 5.00%, due 12/01/2003 ...................... 150,888
250,000 4.80%, due 12/01/2012 ...................... 235,210
-------------
537,964
-------------
Huntsville, AL, Water Systems Rev.,
150,000 5.15%, due 05/01/2004 ...................... 151,587
150,000 5.25%, due 05/01/2005 ...................... 151,694
200,000 4.70%, due 11/01/2013 ...................... 183,100
-------------
486,381
-------------
Jefferson Co., AL, GO,
150,000 5.55%, due 04/01/2002 ...................... 152,206
100,000 5.00%, due 04/01/2004 ...................... 100,179
-------------
252,385
-------------
Jefferson Co., AL, Board of Education Capital
Outlay Warrants,
300,000 5.70%, due 02/15/2011 ...................... 315,144
-------------
Jefferson Co., AL, Sewer Rev.,
140,000 5.15%, due 09/01/2002 ...................... 141,471
50,000 5.50%, due 09/01/2003, ETM ................. 51,136
300,000 5.75%, due 09/01/2005 ...................... 310,845
-------------
503,452
-------------
Lee Co., AL, GO,
300,000 5.50%, due 02/01/2007 ...................... 307,872
-------------
Madison Co., AL, Board of Education Capital
Outlay Tax Antic. Warrants,
175,000 5.20%, due 09/01/2004 ...................... 179,611
250,000 5.10%, due 09/01/2011 ...................... 245,495
-------------
425,106
-------------
Madison, AL, Warrants,
325,000 5.55%, due 04/01/2007 ...................... 334,675
200,000 4.40%, due 02/01/2011 ...................... 182,148
400,000 4.85%, due 02/01/2013 ...................... 376,120
-------------
892,943
-------------
Mobile Co., AL, Board of Education Capital
Outlay Warrants,
400,000 5.00%, due 03/01/2008 ...................... 398,176
-------------
Mobile Co., AL, Gas Tax Antic. Warrants,
100,000 4.50%, due 02/01/2003 ...................... 98,844
-------------
Mobile, AL, GO,
200,000 5.40%, due 08/15/2000 ...................... 200,952
25,000 6.30%, due 08/01/2001 ...................... 25,590
25,000 6.25%, due 08/01/2001 ...................... 25,574
275,000 6.20%, due 02/15/2007, ETM ................. 292,496
180,000 5.75%, due 02/15/2016 ...................... 182,601
-------------
727,213
-------------
Mobile, AL, Water & Sewer Commissioners Rev.,
55,000 6.30%, due 01/01/2003 ...................... 57,034
-------------
Montgomery Co., AL, GO,
100,000 5.20%, due 11/01/2006 ...................... 100,846
-------------
Montgomery, AL, GO,
200,000 4.70%, due 05/01/2002 ...................... 199,918
500,000 5.10%, due 10/01/2008 ...................... 501,025
-------------
700,943
-------------
21
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Montgomery, AL, Waterworks & Sanitation Rev.,
$ 200,000 5.85%, due 03/01/2003 ...................... $ 205,042
400,000 5.60%, due 09/01/2009 ...................... 411,956
-------------
616,998
-------------
Mountain Brook, AL, Board of Education Capital
Outlay Warrants,
405,000 4.80%, due 02/15/2011 ...................... 387,241
-------------
Muscle Shoals, AL, GO,
400,000 5.60%, due 08/01/2010 ...................... 411,972
-------------
Opelika, AL, GO,
100,000 4.60%, due 03/01/2003 ...................... 99,458
100,000 5.30%, due 07/01/2003 ...................... 101,570
-------------
201,028
-------------
Scottsboro, AL, Waterworks Sewer & Gas Rev.,
200,000 4.35%, due 08/01/2011 ...................... 180,372
-------------
Shelby Co., AL, GO,
205,000 5.20%, due 08/01/2000 ...................... 205,744
50,000 5.35%, due 08/01/2001 ...................... 50,544
-------------
256,288
-------------
Shelby Co., AL, Hospital Board Rev.,
35,000 6.60%, due 02/01/2001, ETM ................. 35,666
25,000 6.60%, due 02/01/2002, ETM ................. 25,801
40,000 6.60%, due 02/01/2003, ETM ................. 41,818
-------------
103,285
-------------
Tuscaloosa, AL, Board of Education Special
Tax Warrants,
75,000 5.70%, due 02/15/2005 ...................... 77,358
125,000 6.00%, due 02/15/2009 ...................... 129,911
300,000 4.85%, due 02/15/2013 ...................... 281,844
-------------
489,113
-------------
Tuscaloosa, AL, Board of Education, GO,
100,000 5.10%, due 02/01/2004 ...................... 100,823
300,000 4.625%, due 08/01/2008 ..................... 287,652
-------------
388,475
-------------
University of Alabama General Fee Series A Rev.,
50,000 5.00%, due 11/01/2000 ...................... 50,248
240,000 5.10%, due 10/01/2002 ...................... 242,239
400,000 5.25%, due 06/01/2010 ...................... 402,344
100,000 5.375%, due 06/01/2013 ..................... 100,287
-------------
795,118
-------------
Vestavia Hills, AL, Board of Education Capital
Outlay Rev.,
55,000 5.25%, due 02/01/2004 ...................... 55,857
-------------
Vestavia Hills, AL, Warrants,
125,000 4.90%, due 04/01/2005 ...................... 124,639
-------------
TOTAL ALABAMA FIXED RATE REVENUE AND GENERAL
OBLIGATION (GO) BONDS - 94.1%
(Cost $21,716,842) ......................... $ 21,690,324
-------------
22
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS - 4.7%
--------------------------------------------------------------------------------
1,075,857 Firstar Tax-Free Fund (Cost $1,075,857) ....... $ 1,075,857
-------------
TOTAL INVESTMENTS AT VALUE - 98.8%
(COST $22,792,699) ......................... $ 22,766,181
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.2% .. 282,159
-------------
NET ASSETS - 100.0% ........................... $ 23,048,340
============
ETM - Escrowed to maturity.
See accompanying notes to financial statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Government Street Equity Fund, The Government Street Bond Fund, and The
Alabama Tax Free Bond Fund (the Funds) are each a no-load series of The
Williamsburg Investment Trust (the Trust). The Trust, an open-end management
investment company registered under the Investment Company Act of 1940, was
organized as a Massachusetts business trust on July 18, 1988.
The Government Street Equity Fund's investment objective is to seek capital
appreciation through the compounding of dividends and capital gains, both
realized and unrealized, on its investments in common stocks.
The Government Street Bond Fund's investment objectives are to preserve capital,
to provide current income and to protect the value of the portfolio against the
effects of inflation.
The Alabama Tax Free Bond Fund's investment objectives are to provide current
income exempt from both federal income taxes and the personal income taxes of
Alabama and to preserve capital.
The following is a summary of the Funds' significant accounting policies:
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 which are traded over-the-counter
are valued at the last sales price, if available, otherwise, at the last quoted
bid price. Securities traded on a national stock exchange are valued based upon
the closing price on the principal exchange where the security is traded. It is
expected that fixed income securities will ordinarily be traded in the
over-the-counter market, and common stocks will ordinarily be traded on a
national securities exchange, but may also be traded in the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service.
Repurchase agreements - The Funds may enter into joint repurchase agreements
with other funds within the Trust. The joint repurchase agreement, which is
collateralized by U.S. Government obligations, is valued at cost which, together
with accrued interest, approximates market value. At the time the Funds enter
into the joint repurchase agreement, the Funds take possession of the underlying
securities and the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement. In addition, each Fund actively monitors and
seeks additional collateral, as needed.
Share valuation - The net asset value per share of each Fund is calculated daily
by dividing the total value of each Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of each Fund is equal to the net asset value per share.
Investment income - Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized in accordance with income tax regulations.
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 monthly to shareholders of The Government Street Bond
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. Income dividends and capital gain
distributions are determined in accordance with income tax regulations.
24
<PAGE>
Security transactions - Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at 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 - It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies,
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
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% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of each Fund as of March 31, 2000:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
GOVERNMENT GOVERNMENT ALABAMA
STREET STREET TAX FREE
EQUITY FUND BOND FUND BOND FUND
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized appreciation ............ $ 60,272,476 $ 87,338 $ 233,036
Gross unrealized depreciation ............ (1,183,194) (1,999,346) (329,106)
------------ ------------ ------------
Net unrealized appreciation (depreciation) $ 59,089,282 $ (1,912,008) $ (96,070)
============ ============ ============
Federal income tax cost .................. $ 60,149,198 $ 46,424,871 $ 22,862,251
============ ============ ============
------------------------------------------------------------------------------------------
</TABLE>
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for The Government Street Equity Fund and The
Alabama Tax Free Bond Fund is due to certain timing differences in the
recognition of capital losses under income tax regulations and generally
accepted accounting principles.
As of March 31, 2000, The Government Street Bond Fund and The Alabama Tax Free
Bond Fund had capital loss carryforwards for federal income tax purposes of
$760,308 and $176,717, respectively, which expire through the year 2008. In
addition, The Government Street Bond Fund had net realized capital losses of
$145,238 during the period from November 1, 1999 through March 31, 2000, which
are treated for federal income tax purposes as arising during the Fund's tax
year ending March 31, 2001. These capital loss carryforwards and "post-October"
losses may be utilized in future years to offset net realized capital gains
prior to distributing such gains to shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 2000, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $22,178,843 and $16,307,402, respectively, for The Government Street
Equity Fund, $11,563,587 and $7,842,909, respectively, for The Government Street
Bond Fund, and $5,922,774 and $3,884,720, respectively, for The Alabama Tax Free
Bond Fund.
25
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by T. Leavell & Associates, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, The Government Street Equity Fund pays the
Adviser a fee, which is computed and accrued daily and paid monthly, at an
annual rate of .60% of its average daily net assets up to $100 million and .50%
of such assets in excess of $100 million. The Government Street Bond Fund pays
the Adviser a fee at an annual rate of .50% of its average daily net assets up
to $100 million and .40% of such net assets in excess of $100 million. The
Alabama Tax Free Bond Fund pays the Adviser a fee at an annual rate of .35% of
its average daily net assets up to $100 million and .25% of such net assets in
excess of $100 million.
The Adviser currently intends to limit the total operating expenses of The
Alabama Tax Free Bond Fund to .65% of its average daily net assets. Accordingly,
the Adviser voluntarily waived $15,400 of its investment advisory fees for the
Fund during the year ended March 31, 2000.
Certain Trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement between the Trust and
Integrated Fund Services, Inc. (IFS), IFS provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Funds. For these services, IFS receives a monthly fee from The
Government Street Equity Fund at an annual rate of .20% of its average daily net
assets up to $25 million; .175% of the next $25 million of such assets; and .15%
of such net assets in excess of $50 million. From The Government Street Bond
Fund, IFS receives a monthly fee of .075% of its average daily net assets up to
$200 million and .05% of such assets in excess of $200 million. From The Alabama
Tax Free Bond Fund, IFS receives a monthly fee of .15% of its average daily net
assets up to $200 million and .10% of such assets in excess of $200 million. The
fee for each Fund is subject to a $2,000 monthly minimum. In addition, each Fund
pays IFS 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 IFS.
4. FEDERAL TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
In accordance with federal tax requirements, the following provides shareholders
with information concerning distributions from net realized gains, if any, made
by the Funds during the year ended March 31, 2000. On March 31, 2000, The
Government Street Equity Fund declared and paid a long-term capital gain
distribution of $0.4190 per share. As required by federal regulations,
shareholders will receive notification of their portion of a Fund's taxable
capital gain distribution, if any, paid during the 2000 calendar year early in
2001.
In accordance with federal tax requirements, The Alabama Tax Free Bond Fund
designates its respective dividends paid from net investment income during the
year ended March 31, 2000, as "exempt-interest dividends."
26
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
================================================================================
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statements of assets and liabilities of
The Government Street Equity Fund, The Government Street Bond Fund and The
Alabama Tax Free Bond Fund, (each a series of The Williamsburg Investment
Trust), including the portfolios of investments, as of March 31, 2000, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 2000 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Government Street Equity Fund, The Government Street Bond Fund and The Alabama
Tax Free Bond Fund, as of March 31, 2000, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended and their financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 28, 2000
27
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
------------------------------
No Load Mutual Funds
INVESTMENT ADVISER
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, AL 36633
ADMINISTRATOR
Integrated Fund Services, Inc.
P.O. Box 5354
Cincinnati, OH 45201-5354
1-800-443-4249
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
BOARD OF TRUSTEES
Richard Mitchell, President
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Erwin H. Will, Jr.
Samuel B. Witt, III
PORTFOLIO MANAGERS
Thomas W. Leavell,
The Government Street Equity Fund
Mary Shannon Hope,
The Government Street Bond Fund
Timothy S. Healey,
The Alabama Tax Free Bond Fund
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE ALABAMA
TAX FREE BOND FUND
AUGUST 1, 2000
REVISED NOVEMBER 6, 2000
A SERIES OF
WILLIAMSBURG INVESTMENT TRUST
135 MERCHANT STREET, SUITE 230
CINCINNATI, OHIO 45246
TELEPHONE 1-866-738-1125
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES........................................... 2
INVESTMENT LIMITATIONS....................................................... 10
TRUSTEES AND OFFICERS........................................................ 12
INVESTMENT ADVISER........................................................... 15
ADMINISTRATOR................................................................ 16
OTHER SERVICES............................................................... 17
BROKERAGE.................................................................... 17
SPECIAL SHAREHOLDER SERVICES................................................. 18
PURCHASE OF SHARES........................................................... 19
REDEMPTION OF SHARES......................................................... 20
NET ASSET VALUE DETERMINATION................................................ 20
ALLOCATION OF TRUST EXPENSES................................................. 21
ADDITIONAL TAX INFORMATION................................................... 21
CAPITAL SHARES AND VOTING.................................................... 22
CALCULATION OF PERFORMANCE DATA.............................................. 24
FINANCIAL STATEMENTS AND REPORTS............................................. 26
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Alabama Tax Free Bond Fund (the
"Fund") dated August 1, 2000. The Prospectus may be obtained from the Fund, at
the address and phone number shown above, at no charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
MUNICIPAL OBLIGATIONS. Municipal Obligations include bonds, notes and commercial
paper issued by or on behalf of states, territories and possessions of the
United States and the District of Columbia and their political subdivisions,
agencies or instrumentalities, the interest on which is exempt from federal
income taxes (without regard to whether the interest thereon is also exempt from
the personal income taxes of any state). Municipal Obligation bonds are issued
to obtain funds for various public purposes, including the construction of a
wide range of public facilities such as bridges, highways, housing, hospitals,
mass transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligation bonds may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses, and
obtaining funds to loan to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide privately-operated
housing facilities, airport, mass transit or port facilities, sewage disposal,
solid waste disposal or hazardous waste treatment or disposal facilities and
certain local facilities for water supply, gas or electricity. Such obligations
are included within the term Municipal Obligations if the interest paid thereon
qualifies as exempt from federal income tax. Other types of industrial
development bonds, the proceeds of which are used for the construction,
equipment, repair or improvement of privately operated industrial or commercial
facilities, may constitute Municipal Obligations, although the current federal
tax laws place substantial limitations on the size of such issues.
The two principal classifications of Municipal Obligation bonds are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its good faith, credit and taxing power for the payment of
principal and interest. The payment of the principal of and interest on such
bonds may be dependent upon an appropriation by the issuer's legislative body.
The characteristics and enforcement of general obligation bonds vary according
to the law applicable to the particular issuer. Revenue bonds are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other specific revenue
source. Industrial development bonds which are Municipal Obligations are in most
cases revenue bonds and do not generally constitute the pledge of the credit of
the issuer of such bonds.
Municipal Obligations also include participations in municipal leases. These are
undivided interests in a portion of an obligation in the form of a lease or
installment purchase which is issued by state and local governments to acquire
equipment and facilities. Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds. Leases and
installment purchase or conditional sale contracts (which normally provide for
title to the leased asset to pass eventually to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations are deemed to be inapplicable because of
the inclusion in many leases or contracts of "non-appropriation" clauses
2
<PAGE>
that provide that the governmental issuer has no obligation to make future
payments under the lease or contract unless money is appropriated for such
purpose by the appropriate legislative body on a yearly or other periodic basis.
Accordingly, a risk peculiar to these municipal lease obligations is the
possibility that a governmental issuer will not appropriate funds for lease
payments. Although the obligations will be secured by the leased equipment or
facilities, the disposition of the property in the event of non-appropriation or
foreclosure might, in some cases, prove difficult. There are, of course,
variations in the security of Municipal Obligations, both within a particular
classification and between classifications, depending on numerous factors.
Municipal Obligation notes generally are used to provide for short-term capital
needs and generally have maturities of one year or less. Municipal Obligation
notes include:
1. Tax Anticipation Notes. Tax Anticipation Notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various tax revenues, such as income, sales, use and business
taxes, and are payable from these specific future taxes.
2. Revenue Anticipation Notes. Revenue Anticipation Notes are issued in
expectation of receipt of other kinds of revenue, such as federal revenues
available under Federal Revenue Sharing Programs.
3. Bond Anticipation Notes. Bond Anticipation Notes are issued to provide
interim financing until long-term bond financing can be arranged. In most cases,
the long-term bonds then provide the money for the repayment of the Notes.
Issues of commercial paper typically represent short-term, unsecured, negotiable
promissory notes. These obligations are issued by agencies of state and local
governments to finance seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general revenues of
municipalities or are refinanced with long-term debt. In most cases, Municipal
Obligation commercial paper is backed by letters of credit, lending agreements,
note repurchase agreements or other credit facility agreements offered by banks
or other institutions.
The yields on Municipal Obligations are dependent on a variety of factors,
including general market conditions, supply and demand and general conditions of
the Municipal Obligation market, size of a particular offering, the maturity of
the obligation and rating (if any) of the issue.
MUNICIPAL BOND RATINGS. The ratings of the nationally recognized statistical
rating organizations (Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, Fitch Investors Service and Duff & Phelps) represent each firm's opinion
as to the quality of various Municipal Obligations. It should be emphasized,
however, that ratings are not absolute standards of quality. Consequently,
Municipal Obligations with the same maturity, coupon and rating may have
different yields while Municipal Obligations of the same maturity and coupon
with different ratings may have the same yield. The descriptions offered by each
individual rating firm may differ slightly, but the following offers a
description by Moody's Investors Service, Inc. of each rating category:
3
<PAGE>
Aaa or AAA: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa or AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat greater than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
FACTORS AFFECTING ALABAMA MUNICIPAL OBLIGATIONS. The following information
regarding certain economic, financial and legal matters pertaining to Alabama is
drawn primarily from official statements relating to securities offerings of
Alabama and other publicly available documents, dated as of various dates prior
to the date of this Statement of Additional Information and do not purport to be
complete descriptions. Data regarding the financial condition of Alabama State
government may not be relevant to Municipal Obligations issued by political
subdivisions of Alabama. Moreover, the general economic conditions discussed may
or may not affect issuers of the obligations.
REVIEW OF 1999. Consumer spending and a strong demand for both commercial and
residential construction drove the state's economic growth in 1999. The effects
of short term interest rate cuts by the Federal Reserve Bank in 1998 were very
evident in 1999 by providing a strong incentive for consumers to spend.
EMPLOYMENT. In contrast to a fairly steady increase in new jobs for the U.S.
economy, Alabama job growth declined sharply in 1999 compared to the previous
year. About 39,700 nonagricultural jobs were created in 1998; job growth was
about 22,000 for 1999. The primary reason behind this decline was a significant
loss of manufacturing jobs in the state. Job losses in manufacturing amounted to
about 7,000 jobs with most of the losses in non-durable goods producing
industries.
Several other reasons also accounted for the job losses in manufacturing. A
decline in the global demand for exports, intense competition among
manufacturing firms, the strong value of the U.S. dollar, and over-capacity kept
manufacturing industries from adding many new workers. Despite job losses in
manufacturing industries and a slowing economy during the latter half of the
year, the state's unemployment rate averaged 4.4 percent.
4
<PAGE>
Four major sectors-services, retail trade, construction, and state and local
government-accounted for most of the statewide job growth. These sectors
together created almost 29,500 new jobs, mostly in metropolitan areas. However,
due largely to job losses in nonmetro area counties, the state's net job growth
was 22,000.
GROSS STATE PRODUCT (GSP). Alabama's GSP, the total value of goods and services
produced in the state, has not kept pace with other southeastern states. In
fact, Alabama has the slowest growing GSP among all southeastern states
including Mississippi. Real GSP grew by approximately 3.5 percent in 1999 to a
level in excess of $100 billion. The primary drivers for this growth were
consumer spending and strong demand for both commercial and residential
construction.
INCOME. During the last three years, income growth in the United States has been
faster than in Alabama. In 1997, 1998, and 1999, total personal income in
Alabama has increased by 5.0, 4.7, and 3.9 percent, respectively. Income growth
in the same years for the United States was 6.1, 5.9, and 5.7 percent,
respectively. Primary reasons for the slower income growth rate are the lack of
employment opportunities in nonmetropolitan area counties and the concentration
of jobs in the retailing sector of metropolitan areas. The fastest growing
sector has been retail trade. Average retail trade wages are significantly lower
than average manufacturing wages.
STATE TAX REVENUES. For fiscal year 1998-99 (ended September 30), tax revenues
increased by 4.5 percent over the previous year to $5,684 million. Total sales
tax revenues increased by 5.3 percent, reaching $1,482 million, an improvement
over the 4.6 percent increase in the previous fiscal year. Enthusiastic consumer
spending accounted for the growth in sales tax revenues. Income tax revenues did
not increase correspondingly.
EXPORTS. Exports from Alabama account for approximately 7 percent of GSP.
Exports rose slightly in the second half of 1999, after a decline of 1.4 percent
in the first half of the year. For the year, exports were estimated at $7.1
billion, an increase of about 1.5 percent over 1998. During the first half of
1999, Alabama exports to Japan declined by 12.9 percent, and exports to Mexico
declined by 21.1 percent.
Alabama's five largest trading partners in 1999 were Canada, Japan, Germany,
Mexico, and the United Kingdom. Exports to these five countries accounted for
almost 57 percent of total state exports. Transportation equipment (which
includes Mercedes and related suppliers) was the leading export commodity and
increased by almost 40 percent in the first half of 1999.
FORECAST 2000. Economic growth in Alabama is expected to be slower in 2000. GSP
will grow by 3.1 percent and the state will add about 18,000 new jobs. Most job
growth will be in retailing, services, and construction. Employment in
manufacturing and mining will decline slightly or remain unchanged, with
variations in industry growth rates. Income growth will be modest, around 3.7
percent, constrained by an increase in unemployment in rural areas, pressures on
manufacturing industries to cut costs, and intense competition in both
manufacturing and retail sectors.
5
<PAGE>
INDUSTRIAL REVENUE BONDS. The Fund may invest from time to time a portion of the
Fund's assets in industrial revenue bonds (referred to under current tax law as
private activity bonds), and also may invest a portion of the Fund's assets in
revenue bonds issued for housing, including multi-family housing, health care
facilities or electric utilities, at times when the relative value of issues of
such a type is considered, in the judgment of the Adviser, to be more favorable
than that of other available types of issues, taking into consideration the
particular restrictions on investment flexibility arising from the investment
objective of the Fund of providing current income exempt from personal income
taxes of Alabama (as well as federal income taxes). Therefore, investors should
also be aware of the risks which these investments may entail. Industrial
revenue bonds are issued by various state and local agencies to finance various
projects.
Housing revenue bonds typically are issued by a state, county or local housing
authority and are secured only by the revenues of mortgages originated by the
authority using the proceeds of the bond issue. Because of the impossibility of
precisely predicting demand for mortgages from the proceeds of such an issue,
there is a risk that the proceeds of the issue will be in excess of demand,
which would result in early retirement of the bonds by the issuer. Moreover,
such housing revenue bonds depend for their repayment upon the cash flow from
the underlying mortgages, which cannot be precisely predicted when the bonds are
issued. Any difference in the actual cash flow from such mortgages from the
assumed cash flow could have an adverse impact upon the ability of the issuer to
make scheduled payments of principal and interest on the bonds, or could result
in early retirement of the bonds. Additionally, such bonds depend in part for
scheduled payments of principal and interest upon reserve funds established from
the proceeds of the bonds, assuming certain rates of return on investment of
such reserve funds. If the assumed rates of return are not realized because of
changes in interest rate levels or for other reasons, the actual cash flow for
scheduled payments of principal and interest on the bonds may be inadequate. The
financing of multi-family housing projects is affected by a variety of factors,
including satisfactory completion of construction within cost constraints, the
achievement and maintenance of a sufficient level of occupancy, sound management
of the developments, timely and adequate increases in rents to cover increases
in operating expenses, including taxes, utility rates and maintenance costs,
changes in applicable laws and governmental regulations and social and economic
trends.
Electric utilities face problems in financing large construction programs in an
inflationary period, cost increases and delay occasioned by environmental
considerations (particularly with respect to nuclear facilities), difficulty in
obtaining fuel at reasonable prices, the cost of competing fuel sources,
difficulty in obtaining sufficient rate increases and other regulatory problems,
the effect of energy conservation and difficulty of the capital market to absorb
utility debt.
Health care facilities include life care facilities, nursing homes and
hospitals. Life care facilities are alternative forms of long-term housing for
the elderly which offer residents the independence of condominium life style
and, if needed, the comprehensive care of nursing home services. Bonds to
finance these facilities have been issued by various state industrial
development authorities. Because the bonds are secured only by the revenues of
each facility, and not by state or local government tax payments, they are
subject to a wide variety of risks. Primarily, the projects must maintain
adequate occupancy levels to be able to provide revenues adequate to
6
<PAGE>
maintain debt service payments. Moreover, in the case of life care facilities,
because a portion of housing, medical care and other services may be financed by
an initial deposit, there may be risk if the facility does not maintain adequate
financial reserves to secure estimated actuarial liabilities. The ability of
management to accurately forecast inflationary cost pressures weighs importantly
in this process. The facilities may also be affected by regulatory cost
restrictions applied to health care delivery in general, particularly state
regulations or changes in Medicare and Medicaid payments or qualifications, or
restrictions imposed by medical insurance companies. They may also face
competition from alternative health care or conventional housing facilities in
the private or public sector. Hospital bond ratings are often based on
feasibility studies which contain projections of expenses, revenues and
occupancy levels. A hospital's gross receipts and net income available to
service its debt are influenced by demand for hospital services, the ability of
the hospital to provide the services required, management capabilities, economic
developments in the service area, efforts by insurers and government agencies to
limit rates and expenses, confidence in the hospital, service area economic
developments, competition, availability and expense of malpractice insurance,
Medicaid and Medicare funding, and possible federal legislation limiting the
rates of increase of hospital charges.
The Fund may also invest in bonds for industrial and other projects, such as
sewage or solid waste disposal or hazardous waste treatment facilities.
Financing for such projects will be subject to inflation and other general
economic factors as well as construction risks including labor problems,
difficulties with construction sites and the ability of contractors to meet
specifications in a timely manner. Because some of the materials, processes and
wastes involved in these projects may include hazardous components, there are
risks associated with their production, handling and disposal.
VARIABLE RATE SECURITIES. The Fund may invest in tax-exempt securities that bear
interest at rates which are adjusted periodically to market rates. The market
value of fixed coupon securities fluctuates with changes in prevailing interest
rates, increasing in value when interest rates decline and decreasing in value
when interest rates rise. The value of variable rate securities, however, is
less affected by changes in prevailing interest rates because of the periodic
adjustment of their coupons to a market rate. The shorter the period between
adjustments, the smaller the impact of interest rate fluctuations on the value
of these securities. The market value of tax exempt variable rate securities
usually tends toward par (100% of face value) at interest rate adjustment time.
PUT BONDS. The Fund may invest in tax-exempt securities (including securities
with variable interest rates) which may be redeemed or sold back (put) to the
issuer of the security or a third party at face value prior to stated maturity.
This type of security will normally trade as if maturity is the earlier put
date, even though stated maturity is longer.
ZERO COUPON BONDS. Municipal Obligations in which the Fund may invest also
include zero coupon bonds and deferred interest bonds. Zero coupon bonds and
deferred interest bonds are debt obligations which are issued at a significant
discount from face value. While zero coupon bonds do not require the periodic
payment of interest, deferred interest bonds provide for a period of delay
before the regular payment of interest begins. The discount approximates the
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<PAGE>
total amount of interest the bonds will accrue and compound over the period
until maturity or the first interest payment date at a rate of interest
reflecting the market rate of the security at the time of issuance. Zero coupon
bonds and deferred interest bonds benefit the issuer by mitigating its need for
cash to meet debt service, but they also require a higher rate of return to
attract investors who are willing to defer receipt of such cash. Such
investments may experience greater volatility in market value than debt
obligations which make regular payments of interest. The Fund will accrue income
on such investments for tax and accounting purposes, which is distributable to
shareholders.
MUNICIPAL LEASE OBLIGATIONS. The Fund may also invest in municipal lease
obligations, installment purchase contract obligations, and certificates of
participation in such obligations (collectively, "lease obligations"). A lease
obligation does not constitute a general obligation of the municipality for
which the municipality's taxing power is pledged, although the lease obligation
is ordinarily backed by the municipality's covenant to budget for the payments
due under the lease obligation. Certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease obligation payments in future years unless money is
appropriated for such purpose on a yearly basis. A risk peculiar to these
municipal lease obligations is the possibility that a municipality will not
appropriate funds for lease payments. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the property in
the event of foreclosure might prove difficult. The Adviser will seek to
minimize these risks by not investing more than 10% of the total assets of the
Fund in lease obligations that contain "non-appropriation" clauses. In
evaluating a potential investment in such a lease obligation, the Adviser will
consider: (1) the credit quality of the obligor, (2) whether the underlying
property is essential to a government function, and (3) whether the lease
obligation contains covenants prohibiting the obligor from substituting similar
property if the obligor fails to make appropriations for the lease obligation.
Municipal lease obligations may be determined to be liquid in accordance with
the guidelines established by the Board of Trustees and other factors the
Adviser may determine to be relevant to such determination. In determining the
liquidity of municipal lease obligations, the Adviser will consider a variety of
factors including: (1) the willingness of dealers to bid for the security; (2)
the number of dealers willing to purchase or sell the obligation and the number
of other potential buyers; (3) the frequency of trades and quotes for the
obligation; and (4) the nature of the marketplace trades. In addition, the
Adviser will consider factors unique to particular lease obligations affecting
their marketability. These include the general creditworthiness of the
municipality, the importance of the property covered by the lease to the
municipality, and the likelihood that the marketability of the obligation will
be maintained throughout the time the obligation is held by the Fund.
The Board of Trustees is responsible for determining the credit quality of
unrated municipal lease obligations on an ongoing basis, including an assessment
of the likelihood that the lease will not be cancelled.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time the
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must
8
<PAGE>
deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. Such
securities, including any securities so substituted, are referred to as the
"Repurchase Securities." The repurchase price exceeds the purchase price by an
amount which reflects an agreed upon market interest rate effective for the
period of time during which the repurchase agreement is in effect. The majority
of these transactions run day to day and the delivery pursuant to the resale
typically will occur within one to five days of the purchase. The Fund's risk is
limited to the ability of the vendor to pay the agreed upon sum upon the
delivery date; in the event of bankruptcy or other default by the vendor, there
may be possible delays and expenses in liquidating the instrument purchased,
decline in its value and loss of interest. These risks are minimized when the
Fund holds a perfected security interest in the Repurchase Securities and can
therefore sell the instrument promptly. Under guidelines issued by the Trustees,
the Adviser will carefully consider the creditworthiness during the term of the
repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Fund's custodian either directly or through a securities depository.
MONEY MARKET INSTRUMENTS. Money market instruments may include U.S. Government
Securities or corporate debt obligations (including those subject to repurchase
agreements) as described herein, provided that they mature in thirteen months or
less from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Bankers' Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). BANKERS' ACCEPTANCES are
time drafts drawn on and "accepted" by a bank, are the customary means of
effecting payment for merchandise sold in import-export transactions and are a
source of financing used extensively in international trade. When a bank
"accepts" such a time draft, it assumes liability for its payment. When the Fund
acquires a Bankers' Acceptance, the bank which "accepted" the time draft is
liable for payment of interest and principal when due. The Bankers' Acceptance,
therefore, carries the full faith and credit of such bank. A CERTIFICATE OF
DEPOSIT ("CD") is an unsecured interest-bearing debt obligation of a bank. CDs
acquired by the Fund would generally be in amounts of $100,000 or more.
Commercial Paper is an unsecured, short term debt obligation of a bank,
corporation or other borrower. COMMERCIAL PAPER maturity generally ranges from
two to 270 days and is usually sold on a discounted basis rather than as an
interest-bearing instrument. The Fund will invest in Commercial Paper only if it
is rated in the highest rating category by any nationally recognized statistical
rating organization ("NRSRO") or, if not rated, the issuer must have an
outstanding unsecured debt issue rated in the three highest categories by any
NRSRO or, if not so rated, be of equivalent quality in the Adviser's assessment.
Commercial Paper may include Master Notes of the same quality. MASTER NOTES are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian, acting as administrator thereof. The Adviser will monitor,
on a continuous basis, the earnings power, cash flow and other liquidity ratios
of the issuer of a Master Note held by the Fund.
9
<PAGE>
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Adviser felt such action was appropriate. In such a case
the Fund could incur a short-term gain or loss.
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 15% of its total assets to
meet redemption requests which might otherwise require untimely disposition of
portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
INVESTMENT COMPANIES. The Fund will not invest more than 10% of its total assets
in securities of other investment companies nor (with affiliates) hold more than
3% of securities of one investment company. Any such investment would involve
duplication of expenses, particularly investment advisory fees.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund. A "majority" for this purpose, means the lesser of (i) 67%
of the Fund's outstanding shares represented in person or by proxy at a meeting
at which more than 50% of its outstanding shares are represented, or (ii) more
than 50% of its outstanding shares.
Under these limitations, the Fund MAY NOT:
(1) Invest for the purpose of exercising control or management of another
issuer;
(2) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Fund may
invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things;
10
<PAGE>
(3) Underwrite securities issued by others, except to the extent the Fund may
be deemed to be an underwriter under the federal securities laws in
connection with the disposition of portfolio securities;
(4) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
(5) Make short sales of securities or maintain a short position, except short
sales "against the box" (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);
(6) Participate on a joint or joint and several basis in any trading account in
securities;
(7) Make loans of money or securities, except that the Fund may invest in
repurchase agreements;
(8) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors), if more than 5% of its total assets would be invested
in such securities;
(9) Write, purchase or sell commodities, commodities contracts, futures
contracts or related options;
(10) Invest, with respect to at least 50% of its total assets, more than 5% in
the securities of any one issuer (other than the U.S. Government, its
agencies or instrumentalities) or acquire more than 25% of the outstanding
voting securities of any issuer;
(11) Invest more than an aggregate of 15% of the net assets of the Fund in
securities subject to legal or contractual restrictions on resale or for
which there are no readily available market quotations or in other illiquid
securities; or
(12) Issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets,
or (b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities, in amounts not exceeding 15%
of its total assets, and may pledge its assets to secure all such
borrowings
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation.
While the Fund has reserved the right to make short sales "against the box"
(limitation number 5, above), the Adviser has no present intention of engaging
in such transactions at this time or during the coming year.
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<PAGE>
TRUSTEES AND OFFICERS
The Board of Trustees supervises the activities of the Williamsburg Investment
Trust (the "Trust"). Following are the Trustees and executive officers of the
Trust, their present position with the Trust or Funds, age, principal occupation
during the past 5 years and their aggregate compensation from the Trust for the
fiscal year ended March 31, 2000:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
--------------- -------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 63) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 46) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 63) Physician $12,500
Trustee** Dermatology Associates of
931 Broad Street Road Virginia, P.C.,
Manakin Sabot, Virginia 23103 Richmond, Virginia
J. Finley Lee (age 60) Julian Price Professor Emeritus of $12,500
Trustee Business Administration
105 Gristmill Lane University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 51) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
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Richard L. Morrill (age 61) Chancellor of $12,500
Trustee University of Richmond,
University of Richmond Richmond, Virginia;
G19 Boatright Library Director of Tredegar
Richmond, Virginia 23173 Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 40) President of $12,500
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling)
Erwin H. Will, Jr. (age 67) Chief Investment Officer of $12,500
Trustee Virginia Retirement System,
1200 East Main Street Richmond, Virginia
Richmond, Virginia 23219
Samuel B. Witt III (age 64) Senior Vice President and $13,500
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 37) Portfolio Manager of None
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 55) Executive Vice President of None
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Charles M. Caravati III (age 34) Assistant Portfolio Manager of None
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
The Jamestown International Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Robert G. Dorsey (age 43) Managing Director of Ultimus Fund None
Vice President Solutions, LLC and Ultimus Fund
135 Merchant Street, Suite 230 Distributors, LLC, Cincinnati, Ohio.
Cincinnati, Ohio 45246 Prior to March, 1999, President of
Countrywide Fund Services, Inc.
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<PAGE>
John M. Flippin (age 58) Principal of None
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 47) Principal of None
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
600 Luckie Drive
Luckie Building, Suite 305
Birmingham, Alabama 35223
J. Lee Keiger III (age 45) First Vice President and Chief Financial None
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter III (age 59) Principal of None
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 38) Managing Director of Ultimus Fund None
Treasurer Solutions, LLC and Ultimus Fund
135 Merchant Street, Suite 230 Distributors, LLC, Cincinnati, Ohio.
Cincinnati, Ohio 45246 Prior to March 1999, First Vice President
of Countrywide Fund Services, Inc.
Henry C. Spalding, Jr. (age 62) Executive Vice President of None
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street, Suite 300
Richmond, Virginia 23230
John F. Splain (age 44) Managing Director of Ultimus Fund None
Secretary Solutions, LLC and Ultimus Fund
135 Merchant Street, Suite 230 Distributors, LLC, Cincinnati, Ohio.
Cincinnati, Ohio 45246 Prior to March 1999, First Vice President
and Secretary of Countrywide Fund
Services, Inc. and affiliated companies
Connie R. Taylor (age 49) Administrator of None
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
14
<PAGE>
Beth Ann Walk (age 41) Portfolio Manager of None
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 54) President and Chief Executive None
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
** Indicates that Trustee is an Interested Person for purposes of the Investment
Company Act of 1940. Charles M. Caravati, Jr. is the father of Charles M.
Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee and Audit Committee. The Audit Committee reviews annually
the nature and cost of the professional services rendered by the Trust's
independent accountants, the results of their year-end audit and their findings
and recommendations as to accounting and financial matters, including the
adequacy of internal controls. On the basis of this review the Audit Committee
makes recommendations to the Trustees as to the appointment of independent
accountants for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 7, 2000, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then-outstanding shares of the Fund. As of
that same date, Mr. John R. Miller, Jr., P.O. Box 469, Brewton, Alabama 36427,
beneficially owned 17.7% of the then-outstanding shares of the Fund and Charles
Schwab & Co., Inc., 101 Montgomery Street, San Francisco, California 94104,
owned of record 39.9% of the then-outstanding shares of the Fund. As a result,
Charles Schwab & Co., Inc. may be deemed to control the Fund.
INVESTMENT ADVISER
T. Leavell & Associates, Inc. (the "Adviser") supervises the Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement"). The
Advisory Agreement is effective until April 1, 2001 and will be renewed
thereafter for one year periods only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of the Fund's outstanding voting securities, provided the continuance
is also approved by a majority of the Trustees who are not "interested persons"
of the Trust or the Adviser by vote cast in person at a meeting called for the
purpose of voting on such approval.
The Advisory Agreement is terminable without penalty on sixty days notice by the
Board of Trustees of the Trust or by the Adviser. The Advisory Agreement
provides that it will terminate automatically in the event of its assignment.
Compensation of the Adviser is at the annual rate of 0.35% of the Fund's average
daily net assets up to $100 million and 0.25% of such net assets in excess of
$100 million. For the fiscal years ended March 31, 2000, 1999 and 1998, the Fund
paid the Adviser advisory fees of $62,822
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<PAGE>
(which was net of voluntary fee waivers of $15,400), $48,813 (which was net of
voluntary fee waivers of $21,089), and $46,538 (which was net of voluntary fee
waivers of $18,821), respectively.
The Adviser, organized as an Alabama corporation in 1979, is controlled by its
shareholders, Thomas W. Leavell, Richard Mitchell, Dorothy G. Gambill and
Timothy S. Healey. In addition to acting as Adviser to the Fund, the Adviser
serves as investment Adviser to two additional investment companies, the
subjects of separate prospectuses, and also provides investment advice to
corporations, trusts, pension and profit sharing plans, other business and
institutional accounts and individuals.
The Adviser provides a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Fund. The Adviser determines what securities
and other investments will be purchased, retained or sold by the Fund, and does
so in accordance with the investment objectives and policies of the Fund as
described herein and in the Prospectus. The Adviser places all securities orders
for the Fund, determining with which broker, dealer, or issuer to place the
orders. The Adviser must adhere to the brokerage policies of the Fund in placing
all orders, the substance of which policies are that the Adviser must seek at
all times the most favorable price and execution for all securities brokerage
transactions. The Adviser also provides, at its own expense, certain Executive
Officers to the Trust, and pays the entire cost of distributing Fund shares.
The Adviser may compensate dealers or others based on sales of shares of the
Fund to clients of such dealers or others or based on the average balance of all
accounts in the Fund for which such dealers or others are designated as the
person responsible for the account.
ADMINISTRATOR
The Fund has retained Ultimus Fund Solutions, LLC (the "Administrator"), 135
Merchant Street, Suite 230, Cincinnati, Ohio 45246, to provide administrative,
pricing, accounting, dividend, disbursing, shareholder servicing and transfer
agent services. The Administrator maintains the records of each shareholder's
account, answers shareholders' inquiries concerning their accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service functions.
The Administrator also provides accounting and pricing services to the Fund and
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services. The
Administrator supervises the preparation of tax returns, reports to shareholders
of the Fund, reports to and filings with the Securities and Exchange Commission
and state securities commissions, and materials for meetings of the Board of
Trustees.
For the performance of these administrative services, the Fund pays the
Administrator a fee at the annual rate of 0.15% of the average value of its
daily net assets up to $25,000,000, 0.125% of such assets from $25,000,000 to
$50,000,000 and 0.10% of such assets in excess of $50,000,000. In addition, the
Fund pays out-of-pocket expenses, including but not limited to, postage,
envelopes, checks, drafts, forms, reports, record storage and communication
lines.
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Prior to November 6, 2000, Integrated Fund Services, Inc. ("Integrated"), P.O.
Box 5354, Cincinnati, Ohio 45201, provided the Fund with administrative,
pricing, accounting, dividend disbursing, shareholder servicing and transfer
agent services. Integrated is a wholly-owned indirect subsidiary of The Western
and Southern Life Insurance Company. For the fiscal years ended March 31, 2000,
1999, and 1998, the Integrated received from the Fund fees of $33,491, $29,975
and $28,029, respectively.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103 has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Fund's federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
The Custodian of the Fund's assets is Firstar Bank, N.A. (the "Custodian"), 425
Walnut Street, Cincinnati, Ohio 45202. The Custodian holds all cash and
securities of the Fund (either in its possession or in its favor through "book
entry systems" authorized by the Trustees in accordance with the 1940 Act),
collects all income and effects all securities transactions on behalf of the
Fund.
BROKERAGE
It is the Fund's practice to seek the best price and execution for all portfolio
securities transactions. The Adviser (subject to the general supervision of the
Board of Trustees) directs the execution of the Fund's portfolio transactions.
Subject to the requirements of the 1940 Act and procedures adopted by the Board
of Trustees, the Fund may execute portfolio transactions through any broker or
dealer and pay brokerage commissions to a broker (i) which is an affiliated
person of the Trust, or (ii) which is an affiliated person of such person, or
(iii) an affiliated person of which is an affiliated person of the Trust or the
Adviser.
The Fund's portfolio transactions will normally be principal transactions
executed in over-the-counter markets and will be executed on a "net" basis,
which may include a dealer markup. No brokerage commissions were paid by the
Fund for the last three fiscal years.
While there is no formula, agreement or undertaking to do so, the Fund has
adopted policies which allow the Adviser to allocate a portion of the Fund's
brokerage commissions to persons or firms providing the Adviser with research
services, which may typically include, but are not limited to, investment
recommendations, financial, economic, political, fundamental and technical
market and interest rate data, and other statistical or research services. Much
of the information so obtained may also be used by the Adviser for the benefit
of the other clients it may have. Conversely, the Fund may benefit from such
transactions effected for the benefit of other clients. In all cases, the
Adviser is obligated to effect transactions for the Fund based upon obtaining
the most favorable price and execution. Factors considered by the Adviser in
determining whether the Fund will receive the most favorable price and execution
include, among other things: the size of the order, the broker's ability to
effect and settle the transaction promptly and efficiently and the Adviser's
perception of the broker's reliability, integrity and financial condition.
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CODE OF ETHICS. The Trust and the Adviser have adopted Codes of Ethics under
Rule 17j-1 of the 1940 Act which permit personnel subject to the Codes to invest
in securities, including securities that may be purchased or held by the Fund.
The Codes of Ethics adopted by the Trust and the Adviser are on public file
with, and are available from, the SEC.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts, estates
and others, investors are free to make additions and withdrawals to or from
their account as often as they wish. When an investor makes an initial
investment in the Fund, a shareholder account is opened in accordance with the
investor's registration instructions. Each time there is a transaction in a
shareholder account, such as an additional investment or the reinvestment of a
dividend or distribution, the shareholder will receive a statement showing the
current transaction and all prior transactions in the shareholder account during
the calendar year to date.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see the Prospectus under the heading "Signature
Guarantees"). A corporation (or partnership) must also submit a "Corporate
Resolution" (or "Certification of Partnership") indicating the names, titles and
required number of signatures authorized to act on its behalf. The application
must be signed by a duly authorized officer(s) and the corporate seal affixed.
No redemption fees are charged to shareholders under this plan. Costs in
conjunction with the administration of the plan are borne by the Fund.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely their initial investment and may result in realized long-term or
short-term capital gains or losses. The Systematic Withdrawal Plan may be
terminated at any time by the Fund upon sixty days' written notice or by a
shareholder upon written notice to the Fund. Applications and further details
may be obtained by calling the Fund at 1-866-738-1125, or by writing to:
The Alabama Tax Free Bond Fund
Shareholder Services
P.O. Box 46707
Cincinnati, Ohio 45246-0707
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares of the Fund. The acceptance of such securities is at the
sole discretion of the Adviser based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Adviser may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
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<PAGE>
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election may be filed under
Rule 18f-1 of the 1940 Act, wherein the Fund commits itself to pay redemptions
in cash, rather than in kind, to any shareholder of record of the Fund who
redeems during any ninety day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the existing account registration; (2) signature(s) of the
registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (see the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received. An order received prior to the close of the regular
session of trading on the New York Stock Exchange (the "Exchange"), generally
4:00 p.m., Eastern time, will be executed at the price computed on the date of
receipt; and an order received after that time will be executed at the price
computed on the next Business Day. An order to purchase shares is not binding on
the Fund until confirmed in writing (or unless other arrangements have been made
with the Fund, for example in the case of orders utilizing wire transfer of
funds) and payment has been received.
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
An order to purchase shares is not binding on the Fund until confirmed in
writing (or unless other arrangements have been made with the Fund, for example
in the case of orders utilizing wire transfer of funds) and payment has been
received.
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The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUND. The Fund has adopted initial investment
minimums for the purpose of reducing the cost to the Fund (and consequently to
the shareholders) of communicating with and servicing its shareholders. However,
a reduced minimum initial investment requirement of $1,000 applies to Trustees,
officers and employees of the Fund, the Adviser and certain parties related
thereto, including clients of the Adviser or any sponsor, officer, committee
member thereof, or the immediate family of any of them. In addition, accounts
having the same mailing address may be aggregated for purposes of the minimum
investment if they consent in writing to share a single mailing of shareholder
reports, proxy statements (but each such shareholder would receive his/her own
proxy) and other Fund literature.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the Exchange is closed, or trading on the Exchange is
restricted as determined by the Securities and Exchange Commission (the
"Commission"), (ii) during any period when an emergency exists as defined by the
rules of the Commission as a result of which it is not reasonably practicable
for the Fund to dispose of securities owned by it, or to fairly determine the
value of its assets, and (iii) for such other periods as the Commission may
permit.
No charge is made by the Fund for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Fund.
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund, and they have
adopted procedures to do so, as follows. The net asset value of the Fund is
determined as of the close of the regular session of trading on the Exchange
(currently 4:00 p.m. Eastern time) on each "Business Day." A Business Day means
any day, Monday through Friday, except for the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Fourth of July, Labor Day, Thanksgiving Day and Christmas. Net asset value per
share is determined by dividing the total value of all Fund securities and other
assets, less liabilities, by the total number
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<PAGE>
of shares then outstanding. Net asset value includes interest on fixed income
securities, which is accrued daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Adviser
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the Trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Fund. General Trust expenses are allocated among
the series, or funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, the Fund
must distribute annually at least 90% of its net taxable income plus 90% of its
net tax-exempt interest income. In addition to this distribution requirement,
the Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities' loans, gains from the
disposition of stock or securities, and certain other income.
While the above requirements are aimed at qualification of the Fund as a
regulated investment company under Subchapter M of the Code, the Fund also
intends to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Fund remains qualified under Subchapter M,
it will not be subject to federal income tax to the extent it distributes its
taxable net investment income and net realized capital gains. A nondeductible 4%
federal excise tax will be imposed on the Fund to the extent it does not
distribute at least 98% of its ordinary taxable income for a calendar year, plus
98% of its capital gain net taxable income for the one year period ending each
October 31, plus certain undistributed amounts from prior years. Such required
distributions are based only on the Fund's taxable income, however, so the
excise tax generally would not apply to tax-exempt income earned by the Fund.
While the Fund intends to distribute its taxable income and capital gains in a
manner so as to avoid imposition of the federal excise and income taxes, there
can be no assurance that the Fund indeed will make sufficient distributions to
avoid entirely imposition of federal excise or income taxes.
As of March 31, 2000, the Fund had capital loss carryforwards for federal income
tax purposes of $176,717, which expire through the year 2008. These capital loss
carryforwards may be utilized in future years to offset net realized capital
gains prior to distributing such gains to shareholders.
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Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUND'S DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the Fund
derived from net investment income or net short-term capital gains are taxable
to shareholders as ordinary income, whether received in cash or reinvested in
additional shares. Since federal and Alabama tax laws exempt income from
qualifying municipal bond obligations, income dividends attributable to such
obligations are exempt from such taxes. A report will be distributed to each
shareholder as of December 31st of each year outlining the percentage of income
dividends which qualify for such tax exemptions. Distributions, if any, of
long-term capital gains are taxable to shareholders as long-term capital gains,
whether received in cash or reinvested in additional shares, regardless of how
long Fund shares have been held. Such capital gain distributions are also
subject to Alabama income tax, except to the extent attributable to gains from
certain obligations of the State of Alabama and its political subdivisions. For
information on "backup" withholding, see "Purchase of Shares" above.
For federal income tax purposes, any loss upon the sale of shares of the Fund
held for six months or less will be treated as long-term capital loss to the
extent of any long-term capital gain distributions received by the shareholder.
In addition, any loss of Fund shares held for six months or less will be
disallowed for both federal and Alabama income tax purposes to the extent of any
dividends received by the shareholder exempt from federal income tax, even
though, in the case of Alabama, some portion of such dividends actually may have
been subject to Alabama income tax.
Shareholders should be aware that dividends from the Fund which are derived in
whole or in part from interest on U.S. Government Securities may not be taxable
for state income tax purposes. Other state income and federal income tax
implications may apply. You should consult your tax Adviser for further
information.
CAPITAL SHARES AND VOTING
The Fund is a non-diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988. The Board of Trustees has overall responsibility for management of
the Fund under the laws of Massachusetts governing the responsibilities of
trustees of business trusts.
Shares of the Fund, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at lease
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust,
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cast in person or by proxy at a meeting called for that purpose; or (c) by a
written declaration signed by shareholders holding not less than two-thirds of
the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not less
than ten percent (10%) of the shares then outstanding may require the Trustees
to call such a meeting and the Trustees are obligated to provide certain
assistance to shareholders desiring to communicate with other shareholders in
such regard (e.g., providing access to shareholder lists, etc.). In case a
vacancy or an anticipated vacancy shall for any reason exist, the vacancy shall
be filled by the affirmative vote of a majority of the remaining Trustees,
subject to the provisions of Section 16(a) of the 1940 Act. The Trust does not
expect to have an annual meeting of shareholders.
The Declaration of Trust currently provides for the shares of ten funds, or
series, to be issued. Shares of all ten series have currently been issued, in
addition to the Fund: shares of the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund, which are managed by Flippin, Bruce & Porter, Inc. of
Lynchburg, Virginia; shares of The Jamestown Balanced Fund, The Jamestown Equity
Fund, The Jamestown International Equity Fund and The Jamestown Tax Exempt
Virginia Fund, which are managed by Lowe, Brockenbrough & Company, Inc. of
Richmond, Virginia; shares of The Davenport Equity Fund, which is managed by
Davenport & Company LLC of Richmond, Virginia; and shares of The Government
Street Equity Fund and The Government Street Bond Fund, which are managed by T.
Leavell & Associates, Inc. The Trustees are permitted to create additional
series, or funds, at any time.
Upon liquidation of the Trust or a particular Fund of the Trust, holders of the
outstanding shares of the Fund being liquidated shall be entitled to receive, in
proportion to the number of shares of the Fund held by them, the excess of that
Fund's assets over its liabilities. Each outstanding share is entitled to one
vote for each full share and a fractional vote for each fractional share, on all
matters which concern the Trust as a whole. On any matter submitted to a vote of
shareholders, all shares of the Trust then issued and outstanding and entitled
to vote, irrespective of the Fund, shall be voted in the aggregate and not by
Fund, except (i) when required by the 1940 Act, shares shall be voted by
individual Fund; and (ii) when the matter does not affect any interest of a
particular Fund, then only shareholders of the affected Fund or Funds shall be
entitled to vote thereon. Examples of matters which affect only a particular
Fund could be a proposed change in the fundamental investment objectives or
policies of that Fund or a proposed change in the investment advisory agreement
for a particular Fund. The shares of the Fund will have noncumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of Trustees can elect all of the Trustees if they so choose.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability.
Stock Certificates will not be issued for your shares. Evidence of ownership
will be given by issuance of periodic account statements which will show the
number of shares owned.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
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CALCULATION OF PERFORMANCE DATA
The Fund may, from time to time, advertise certain total return and yield
information. The average annual total return of the Fund for a period is
computed by subtracting the net asset value per share at the beginning of the
period from the net asset value per share at the end of the period (after
adjusting for the reinvestment of any income dividends and capital gain
distributions), and dividing the result by the net asset value per share at the
beginning of the period. In particular, the average annual total return of the
Fund ("T") is computed by using the redeemable value at the end of a specified
period of time ("ERV") of a hypothetical initial investment of $1,000 ("P") over
a period of time ("n") according to the formula P(l+T)n=ERV. The average annual
total return quotations for the Fund for the one year period ended March 31,
2000, for the five year period ended March 31, 2000 and for the period since
inception (January 15, 1993) to March 31, 2000 are 0.34%, 4.64% and 4.47%,
respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, the Fund may advertise its yield and tax-equivalent yield. A
yield quotation is based on a 30-day (or one month) period and is computed by
dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period, according to the
following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The Fund's yield for the 30 days ended March 31, 2000 was 4.34%.
The tax-equivalent yield of the Fund is computed by using the tax-exempt yield
figure and dividing by one minus the applicable tax rate. The Fund's
tax-equivalent yield for the 30 days ended March 31, 2000, based on the highest
marginal combined federal and Alabama income tax rate, was 6.31%.
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The Fund's performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Fund may compare its performance to the Lehman
7-Year G.O. Municipal Bond Index or the Lehman 3-Year Municipal Bond Index,
which are generally considered to be representative of the performance of
intermediate term municipal bonds. Comparative performance may also be expressed
by reference to a ranking prepared by a mutual fund monitoring service, such as
Lipper Analytical Services, Inc. or Morningstar, Inc., or by one or more
newspapers, newsletters or financial periodicals. Performance comparisons may be
useful to investors who wish to compare the Fund's past performance to that of
other mutual funds and investment products. Of course, past performance is not a
guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
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FINANCIAL STATEMENTS AND REPORTS
Pursuant to an Agreement and Plan of Reorganization, the Fund, on April 1, 1994,
succeeded to the assets and liabilities of another mutual fund of the same name
(the "Predecessor Fund"), which was an investment series of Albemarle Investment
Trust. The investment objectives, policies and restrictions of the Fund and the
Predecessor Fund are practically identical and the financial data and
performance information in this Statement of Additional Information for periods
prior to April 1, 1994 relates to the Predecessor Fund.
The books of the Fund will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published, and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Fund as of March 31, 2000, together with the report of the independent
accountants thereon, are included on the following pages.
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THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
------------------------------
No Load Mutual Funds
ANNUAL REPORT
MARCH 31, 2000
Investment Adviser
T. LEAVELL & ASSOCIATES, INC.
Founded 1979
<PAGE>
LETTER FROM THE PRESIDENT MAY 15, 2000
================================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the audited Annual Report of The
Government Street Funds and The Alabama Tax Free Bond Fund for the year ended
March 31, 2000.
THE GOVERNMENT STREET EQUITY FUND
---------------------------------
The Government Street Equity Fund achieved a total investment return of
19.93% for its fiscal year ended March 31, 2000. During this same period, the
S&P 500 Index achieved a total return of 17.94%. In addition, the average return
for the 968 "Large-Cap Blend Funds" included in Morningstar, Inc.'s universe was
19.64% for the same twelve month period. (The Government Street Equity Fund is
classified by Morningstar as a Large-Cap Blend Fund.)
Investment returns during the twelve months ended March 31, 2000 continued
to reflect the disproportionately high return of growth stocks (particularly
technology issues) compared to value stocks. New terms have even been coined -
"new economy" stocks and "old economy" stocks - to describe the phenomenon of
stock valuations (and investment returns) of technology oriented companies
defying more traditional methods of securities analysis and valuation.
The Government Street Equity Fund continues its blended portfolio
management style with approximately one-half of its investments in both growth
and value stocks. This approach equates the importance of risk management with
the pursuit of investment returns, and, ultimately, provides the portfolio
environment that we believe is most conducive for compounding investment returns
over time.
In last year's annual report, we stated that "It is unlikely that the U.S.
stock market will continue indefinitely to be driven by the narrow leadership of
a handful of large capitalization stocks; nor is it reasonable to expect that
growth stocks will continue to outperform value stocks as they have over the
past 18 months." This statement remains an appropriate one today, though the 18
month period now has grown to 30 months.
The future for "new economy" stocks is exciting. The technological
innovation and advances already achieved in computing, biotechnology,
electronics, the Internet, wireless technology, communications, and their
applications are nothing short of stunning. Still, creating profitable business
enterprises from their technological achievements remain challenges for many of
these companies. Until there is a clearer picture of which ventures will survive
and prosper, the result is likely to be a highly volatile market for common
stocks. At the same time, it is a market that is likely to see a narrowing of
the gap that currently exists between growth and value stocks.
The selection of those companies whose current (and future) stock prices
are (or will be) justified by future earnings growth remains a daunting task for
investment managers. A more immediate concern, however, is the current monetary
policy of the Federal Reserve Board. The Fed's zeal in fighting the threat of
inflation over the past 10 months has brought the general level of interest
rates close to a point at which strong economies historically have faltered.
Neither "new" nor "old" economy companies are likely to prosper in an economic
environment where the cost of debt capital is 9% - 10%. However, it is in just
such a hostile environment where The Government Street Equity Fund's broadly
diversified portfolio of quality companies is most likely to prove its merit.
At March 31, 2000, the Fund was invested in 118 companies. Net assets of
the Fund were $116,446,622; net asset value was $57.07.
THE GOVERNMENT STREET BOND FUND
-------------------------------
For the first time since 1976-78, the U.S. economy has expanded at a rate
of 4% or more for 3 consecutive years. With an eye toward controlling inflation,
the Federal Reserve Board has moved to curb this booming economy by raising
short-term interest rates a total of 1.25% over a 10 month period - 5 times
since June, 1999.
In addition to rising interest rates, inflation concerns and worry about
Y2K computer disruptions sent bond prices sliding in 1999. As a result, the bond
market suffered its worst year since 1994 and the second worst since 1973.
1
<PAGE>
Despite these difficulties and despite the fact that the Federal Reserve
seems poised to continue its tightening during 2000, the bond market staged a
modest recovery during the first calendar quarter of the new year. The
Government Street Bond Fund achieved a return of 1.31% for the quarter ended
March 31, 2000, and this was enough to lift its total return for the fiscal year
ended March 31, 2000 to 0.67%. These returns compare favorably to those of the
Lehman Government/Corporate Intermediate Bond Index which were 1.50% and 2.09%,
respectively. The Fund's ratio of net investment income to average net assets
was 6.12% at fiscal year end.
The Government Street Bond Fund continues its emphasis on holding quality
securities while maintaining an intermediate-term average maturity. At fiscal
year-end, the Fund's average maturity was slightly over 6 years; just over 61%
of the Fund was invested in securities rated AAA.
The net assets of the Fund at March 31, 2000 were $45,155,791; net asset
value was $19.79; and the ratio of expenses to average net assets was 0.70%.
THE ALABAMA TAX FREE BOND FUND
------------------------------
We are proud to report that The Alabama Tax Free Bond Fund has received a
four star rating from Morningstar, Inc. for its overall performance, as well as
for the past 3 and 5 year periods coinciding with the end of its fiscal year on
March 31, 2000. The Morningstar ratings reflect risk-adjusted performance and
are subject to change every month. Ratings are calculated for the Fund's total
annual return in excess of the 90-day T-bill return with fee adjustments and a
risk factor that reflects Fund performance below the 90-day T-bill return. A
four star rating places the fund in the top 32.5% of all municipal bond funds
measured. For the five-year period ended March 31, 2000, that universe consisted
of 1,682 municipal bond mutual funds.
These ratings, however, do not mean that the Fund was able to escape the
impact of sharply rising interest rates during the past 12 months. The annual
rate of inflation as measured by the consumer price index, increased from 1.7%
at the beginning of 1999 to 3.7% at the end of March, 2000. This steady increase
in the rate of inflation, though relatively low in absolute terms, has caused
investors to demand higher yields from fixed income securities. The resulting
decline in bond prices has actually generated negative returns for many fixed
income investments over the past 15 months.
During the last quarter of its fiscal year, however, The Alabama Tax Free
Bond Fund achieved a total return of 1.71%. This allowed the fund to achieve a
positive return of 0.34% for the entire year. These returns compare favorably to
those of the Lipper Intermediate Municipal Bond Index which were 1.76% and
-0.27%, respectively, for the same periods. The Fund's ratio of net investment
income to average net assets was 4.32% at year end.
The net assets of the fund as of March 31, 2000 were $23,048,340; net asset
value was $10.13. The weighted average maturity of the Fund's portfolio was 7.2
years -consistent with its intermediate-term objective. The average credit
quality of the portfolio was "AA", and almost 60% of the individual securities
were rated "AAA".
The Alabama Tax Free Bond Fund continues to provide an attractive option
for investors who are seeking stability of principal as well as income which is
sheltered from federal and Alabama state income taxes.
Thank you for your continued confidence in The Government Street Funds and
The Alabama Tax Free Bond Fund. Please call us if we can be of further service
to you.
Very truly yours,
/s/ Thomas W. Leavell /s/ Richard Mitchell
Thomas W. Leavell Richard Mitchell
President President
T. Leavell & Associates, Inc. The Government Street Funds
The Alabama Tax Free Bond Fund
2
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Equity Fund, the Standard & Poor's 500 Index and the Consumer Price Index
------------------------------------
The Government Street Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
19.93% 23.09% 15.59%
------------------------------------
[GRAPHIC OMITTED]
Mar 00
The Government Street Equity Fund $35,759
Standard & Poor's 500 Index $48,286
Consumer Price Index $12,535
Past performance is not predictive of future performance.
* Initial public offering of shares was June 3, 1991.
THE GOVERNMENT STREET BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Bond Fund, the Lehman Government/Corporate Intermediate Bond Index and
the 90-Day Treasury Bill Index
------------------------------------
The Government Street Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
0.67% 5.89%.4 6.28%
------------------------------------
[GRAPHIC OMITTED]
Mar 00
The Government Street Bond Fund $17,116
Lehman Government/Corporate Intermediate Bond Index $17,979
90-Day Treasury Bill Index $15,205
Past performance is not predictive of future performance.
* Initial public offering of shares was June 3, 1991.
3
<PAGE>
THE ALABAMA TAX FREE BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Alabama Tax
Free Bond Fund, the Lehman 7-Year G.O. Municipal Bond Index, the Lehman 3-Year
Municipal Bond Index and the Lipper Intermediate Municipal Fund Index
-----------------------------------
The Alabama Tax Free Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
0.34% 4.64% 4.47%
-----------------------------------
[GRAPHIC OMITTED]
Mar 00
The Alabama Tax Free Bond Fund $13,708
Lehman 7-Year G.O. Municipal Bond Index $14,807
Lehman 3-Year Municipal Bond Index $13,852
Lipper Intermediate Municipal Fund Index $13,553
Past performance is not predictive of future performance.
* Initial public offering of shares was January 15, 1993.
4
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2000
<TABLE>
<CAPTION>
=======================================================================================================
GOVERNMENT GOVERNMENT ALABAMA
STREET STREET TAX FREE
EQUITY BOND BOND
FUND FUND FUND
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost ............................. $ 60,100,244 $ 46,424,871 $ 22,792,699
============= ============= =============
At value (Note 1) ............................... $ 119,238,480 $ 44,512,863 $ 22,766,181
Interest receivable ................................ 15,997 723,356 300,166
Dividends receivable ............................... 66,389 -- --
Receivable for capital shares sold ................. 108,250 -- 11,188
Other assets ....................................... 6,462 4,007 1,857
------------- ------------- -------------
TOTAL ASSETS .................................... 119,435,578 45,240,226 23,079,392
------------- ------------- -------------
LIABILITIES
Dividends payable .................................. 1,367 15,271 9,644
Distributions payable .............................. 15,565 -- --
Payable for capital shares redeemed ................ 5,065 37,518 9,341
Payable for securities purchased ................... 2,885,903 -- --
Accrued investment advisory fees (Note 3) .......... 56,700 19,193 5,457
Accrued administration fees (Note 3) ............... 15,500 2,850 2,900
Other accrued expenses and liabilities ............. 8,856 9,603 3,710
------------- ------------- -------------
TOTAL LIABILITIES ............................... 2,988,956 84,435 31,052
------------- ------------- -------------
NET ASSETS ......................................... $ 116,446,622 $ 45,155,791 $ 23,048,340
============= ============= =============
Net assets consist of:
Paid-in capital .................................... $ 57,357,340 $ 47,973,345 $ 23,321,127
Distributions in excess of realized gains .......... (48,954) -- --
Accumulated net realized losses
from security transactions ...................... -- (905,546) (246,269)
Net unrealized appreciation (depreciation)
on investments .................................. 59,138,236 (1,912,008) (26,518)
------------- ------------- -------------
Net assets ......................................... $ 116,446,622 $ 45,155,791 $ 23,048,340
============= ============= =============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ...... 2,040,365 2,281,479 2,274,894
============= ============= =============
Net asset value, offering price and
redemption price per share (Note 1) ............. $ 57.07 $ 19.79 $ 10.13
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
=================================================================================================
GOVERNMENT GOVERNMENT ALABAMA
STREET STREET TAX FREE
EQUITY BOND BOND
FUND FUND FUND
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest ......................................... $ 50,372 $ 2,946,594 $ 1,079,194
Dividends ........................................ 1,141,189 73,921 28,794
----------- ----------- -----------
TOTAL INVESTMENT INCOME ....................... 1,191,561 3,020,515 1,107,988
----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 3) ................ 606,159 221,781 78,222
Administration fees (Note 3) ..................... 170,044 33,179 33,491
Professional fees ................................ 11,945 11,945 8,845
Pricing costs .................................... 2,844 11,663 14,637
Custodian fees ................................... 14,399 6,459 4,296
Trustees' fees and expenses ...................... 8,280 8,280 8,280
Printing of shareholder reports .................. 8,613 6,949 6,623
Postage and supplies ............................. 6,480 4,149 2,886
Registration fees ................................ 5,789 4,671 1,634
Other expenses ................................... 7,561 305 1,756
----------- ----------- -----------
TOTAL EXPENSES ................................ 842,114 309,381 160,670
Fees waived by the Adviser (Note 3) .............. -- -- (15,400)
----------- ----------- -----------
NET EXPENSES .................................. 842,114 309,381 145,270
----------- ----------- -----------
NET INVESTMENT INCOME ............................... 349,447 2,711,134 962,718
----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses)
from security transactions .................... 798,881 (352,285) (46,986)
Net change in unrealized appreciation/depreciation
on investments ................................ 17,790,895 (2,047,757) (844,115)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS ....................... 18,589,776 (2,400,042) (891,101)
----------- ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ............................... $18,939,223 $ 311,092 $ 71,617
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
==============================================================================================================
GOVERNMENT STREET GOVERNMENT STREET
EQUITY FUND BOND FUND
-----------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income ................. $ 349,447 $ 486,890 $ 2,711,134 $ 2,376,899
Net realized gains (losses)
from security transactions ......... 798,881 1,154,015 (352,285) (119,151)
Net change in unrealized appreciation/
depreciation on investments ........ 17,790,895 9,951,369 (2,047,757) (251,151)
------------- ------------- ------------- -------------
Net increase in net assets from operations 18,939,223 11,592,274 311,092 2,006,597
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............ (349,447) (487,774) (2,711,134) (2,380,755)
From net realized gains ............... (847,835) (3,083,650) -- --
------------- ------------- ------------- -------------
Decrease in net assets from
distributions to shareholders ......... (1,197,282) (3,571,424) (2,711,134) (2,380,755)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............. 16,032,742 10,535,714 9,164,881 7,618,281
Net asset value of shares issued in
reinvestment of distributions
to shareholders .................... 1,172,232 3,411,170 2,531,305 2,146,286
Payments for shares redeemed .......... (9,207,743) (6,903,321) (7,180,879) (3,257,836)
------------- ------------- ------------- -------------
Net increase in net assets from
capital share transactions ............ 7,997,231 7,043,563 4,515,307 6,506,731
------------- ------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS ............. 25,739,172 15,064,413 2,115,265 6,132,573
NET ASSETS
Beginning of year ..................... 90,707,450 75,643,037 43,040,526 36,907,953
------------- ------------- ------------- -------------
End of year ........................... $ 116,446,622 $ 90,707,450 $ 45,155,791 $ 43,040,526
============= ============= ============= =============
Capital share activity
Sold .................................. 312,261 233,010 452,679 359,195
Reinvested ............................ 21,194 77,139 126,050 101,333
Redeemed .............................. (178,843) (151,673) (356,474) (153,761)
------------- ------------- ------------- -------------
Net increase in shares outstanding .... 154,612 158,476 222,255 306,767
Shares outstanding, beginning of year . 1,885,753 1,727,277 2,059,224 1,752,457
------------- ------------- ------------- -------------
Shares outstanding, end of year ....... 2,040,365 1,885,753 2,281,479 2,059,224
============= ============= ============= =============
</TABLE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Alabama Tax Free
Bond Fund
----------------------------------
Year Year
Ended Ended
March 31, March 31,
2000 1999
--------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ................. $ 962,718 $ 830,266
Net realized gains (losses)
from security transactions ......... (46,986) (347)
Net change in unrealized appreciation/
depreciation on investments ........ (844,115) 86,422
------------- -------------
Net increase in net assets from operations 71,617 916,341
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............ (962,718) (830,266)
From net realized gains ............... -- --
------------- -------------
Decrease in net assets from
distributions to shareholders ......... (962,718) (830,266)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............. 5,417,544 3,032,760
Net asset value of shares issued in
reinvestment of distributions
to shareholders .................... 799,134 609,745
Payments for shares redeemed .......... (3,837,209) (2,106,904)
------------- -------------
Net increase in net assets from
capital share transactions ............ 2,379,469 1,535,601
------------- -------------
TOTAL INCREASE IN NET ASSETS ............. 1,488,368 1,621,676
NET ASSETS
Beginning of year ..................... 21,559,972 19,938,296
------------- -------------
End of year ........................... $ 23,048,340 $ 21,559,972
============= =============
Capital share activity
Sold .................................. 530,939 286,831
Reinvested ............................ 78,412 57,694
Redeemed .............................. (379,054) (199,887)
------------- -------------
Net increase in shares outstanding .... 230,297 144,638
Shares outstanding, beginning of year . 2,044,597 1,899,959
------------- -------------
Shares outstanding, end of year ....... 2,274,894 2,044,597
============= =============
See accompanying notes to financial statements.
7
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
============================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
============================================================================================================
YEARS ENDED MARCH 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ...... $ 48.10 $ 43.79 $ 32.59 $ 29.41 $ 23.87
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income .................. 0.18 0.27 0.32 0.37 0.40
Net realized and unrealized
gains on investments ................ 9.39 6.01 12.28 4.50 5.75
--------- --------- --------- --------- ---------
Total from investment operations .......... 9.57 6.28 12.60 4.87 6.15
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ... (0.18) (0.27) (0.32) (0.36) (0.40)
Distributions from net realized gains .. (0.42) (1.70) (1.08) (1.33) (0.21)
--------- --------- --------- --------- ---------
Total distributions ....................... (0.60) (1.97) (1.40) (1.69) (0.61)
--------- --------- --------- --------- ---------
Net asset value at end of year ............ $ 57.07 $ 48.10 $ 43.79 $ 32.59 $ 29.41
========= ========= ========= ========= =========
Total return .............................. 19.93% 14.81% 39.31% 16.94% 25.96%
========= ========= ========= ========= =========
Net assets at end of year (000's) ......... $ 116,447 $ 90,707 $ 75,643 $ 49,629 $ 41,421
========= ========= ========= ========= =========
Ratio of net expenses to average net assets 0.83% 0.85% 0.86% 0.89% 0.94%
Ratio of net investment income
to average net assets .................. 0.35% 0.61% 0.82% 1.17% 1.50%
Portfolio turnover rate ................... 17% 22% 18% 20% 31%
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
THE GOVERNMENT STREET BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
============================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
============================================================================================================
YEARS ENDED MARCH 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ...... $ 20.90 $ 21.06 $ 20.47 $ 20.87 $ 20.33
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income .................. 1.23 1.27 1.32 1.34 1.35
Net realized and unrealized
gains (losses) on investments ....... (1.11) (0.16) 0.60 (0.40) 0.54
--------- --------- --------- --------- ---------
Total from investment operations .......... 0.12 1.11 1.92 0.94 1.89
--------- --------- --------- --------- ---------
Dividends from net investment income ...... (1.23) (1.27) (1.33) (1.34) (1.35)
--------- --------- --------- --------- ---------
Net asset value at end of year ............ $ 19.79 $ 20.90 $ 21.06 $ 20.47 $ 20.87
========= ========= ========= ========= =========
Total return .............................. 0.67% 5.38% 9.61% 4.60% 9.43%
========= ========= ========= ========= =========
Net assets at end of year (000's) ......... $ 45,156 $ 43,041 $ 36,908 $ 29,442 $ 28,718
========= ========= ========= ========= =========
Ratio of net expenses to average net assets 0.70% 0.73% 0.74% 0.75% 0.76%
Ratio of net investment income
to average net assets .................. 6.12% 6.01% 6.35% 6.44% 6.38%
Portfolio turnover rate ................... 20% 17% 10% 20% 10%
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
THE ALABAMA TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
===============================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
===============================================================================================================
YEARS ENDED MARCH 31,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 10.54 $ 10.49 $ 10.18 $ 10.23 $ 9.96
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income ..................... 0.44 0.44 0.44 0.43 0.42
Net realized and unrealized
gains (losses) on investments .......... (0.41) 0.05 0.31 (0.05) 0.27
--------- --------- --------- --------- ---------
Total from investment operations ............. 0.07 0.49 0.75 0.38 0.69
--------- --------- --------- --------- ---------
Dividends from net investment income ......... (0.44) (0.44) (0.44) (0.43) (0.42)
--------- --------- --------- --------- ---------
Net asset value at end of year ............... $ 10.13 $ 10.54 $ 10.49 $ 10.18 $ 10.23
========= ========= ========= ========= =========
Total return ................................. 0.34% 4.73% 7.44% 3.82% 7.02%
========= ========= ========= ========= =========
Net assets at end of year (000's) ............ $ 23,048 $ 21,560 $ 19,938 $ 16,801 $ 15,480
========= ========= ========= ========= =========
Ratio of net expenses to average net assets(a) 0.65% 0.65% 0.65% 0.66% 0.75%
Ratio of net investment income
to average net assets ..................... 4.32% 4.16% 4.19% 4.24% 4.11%
Portfolio turnover rate ...................... 19% 7% 2% 6% 4%
</TABLE>
(a) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been
0.72%, 0.76%, 0.75%, 0.78% and 0.86% for the years ended March 31, 2000,
1999, 1998, 1997, and 1996, respectively (Note 3).
See accompanying notes to financial statements.
10
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
SHARES COMMON STOCKS - 95.6% VALUE
--------------------------------------------------------------------------------
ADVERTISING - 0.5%
6,000 Omnicom Group, Inc. ........................ $ 560,625
-------------
AEROSPACE - 0.2%
7,000 Boeing Company ............................. 265,563
-------------
AIR COURIER SERVICES - 1.0%
31,000 FedEx Corporation(a) ....................... 1,209,000
-------------
CHEMICALS AND DRUGS - 9.8%
40,000 Becton Dickinson & Company ................. 1,052,500
15,000 Biomet, Inc. ............................... 545,625
30,000 Cardinal Health, Inc. ...................... 1,376,250
18,000 du Pont (E.I.) de Nemours & Company ........ 951,750
17,000 Eli Lilly & Company ........................ 1,071,000
15,000 Johnson & Johnson .......................... 1,050,938
24,900 Merck & Company, Inc. ...................... 1,546,912
5,500 Monsanto Company ........................... 283,250
29,200 Pfizer, Inc. ............................... 1,067,625
40,000 Schering-Plough Corporation ................ 1,470,000
10,000 Waters Corporation(a) ...................... 952,500
-------------
11,368,350
-------------
CONSTRUCTION - 2.1%
14,000 Caterpiller, Inc. .......................... 552,125
5,000 Clayton Homes, Inc. ........................ 50,625
3,000 Florida Rock Industries, Inc. .............. 84,000
8,500 Kaufman & Broad Home Corporation ........... 182,219
10,000 Lowe's Companies, Inc. ..................... 583,750
7,000 Masco Corporation .......................... 143,500
23,000 Valspar Corporation ........................ 881,188
-------------
2,477,407
-------------
CONSUMER PRODUCTS - 6.6%
21,000 Belo (A.H.) Corporation - Class A .......... 375,375
17,500 Clorox Company (The) ....................... 568,750
13,000 General Motors Corporation ................. 1,076,562
14,000 Gillette Company ........................... 527,625
6,500 Hewlett-Packard Company .................... 861,656
5,300 Lexmark International Group, Inc. - Class A(a) 560,475
4,000 Macromedia, Inc.(a) ........................ 361,250
5,500 Maytag Corporation ......................... 182,188
20,500 Microsoft Corporation(a) ................... 2,178,125
6,000 OshKosh B'Gosh, Inc. - Class A ............. 108,000
15,000 Procter & Gamble Company ................... 843,750
-------------
7,643,756
-------------
DURABLE GOODS - 18.2%
160,000 Cisco Systems, Inc.(a) ..................... 12,370,000
13,000 Costco Wholesale Corporation(a) ............ 683,313
23,500 General Electric Company ................... 3,646,906
6,000 Ingersoll-Rand Company ..................... 265,500
21,800 Intel Corporation .......................... 2,876,238
6,000 International Business Machines Corporation (IBM) 708,000
5,118 SPX Corporation(a) ......................... 583,132
-------------
21,133,089
-------------
11
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
SHARES COMMON STOCKS - 95.6% (CONTINUED) VALUE
--------------------------------------------------------------------------------
ELECTRONICS - 5.2%
1,000 Broadcom Corporation(a) .................... $ 242,875
2,500 Harmonic Inc.(a) ........................... 208,125
4,000 KEMET Corporation(a) ....................... 253,000
15,640 Koninklijke (Royal) Philips Electronics N.V 2,679,328
11,000 Motorola, Inc. ............................. 1,566,125
1,600 Powertel, Inc.(a) .......................... 110,700
5,500 Seagate Technology, Inc.(a) ................ 331,375
9,000 Solectron Corporation(a) ................... 360,562
5,000 Tandy Corporation .......................... 253,750
-------------
6,005,840
-------------
FINANCIAL - 12.9%
6,000 Aegon N.V .................................. 483,375
26,000 AFLAC, Inc. ................................ 1,184,625
10,000 American Express Company ................... 1,489,375
19,000 Charles Schwab Corporation (The) ........... 1,079,438
6,000 Chase Manhattan Corporation ................ 523,125
20,000 Citigroup, Inc. ............................ 1,186,250
75,000 Firstar Corporation ........................ 1,720,312
22,000 FleetBoston Financial Corporation .......... 803,000
20,000 Freddie Mac ................................ 883,750
10,500 Marsh & McLennan Companies, Inc. ........... 1,158,281
17,000 MBNA Corporation ........................... 433,500
50,000 Mellon Financial Corporation ............... 1,475,000
20,000 Nasdaq-100 Shares(a) ....................... 2,192,500
21,000 Synovus Financial Corporation .............. 396,375
-------------
15,008,906
-------------
FOOD/BEVERAGES - 1.4%
10,000 Anheuser-Busch Companies, Inc. ............. 622,500
40,000 Coca-Cola Enterprises ...................... 862,500
3,500 SYSCO Corporation .......................... 124,906
-------------
1,609,906
-------------
HEALTH CARE - 0.4%
7,000 United HealthCare Corporation .............. 417,375
-------------
HOTELS - 0.2%
7,000 Marriott International, Inc. - Class A ..... 220,500
-------------
MANUFACTURING - 3.7%
5,000 Cooper Tire & Rubber Company ............... 62,813
8,387 Delphi Automotive Systems Corporation ...... 134,192
9,500 General Dynamics Corporation ............... 472,625
6,500 Honeywell International, Inc. .............. 342,469
12,200 Johnson Controls, Inc. ..................... 659,562
10,000 Leggett & Platt, Inc. ...................... 215,000
5,500 Mueller Industries, Inc.(a) ................ 167,062
14,000 Pall Corporation ........................... 314,125
38,786 Tyco International, Ltd. ................... 1,934,452
4,000 Worthington Industries, Inc. ............... 49,500
-------------
4,351,800
-------------
METAL AND MINING - 0.9%
12,000 Alcoa, Inc. ................................ 843,000
10,000 Newmont Mining Corporation ................. 224,375
-------------
1,067,375
-------------
MULTIMEDIA - 0.7%
8,000 Meredith Corporation ....................... 221,500
12,000 Viacom, Inc. - Class A(a) .................. 641,250
-------------
862,750
-------------
12
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
SHARES COMMON STOCKS - 95.6% (CONTINUED) VALUE
--------------------------------------------------------------------------------
OIL/ENERGY - 5.1%
33,082 BP Amoco Plc ............................... $ 1,755,414
10,000 Burlington Resources, Inc. ................. 370,000
13,000 Chevron Corporation ........................ 1,201,688
10,000 Enron Corporation .......................... 748,750
14,650 Exxon Mobil Corporation .................... 1,139,953
7,500 Halliburton Company ........................ 307,500
12,000 Nabors Industries, Inc.(a) ................. 465,750
-------------
5,989,055
-------------
PAPER AND FOREST PRODUCTS - 0.8%
11,455 International Paper Company ................ 489,701
5,000 Mead Corporation ........................... 174,687
8,000 Willamette Industries, Inc. ................ 321,000
-------------
985,388
-------------
RACETRACKS - 0.2%
11,000 Speedway Motorsports, Inc.(a) .............. 274,312
-------------
RETAIL STORES - 6.4%
7,000 Abercrombie & Fitch Company - Class A(a) ... 112,000
16,000 Circuit City Stores - Circuit City Group ... 974,000
49,500 Home Depot, Inc. ........................... 3,192,750
7,500 Target Corporation ......................... 560,625
32,000 Wal-Mart Stores, Inc. ...................... 1,776,000
33,000 Walgreen Company ........................... 849,750
-------------
7,465,125
-------------
SERVICES - COMPUTER - 5.4%
12,500 Adobe Systems, Inc. ........................ 1,391,406
12,500 America Online, Inc.(a) .................... 840,625
22,200 Automatic Data Processing, Inc. ............ 1,071,150
24,000 Computer Sciences Corporation(a) ........... 1,899,000
9,500 Electronic Data Systems Corporation ........ 609,781
2,500 Inktomi Corporation(a) ..................... 487,500
-------------
6,299,462
-------------
SERVICES - CONSUMER - 0.0%
9,000 HEALTHSOUTH Corporation(a) ................. 50,062
-------------
TELECOMMUNICATION EQUIPMENT - 8.1%
6,600 Applied Materials, Inc.(a) ................. 622,050
4,000 JDS Uniphase Corporation(a) ................ 482,250
7,000 Lucent Technologies, Inc. .................. 425,250
4,000 Nokia Oyj .................................. 869,000
24,000 Nortel Networks Corporation ................ 3,024,000
36,000 Scientific-Atlanta, Inc. ................... 2,283,750
22,000 Tellabs, Inc.(a) ........................... 1,385,656
6,000 Titan Corporation(a) ....................... 306,000
-------------
9,397,956
-------------
UTILITIES - 5.8%
14,000 AT&T Corporation ........................... 787,500
24,000 BellSouth Corporation ...................... 1,128,000
18,490 Duke Energy Corporation .................... 970,725
59,900 SBC Communications, Inc. ................... 2,515,800
18,000 US WEST, Inc. .............................. 1,307,250
-------------
6,709,275
-------------
TOTAL COMMON STOCKS - 95.6% (COST $52,234,641) $111,372,877
-------------
13
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS - 6.8% VALUE
--------------------------------------------------------------------------------
7,865,603 Firstar Stellar Treasury Fund (Cost $7,865,603) $ 7,865,603
-------------
TOTAL INVESTMENTS AT VALUE - 102.4%
(COST $60,100,244) ......................... $119,238,480
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.4%) (2,791,858)
-------------
NET ASSETS - 100.0% ........................... $116,446,622
============
(a) Non-income producing security.
See accompanying notes to financial statements.
14
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
PAR VALUE U.S. TREASURY AND AGENCY OBLIGATIONS - 30.3%
--------------------------------------------------------------------------------
U.S. TREASURY NOTES - 5.8%
$ 20,000 8.75%, due 08/15/2000 ...................... $ 20,212
50,000 8.50%, due 11/15/2000 ...................... 50,641
140,000 8.00%, due 05/15/2001 ...................... 142,319
125,000 7.875%, due 08/15/2001 ..................... 127,227
850,000 5.75%, due 04/30/2003 ...................... 833,000
750,000 5.875%, due 11/15/2005 ..................... 734,297
750,000 5.50%, due 02/15/2008 ...................... 715,312
-------------
2,623,008
-------------
FEDERAL FARM CREDIT BANK BONDS - 1.7%
500,000 6.00%, due 01/07/2008 ...................... 465,726
325,000 6.06%, due 05/28/2013 ...................... 294,537
-------------
760,263
-------------
FEDERAL HOME LOAN BANK BONDS - 5.7%
500,000 7.57%, due 08/19/2004 ...................... 508,702
500,000 6.045%, due 12/10/2004 ..................... 479,370
750,000 5.925%, due 04/09/2008 ..................... 692,728
500,000 5.52%, due 09/23/2008 ...................... 446,906
500,000 5.42%, due 09/23/2008 ...................... 443,766
-------------
2,571,472
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION BONDS - 4.7%
500,000 6.345%, due 11/01/2005 ..................... 482,823
895,000 7.44%, due 09/20/2006 ...................... 881,969
800,000 7.04%, due 01/09/2007 ...................... 777,006
-------------
2,141,798
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BONDS - 12.4%
500,000 6.63%, due 06/20/2005 ...................... 489,996
650,000 7.65%, due 10/06/2006 ...................... 642,975
500,000 7.36%, due 02/07/2007 ...................... 486,353
500,000 7.125%, due 3/15/2007 ...................... 499,564
400,000 7.70%, due 04/10/2007 ...................... 393,466
500,000 6.62%, due 06/25/2007 ...................... 486,013
500,000 7.16%, due 06/26/2007 ...................... 483,306
500,000 7.00%, due 07/17/2007 ...................... 482,930
750,000 6.08%, due 12/15/2010 ...................... 689,060
400,000 6.80%, due 08/27/2012 ...................... 380,208
600,000 6.875%, due 09/01/2012 ..................... 569,093
-------------
5,602,964
-------------
TOTAL U.S. TREASURY AND AGENCY OBLIGATIONS
(Cost $14,549,929) ......................... $ 13,699,505
-------------
15
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE MORTGAGE-BACKED SECURITIES - 15.8%
--------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 15.8%
$ 12,671 Pool #15032, 7.50%, due 02/15/2007 ......... $ 12,560
384,211 Pool #438434, 6.50%, due 01/15/2013 ........ 371,032
569,950 Pool #470177, 7.00%, due 03/15/2014 ........ 561,800
389,575 Pool #518403, 7.00%, due 09/15/2014 ........ 384,004
10,852 Pool #176413, 7.50%, due 09/15/2016 ........ 10,757
14,872 Pool #170784, 8.00%, due 12/15/2016 ........ 15,040
11,855 Pool #181540, 8.00%, due 02/15/2017 ........ 11,989
483,398 Pool #493659, 6.50%, due 12/15/2018 ........ 455,894
404,119 Pool #476695, 6.50%, due 10/15/2023 ........ 381,126
370,794 Pool #366710, 6.50%, due 02/15/2024 ........ 349,697
493,291 Pool #453826, 7.25%, due 09/15/2027 ........ 485,679
695,862 Pool #412360, 7.00%, due 11/15/2027 ........ 673,951
581,989 Pool #454162, 7.00%, due 05/15/2028 ........ 563,664
978,026 Pool #2617, 7.50%, due 07/20/2028 .......... 963,656
463,712 Pool #158794, 7.00%, due 09/15/2028 ........ 449,111
469,481 Pool #48760, 6.50%, due 12/15/2028 ......... 442,769
970,737 Pool #506618, 7.00%, due 03/15/2029 ........ 940,171
-------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $7,363,455) .......................... $ 7,072,900
-------------
================================================================================
PAR VALUE CORPORATE BONDS - 47.2% VALUE
--------------------------------------------------------------------------------
FINANCE - 22.9%
AmSouth Bancorp,
$ 550,000 7.75%, due 05/15/2004 ...................... $ 549,482
-------------
Banc One Corporation,
600,000 7.00%, due 07/15/2005 ...................... 580,922
500,000 6.875%, due 08/01/2006 ..................... 480,026
-------------
1,060,948
-------------
Bank of America Corporation,
496,000 8.375%, due 03/15/2002 ..................... 504,257
750,000 7.125%, due 03/01/2009 ..................... 727,602
-------------
1,231,859
-------------
Bear Stearns Company,
170,000 9.375%, due 06/01/2001 ..................... 173,348
-------------
Duke Capital Corporation,
750,000 7.50%, due 10/01/2009 ...................... 736,626
-------------
General Electric Capital Corporation,
100,000 7.24%, due 01/15/2002 ...................... 100,268
150,000 7.50%, due 03/15/2002 ...................... 151,054
-------------
251,322
-------------
J.P. Morgan & Company,
500,000 7.25%, due 01/15/2002 ...................... 498,152
500,000 6.00%, due 01/15/2009 ...................... 444,994
-------------
943,146
-------------
Merrill Lynch & Company, Inc.,
745,000 7.375%, due 08/17/2002 ..................... 742,989
1,000,000 7.00%, due 04/27/2008 ...................... 957,499
-------------
1,700,488
-------------
16
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS - 47.2% (CONTINUED) VALUE
--------------------------------------------------------------------------------
NationsBank,
$ 550,000 7.625%, due 04/15/2005 ..................... $ 548,578
-------------
Regions Financial Corporation,
350,000 7.80%, due 12/01/2002 ...................... 350,700
-------------
Salomon, Inc.,
507,000 7.50%, due 02/01/2003 ...................... 506,893
-------------
Sears Roebuck Acceptance Corporation,
700,000 6.00%, due 03/20/2003 ...................... 670,710
-------------
SouthTrust Bank of Alabama, N.A.,
665,000 7.00%, due 11/15/2008 ...................... 637,881
-------------
Transamerica Financial Corporation,
1,000,000 7.50%, due 03/15/2004 ...................... 986,990
-------------
TOTAL FINANCE CORPORATE BONDS ................. 10,348,971
-------------
INDUSTRIAL - 19.4%
BP America, Inc.,
265,000 8.50%, due 04/15/2001 ...................... 268,815
-------------
Coca-Cola Company,
600,000 6.625%, due 08/01/2004 ..................... 582,636
-------------
Conoco, Inc.,
750,000 6.35%, due 04/15/2009 ...................... 698,798
-------------
duPont (E.I.) de Nemours & Company,
150,000 9.15%, due 04/15/2000 ...................... 150,086
425,000 6.75%, due 10/15/2002 ...................... 420,345
-------------
570,431
-------------
Ford Motor Company,
1,000,000 7.25%, due 10/01/2008 ...................... 985,710
-------------
General Motors Corporation,
565,000 7.10%, due 03/15/2006 ...................... 554,726
-------------
Hanson Overseas,
1,100,000 7.375%, due 01/15/2003 ..................... 1,090,914
-------------
International Business Machines Corporation,
1,000,000 7.25%, due 11/01/2002 ...................... 1,003,604
-------------
Kimberly-Clark Corporation,
240,000 8.625%, due 05/01/2001 ..................... 243,930
-------------
Mobil Corporation,
100,000 8.375%, due 02/12/2001 ..................... 101,095
-------------
Philip Morris Companies, Inc.,
700,000 7.125%, due 10/01/2004 ..................... 657,017
-------------
Raytheon Company,
800,000 6.50%, due 07/15/2005 ...................... 754,045
-------------
17
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS - 47.2% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Wal-Mart Stores, Inc.,
$ 170,000 9.10%, due 07/15/2000 ...................... $ 171,000
100,000 8.625%, due 04/01/2001 ..................... 101,492
1,000,000 7.50%, due 05/15/2004 ...................... 1,015,667
-------------
1,288,159
-------------
TOTAL INDUSTRIAL CORPORATE BONDS .............. 8,799,880
-------------
UTILITY - 4.9%
AT&T Corporation,
1,000,000 6.00%, due 03/15/2009 ...................... 903,787
-------------
BellSouth Corporation,
250,000 7.75%, due 02/15/10 ........................ 253,850
-------------
Emerson Electric Company,
587,000 6.30%, due 11/01/2005 ...................... 558,380
-------------
Scana Corporation,
500,000 6.05%, due 01/13/2003 ...................... 482,744
-------------
TOTAL UTILITY CORPORATE BONDS ................. 2,198,761
-------------
TOTAL CORPORATE BONDS
(Amortized Cost $22,123,380) ............... $ 21,347,612
-------------
================================================================================
PAR VALUE MUNICIPAL OBLIGATIONS - 2.2% VALUE
--------------------------------------------------------------------------------
Alabama State Public School & College Auth.,
$ 1,000,000 7.15%, due 09/01/2009 (Cost $972,490) ...... $ 977,229
-------------
================================================================================
SHARES MONEY MARKETS - 3.1% VALUE
--------------------------------------------------------------------------------
1,415,617 Firstar Stellar Treasury Fund (Cost $1,415,617) $ 1,415,617
-------------
TOTAL INVESTMENTS AT VALUE - 98.6%
(COST $46,424,871) ......................... $ 44,512,863
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.4% .. 642,928
-------------
NET ASSETS - 100.0% ........................... $ 45,155,791
============
See accompanying notes to financial statements.
18
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 2000
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% VALUE
--------------------------------------------------------------------------------
Alabama Mental Health Finance Auth. Special Tax,
$ 300,000 5.00%, due 05/01/2006 ...................... $ 299,988
-------------
Alabama Special Care Facilities Financing Auth. Rev.,
400,000 5.375%, due 11/01/2012 ..................... 401,588
-------------
Alabama State, GO,
100,000 5.70%, due 12/01/2002 ...................... 102,522
-------------
Alabama State Industrial Access Road & Bridge Corp., GO,
100,000 5.25%, due 06/01/2003 ...................... 100,862
-------------
Alabama State Mun. Elec. Auth. Power Supply Rev.,
150,000 5.625%, due 09/01/2000 ..................... 150,856
400,000 6.50%, due 09/01/2005, prerefunded
09/01/2001 at 101 ....................... 414,708
340,000 5.75%, due 09/01/2001 ...................... 344,991
-------------
910,555
-------------
Alabama State Public School & College Auth. Rev.,
100,000 4.40%, due 12/01/2000 ...................... 100,190
205,000 5.00%, due 12/01/2005 ...................... 205,588
250,000 5.25%, due 11/01/2005 ...................... 253,852
200,000 5.125%, due 11/01/2010 ..................... 199,586
300,000 5.00%, due 11/01/2012 ...................... 291,261
225,000 5.125%, due 11/01/2013 ..................... 219,319
-------------
1,269,796
-------------
Alabama Water Pollution Control Rev.,
190,000 6.25%, due 08/15/2004 ...................... 199,971
-------------
Anniston, AL, GO,
250,000 5.50%, due 01/01/2004 ...................... 255,920
-------------
Anniston, AL, Regional Medical Center Board Hospital Rev.,
20,000 7.375%, due 07/01/2006, ETM ................ 21,211
-------------
Athens, AL, School Warrants,
335,000 5.05%, due 08/01/2015 ...................... 318,096
-------------
Auburn University, Alabama, Rev.,
150,000 5.20%, due 06/01/2004 ...................... 151,893
325,000 5.25%, due 04/01/2005 ...................... 329,417
-------------
481,310
-------------
Baldwin Co., AL, GO,
200,000 5.85%, due 08/01/2003 ...................... 206,508
400,000 5.00%, due 02/01/2007 ...................... 399,056
200,000 4.55%, due 02/01/2009 ...................... 181,604
-------------
787,168
-------------
Baldwin Co., AL, Board of Education Rev.,
300,000 5.90%, due 12/01/2001 ...................... 303,279
-------------
Birmingham, AL, GO,
100,000 5.80%, due 04/01/2002 ...................... 102,115
200,000 5.90%, due 04/01/2003 ...................... 206,170
-------------
308,285
-------------
19
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Birmingham, AL, Industrial Water Board Rev.,
$ 100,000 5.00%, due 03/01/2001 ...................... $ 100,700
100,000 6.00%, due 07/01/2007 ...................... 106,197
-------------
206,897
-------------
Birmingham, AL, Medical Clinic Board Rev.,
60,000 7.30%, due 07/01/2005, ETM ................. 63,625
-------------
Birmingham, AL, Waterworks & Sewer Board Rev.,
50,000 5.90%, due 01/01/2003 ...................... 51,914
400,000 6.15%, due 01/01/2006 ...................... 416,976
-------------
468,890
-------------
Birmingham-Southern College, AL, Private Education
Bldg. Auth. Rev.,
500,000 5.10%, due 12/01/2012 ...................... 480,215
-------------
DCH Health Care Auth. of Alabama Rev.,
55,000 5.00%, due 06/01/2004 ...................... 54,976
-------------
Decatur, AL, GO,
300,000 5.00%, due 06/01/2009 ...................... 298,020
-------------
Decatur, AL, Water Rev.,
100,000 5.00%, due 05/01/2014 ...................... 95,233
-------------
Dothan, AL, GO,
500,000 5.50%, due 09/01/2014 ...................... 504,620
-------------
Fairhope, AL, Public Improvements Warrants,
295,000 5.10%, due 06/01/2014 ...................... 281,126
-------------
Fairhope, AL, Utility Rev.,
200,000 5.10%, due 12/01/2008 ...................... 200,150
-------------
Florence, AL, School Warrants,
200,000 4.65%, due 12/01/2012 ...................... 185,208
400,000 5.75%, due 09/01/2015 ...................... 406,404
-------------
591,612
-------------
Greenville, AL, GO,
300,000 5.10%, due 12/01/2009 ...................... 299,751
-------------
Hoover, AL, Board of Education Special Tax,
200,000 6.625%, due 02/01/2010, prerefunded
02/01/2001 at 102 ....................... 207,812
-------------
Hoover, AL, Board of Education, GO,
400,000 6.00%, due 02/15/2006 ...................... 420,524
-------------
Houston Co., AL, GO,
250,000 5.00%, due 07/01/2002 ...................... 251,512
300,000 5.60%, due 10/15/2014 ...................... 305,352
-------------
556,864
-------------
Huntsville, AL, GO,
115,000 5.15%, due 08/01/2000 ...................... 115,399
100,000 5.20%, due 11/01/2000 ...................... 100,630
500,000 5.50%, due 11/01/2002 ...................... 509,845
100,000 5.90%, due 11/01/2005 ...................... 104,589
250,000 5.25%, due 11/01/2011 ...................... 250,592
300,000 5.40%, due 02/01/2010 ...................... 303,714
-------------
1,384,769
-------------
20
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Huntsville, AL, Electric Systems Rev.,
$ 150,000 6.10%, due 12/01/2000 ...................... $ 151,866
150,000 5.00%, due 12/01/2003 ...................... 150,888
250,000 4.80%, due 12/01/2012 ...................... 235,210
-------------
537,964
-------------
Huntsville, AL, Water Systems Rev.,
150,000 5.15%, due 05/01/2004 ...................... 151,587
150,000 5.25%, due 05/01/2005 ...................... 151,694
200,000 4.70%, due 11/01/2013 ...................... 183,100
-------------
486,381
-------------
Jefferson Co., AL, GO,
150,000 5.55%, due 04/01/2002 ...................... 152,206
100,000 5.00%, due 04/01/2004 ...................... 100,179
-------------
252,385
-------------
Jefferson Co., AL, Board of Education Capital
Outlay Warrants,
300,000 5.70%, due 02/15/2011 ...................... 315,144
-------------
Jefferson Co., AL, Sewer Rev.,
140,000 5.15%, due 09/01/2002 ...................... 141,471
50,000 5.50%, due 09/01/2003, ETM ................. 51,136
300,000 5.75%, due 09/01/2005 ...................... 310,845
-------------
503,452
-------------
Lee Co., AL, GO,
300,000 5.50%, due 02/01/2007 ...................... 307,872
-------------
Madison Co., AL, Board of Education Capital
Outlay Tax Antic. Warrants,
175,000 5.20%, due 09/01/2004 ...................... 179,611
250,000 5.10%, due 09/01/2011 ...................... 245,495
-------------
425,106
-------------
Madison, AL, Warrants,
325,000 5.55%, due 04/01/2007 ...................... 334,675
200,000 4.40%, due 02/01/2011 ...................... 182,148
400,000 4.85%, due 02/01/2013 ...................... 376,120
-------------
892,943
-------------
Mobile Co., AL, Board of Education Capital
Outlay Warrants,
400,000 5.00%, due 03/01/2008 ...................... 398,176
-------------
Mobile Co., AL, Gas Tax Antic. Warrants,
100,000 4.50%, due 02/01/2003 ...................... 98,844
-------------
Mobile, AL, GO,
200,000 5.40%, due 08/15/2000 ...................... 200,952
25,000 6.30%, due 08/01/2001 ...................... 25,590
25,000 6.25%, due 08/01/2001 ...................... 25,574
275,000 6.20%, due 02/15/2007, ETM ................. 292,496
180,000 5.75%, due 02/15/2016 ...................... 182,601
-------------
727,213
-------------
Mobile, AL, Water & Sewer Commissioners Rev.,
55,000 6.30%, due 01/01/2003 ...................... 57,034
-------------
Montgomery Co., AL, GO,
100,000 5.20%, due 11/01/2006 ...................... 100,846
-------------
Montgomery, AL, GO,
200,000 4.70%, due 05/01/2002 ...................... 199,918
500,000 5.10%, due 10/01/2008 ...................... 501,025
-------------
700,943
-------------
21
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS - 94.1% (CONTINUED) VALUE
--------------------------------------------------------------------------------
Montgomery, AL, Waterworks & Sanitation Rev.,
$ 200,000 5.85%, due 03/01/2003 ...................... $ 205,042
400,000 5.60%, due 09/01/2009 ...................... 411,956
-------------
616,998
-------------
Mountain Brook, AL, Board of Education Capital
Outlay Warrants,
405,000 4.80%, due 02/15/2011 ...................... 387,241
-------------
Muscle Shoals, AL, GO,
400,000 5.60%, due 08/01/2010 ...................... 411,972
-------------
Opelika, AL, GO,
100,000 4.60%, due 03/01/2003 ...................... 99,458
100,000 5.30%, due 07/01/2003 ...................... 101,570
-------------
201,028
-------------
Scottsboro, AL, Waterworks Sewer & Gas Rev.,
200,000 4.35%, due 08/01/2011 ...................... 180,372
-------------
Shelby Co., AL, GO,
205,000 5.20%, due 08/01/2000 ...................... 205,744
50,000 5.35%, due 08/01/2001 ...................... 50,544
-------------
256,288
-------------
Shelby Co., AL, Hospital Board Rev.,
35,000 6.60%, due 02/01/2001, ETM ................. 35,666
25,000 6.60%, due 02/01/2002, ETM ................. 25,801
40,000 6.60%, due 02/01/2003, ETM ................. 41,818
-------------
103,285
-------------
Tuscaloosa, AL, Board of Education Special
Tax Warrants,
75,000 5.70%, due 02/15/2005 ...................... 77,358
125,000 6.00%, due 02/15/2009 ...................... 129,911
300,000 4.85%, due 02/15/2013 ...................... 281,844
-------------
489,113
-------------
Tuscaloosa, AL, Board of Education, GO,
100,000 5.10%, due 02/01/2004 ...................... 100,823
300,000 4.625%, due 08/01/2008 ..................... 287,652
-------------
388,475
-------------
University of Alabama General Fee Series A Rev.,
50,000 5.00%, due 11/01/2000 ...................... 50,248
240,000 5.10%, due 10/01/2002 ...................... 242,239
400,000 5.25%, due 06/01/2010 ...................... 402,344
100,000 5.375%, due 06/01/2013 ..................... 100,287
-------------
795,118
-------------
Vestavia Hills, AL, Board of Education Capital
Outlay Rev.,
55,000 5.25%, due 02/01/2004 ...................... 55,857
-------------
Vestavia Hills, AL, Warrants,
125,000 4.90%, due 04/01/2005 ...................... 124,639
-------------
TOTAL ALABAMA FIXED RATE REVENUE AND GENERAL
OBLIGATION (GO) BONDS - 94.1%
(Cost $21,716,842) ......................... $ 21,690,324
-------------
22
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS - 4.7%
--------------------------------------------------------------------------------
1,075,857 Firstar Tax-Free Fund (Cost $1,075,857) ....... $ 1,075,857
-------------
TOTAL INVESTMENTS AT VALUE - 98.8%
(COST $22,792,699) ......................... $ 22,766,181
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.2% .. 282,159
-------------
NET ASSETS - 100.0% ........................... $ 23,048,340
============
ETM - Escrowed to maturity.
See accompanying notes to financial statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Government Street Equity Fund, The Government Street Bond Fund, and The
Alabama Tax Free Bond Fund (the Funds) are each a no-load series of The
Williamsburg Investment Trust (the Trust). The Trust, an open-end management
investment company registered under the Investment Company Act of 1940, was
organized as a Massachusetts business trust on July 18, 1988.
The Government Street Equity Fund's investment objective is to seek capital
appreciation through the compounding of dividends and capital gains, both
realized and unrealized, on its investments in common stocks.
The Government Street Bond Fund's investment objectives are to preserve capital,
to provide current income and to protect the value of the portfolio against the
effects of inflation.
The Alabama Tax Free Bond Fund's investment objectives are to provide current
income exempt from both federal income taxes and the personal income taxes of
Alabama and to preserve capital.
The following is a summary of the Funds' significant accounting policies:
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 which are traded over-the-counter
are valued at the last sales price, if available, otherwise, at the last quoted
bid price. Securities traded on a national stock exchange are valued based upon
the closing price on the principal exchange where the security is traded. It is
expected that fixed income securities will ordinarily be traded in the
over-the-counter market, and common stocks will ordinarily be traded on a
national securities exchange, but may also be traded in the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service.
Repurchase agreements - The Funds may enter into joint repurchase agreements
with other funds within the Trust. The joint repurchase agreement, which is
collateralized by U.S. Government obligations, is valued at cost which, together
with accrued interest, approximates market value. At the time the Funds enter
into the joint repurchase agreement, the Funds take possession of the underlying
securities and the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement. In addition, each Fund actively monitors and
seeks additional collateral, as needed.
Share valuation - The net asset value per share of each Fund is calculated daily
by dividing the total value of each Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of each Fund is equal to the net asset value per share.
Investment income - Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized in accordance with income tax regulations.
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 monthly to shareholders of The Government Street Bond
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. Income dividends and capital gain
distributions are determined in accordance with income tax regulations.
24
<PAGE>
Security transactions - Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at 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 - It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies,
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
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% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of each Fund as of March 31, 2000:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
GOVERNMENT GOVERNMENT ALABAMA
STREET STREET TAX FREE
EQUITY FUND BOND FUND BOND FUND
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized appreciation ............ $ 60,272,476 $ 87,338 $ 233,036
Gross unrealized depreciation ............ (1,183,194) (1,999,346) (329,106)
------------ ------------ ------------
Net unrealized appreciation (depreciation) $ 59,089,282 $ (1,912,008) $ (96,070)
============ ============ ============
Federal income tax cost .................. $ 60,149,198 $ 46,424,871 $ 22,862,251
============ ============ ============
------------------------------------------------------------------------------------------
</TABLE>
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for The Government Street Equity Fund and The
Alabama Tax Free Bond Fund is due to certain timing differences in the
recognition of capital losses under income tax regulations and generally
accepted accounting principles.
As of March 31, 2000, The Government Street Bond Fund and The Alabama Tax Free
Bond Fund had capital loss carryforwards for federal income tax purposes of
$760,308 and $176,717, respectively, which expire through the year 2008. In
addition, The Government Street Bond Fund had net realized capital losses of
$145,238 during the period from November 1, 1999 through March 31, 2000, which
are treated for federal income tax purposes as arising during the Fund's tax
year ending March 31, 2001. These capital loss carryforwards and "post-October"
losses may be utilized in future years to offset net realized capital gains
prior to distributing such gains to shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 2000, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $22,178,843 and $16,307,402, respectively, for The Government Street
Equity Fund, $11,563,587 and $7,842,909, respectively, for The Government Street
Bond Fund, and $5,922,774 and $3,884,720, respectively, for The Alabama Tax Free
Bond Fund.
25
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by T. Leavell & Associates, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, The Government Street Equity Fund pays the
Adviser a fee, which is computed and accrued daily and paid monthly, at an
annual rate of .60% of its average daily net assets up to $100 million and .50%
of such assets in excess of $100 million. The Government Street Bond Fund pays
the Adviser a fee at an annual rate of .50% of its average daily net assets up
to $100 million and .40% of such net assets in excess of $100 million. The
Alabama Tax Free Bond Fund pays the Adviser a fee at an annual rate of .35% of
its average daily net assets up to $100 million and .25% of such net assets in
excess of $100 million.
The Adviser currently intends to limit the total operating expenses of The
Alabama Tax Free Bond Fund to .65% of its average daily net assets. Accordingly,
the Adviser voluntarily waived $15,400 of its investment advisory fees for the
Fund during the year ended March 31, 2000.
Certain Trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement between the Trust and
Integrated Fund Services, Inc. (IFS), IFS provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Funds. For these services, IFS receives a monthly fee from The
Government Street Equity Fund at an annual rate of .20% of its average daily net
assets up to $25 million; .175% of the next $25 million of such assets; and .15%
of such net assets in excess of $50 million. From The Government Street Bond
Fund, IFS receives a monthly fee of .075% of its average daily net assets up to
$200 million and .05% of such assets in excess of $200 million. From The Alabama
Tax Free Bond Fund, IFS receives a monthly fee of .15% of its average daily net
assets up to $200 million and .10% of such assets in excess of $200 million. The
fee for each Fund is subject to a $2,000 monthly minimum. In addition, each Fund
pays IFS 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 IFS.
4. FEDERAL TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
In accordance with federal tax requirements, the following provides shareholders
with information concerning distributions from net realized gains, if any, made
by the Funds during the year ended March 31, 2000. On March 31, 2000, The
Government Street Equity Fund declared and paid a long-term capital gain
distribution of $0.4190 per share. As required by federal regulations,
shareholders will receive notification of their portion of a Fund's taxable
capital gain distribution, if any, paid during the 2000 calendar year early in
2001.
In accordance with federal tax requirements, The Alabama Tax Free Bond Fund
designates its respective dividends paid from net investment income during the
year ended March 31, 2000, as "exempt-interest dividends."
26
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
================================================================================
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statements of assets and liabilities of
The Government Street Equity Fund, The Government Street Bond Fund and The
Alabama Tax Free Bond Fund, (each a series of The Williamsburg Investment
Trust), including the portfolios of investments, as of March 31, 2000, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 2000 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Government Street Equity Fund, The Government Street Bond Fund and The Alabama
Tax Free Bond Fund, as of March 31, 2000, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended and their financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 28, 2000
27
<PAGE>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
------------------------------
No Load Mutual Funds
INVESTMENT ADVISER
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, AL 36633
ADMINISTRATOR
Integrated Fund Services, Inc.
P.O. Box 5354
Cincinnati, OH 45201-5354
1-800-443-4249
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
BOARD OF TRUSTEES
Richard Mitchell, President
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Erwin H. Will, Jr.
Samuel B. Witt, III
PORTFOLIO MANAGERS
Thomas W. Leavell,
The Government Street Equity Fund
Mary Shannon Hope,
The Government Street Bond Fund
Timothy S. Healey,
The Alabama Tax Free Bond Fund
