STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN BOND FUNDS
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
August 1, 1996
Revised December 9, 1996
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
INVESTMENT OBJECTIVES AND POLICIES....................................... 2
DESCRIPTION OF BOND RATINGS.............................................. 5
INVESTMENT LIMITATIONS................................................... 8
TRUSTEES AND OFFICERS.................................................... 10
INVESTMENT ADVISOR...................................................... 14
ADMINISTRATOR............................................................ 15
OTHER SERVICES........................................................... 15
BROKERAGE............................................................... 16
SPECIAL SHAREHOLDER SERVICES............................................. 17
PURCHASE OF SHARES....................................................... 18
REDEMPTION OF SHARES..................................................... 19
NET ASSET VALUE DETERMINATION............................................ 19
ALLOCATION OF TRUST EXPENSES............................................. 19
ADDITIONAL TAX INFORMATION............................................... 20
CAPITAL SHARES AND VOTING................................................ 21
CALCULATION OF PERFORMANCE DATA.......................................... 22
FINANCIAL STATEMENTS AND REPORTS......................................... 25
This Statement of Additional Information is not a prospectus and should only
be read in conjunction with the Prospectus of The Jamestown Bond Funds (the
"Funds") dated August 1, 1996. The Prospectus may be obtained from the Funds,
at the address and phone number shown above, at no charge.
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INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both The Jamestown Bond Fund (the
"Bond Fund") and The Jamestown Short Term Bond Fund (the "Short Term Fund")
unless otherwise noted.
The investment objectives and policies of the Funds are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
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 Advisor 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.
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SECURITIES OF UNSEASONED COMPANIES. The securities of unseasoned companies
(those in business less than three years, including predecessors and, in the
case of bonds, guarantors) may have a limited trading market, which may
adversely affect disposition. If other investors attempt to dispose of such
holdings when the Funds desire to do so, the Funds could receive lower prices
than might otherwise be obtained. Because of the increased risk over larger,
better known companies, each Fund limits its investments in the securities of
unseasoned issuers to no more than 5% of its total assets.
U.S. GOVERNMENT SECURITIES. Each Fund may invest in debt obligations which are
issued or guaranteed by the U.S. Government, its agencies and
instrumentalities ("U.S. Government Securities") as described herein. U.S.
Government Securities include the following securities: (1) U.S. Treasury
obligations of various interest rates, maturities and issue dates, such as
U.S. Treasury bills (mature in one year or less), U.S. Treasury notes (mature
in one to seven years), and U.S. Treasury bonds (mature in more than seven
years), the payments of principal and interest of which are all backed by the
full faith and credit of the U.S. Government; (2) obligations issued or
guaranteed by U.S. Government agencies or instrumentalities, some of which are
backed by the full faith and credit of the U.S. Government, e.g., obligations
of the Government National Mortgage Association ("GNMA"), the Farmers Home
Administration and the Export Import Bank; some of which do not carry the full
faith and credit of the U.S. Government but which are supported by the right
of the issuer to borrow from the U.S. Government, e.g., obligations of the
Tennessee Valley Authority, the U.S. Postal Service, the Federal National
Mortgage Association ("FNMA"), and the Federal Home Loan Mortgage Corporation
("FHLMC"); and some of which are backed only by the credit of the issuer
itself, e.g., obligations of the Student Loan Marketing Association, the
Federal Home Loan Banks and the Federal Farm Credit Bank; and (3) any of the
foregoing purchased subject to repurchase agreements as described herein. The
Funds do not intend to invest in "zero coupon" Treasury securities. The
guarantee of the U.S. Government does not extend to the yield or value of the
Funds' shares.
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 U.S. Government or the issuing
agency. Mortgage 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 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
<PAGE>
premium, such prepayments could result in capital losses. The
U.S. Government does not guarantee premiums and market value of
U.S. Government Securities.
DESCRIPTION OF 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 interest-bearing
instrument. The Funds 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 Advisor'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 Funds only through the Master Note program of the
Funds' custodian, acting as administrator thereof. The Advisor 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.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Funds may purchase
securities on a when-issued basis or for settlement at a future date if the
Funds hold sufficient assets to meet the purchase price. In such purchase
transactions the Funds will not accrue interest on the purchased security
until the actual settlement. Similarly, if a security is sold for a forward
date,
<PAGE>
the Funds 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 Funds would generally purchase securities on a forward commitment or
when-issued basis with the intention of taking delivery, the Funds may sell
such a security prior to the settlement date if the Advisor felt such action
was appropriate. In such a case, the Funds could incur a short-term gain or
loss.
RESTRICTED SECURITIES. Each Fund may purchase securities that are not
registered ("restricted securities") under the 1933 Act, but can be offered
and sold to "qualified institutional buyers" under Rule 144A of the 1933 Act.
However, a Fund will not invest more than 10% of its assets in illiquid
investments, which includes securities that are not readily marketable and
restricted securities, unless the Board of Trustees determines, based upon a
continuing review of the trading markets for the specific restricted security,
that such restricted securities are liquid. The Board of Trustees may adopt
guidelines and delegate to the Advisor the daily function of determining and
monitoring liquidity of restricted securities. It is not possible to predict
with accuracy how the markets for certain restricted securities will develop.
Investing in restricted securities could have the effect of increasing the
level of a Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. Each
Fund currently intends to limit its investments in restricted securities to no
more than 5% of its net assets.
DESCRIPTION OF BOND RATINGS
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 Advisor believes that the quality of fixed-income securities
in which the Funds 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.
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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.
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.
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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.
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.
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INVESTMENT LIMITATIONS
The Funds have adopted the following investment limitations, in addition to
those described in the Prospectus, 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 (except that securities of the
U.S. Government, its agencies or instrumentalities are not
subject to these limitations);
(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 Advisor 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;
(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, and the Funds
may invest in certain mortgage backed securities as
described in the Prospectus under "Investment Objectives,
Investment Policies and Risk Considerations";
(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);
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(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 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) Purchase real estate or interests in real estate, except that
securities in which the Funds invest may themselves have investment
in real estate or interests in real estate (the Funds do invest in
securities composed of mortgages against real estate);
(11) Invest more than 10% in the aggregate in illiquid securities
(potentially including repurchase agreements with a maturity of
greater than 7 days, Interest Only or Principal Only securities, and
mortgage backed strips which may not be readily marketable); or
(12) Write, purchase or sell puts, calls or combinations thereof, or
purchase or sell commodities, commodities contracts, futures
contracts or related options, or purchase, sell or write warrants.
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 Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
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<TABLE>
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg
Investment Trust (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, 1996:
<CAPTION>
NAME, POSITION, PRINCIPAL OCCUPATION COMPENSATION
AGE AND ADDRESS DURING PAST 5 YEARS FROM THE TRUST
- ------------------ -------------------- --------------
<S> <C> <C>
Jack E. Brinson (age 64) President, Brinson Investment Co. $8,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886
Austin Brockenbrough III (age 59) Managing Director None
Trustee** Lowe, Brockenbrough & Tattersall, Inc.
President Richmond, Virginia
The Jamestown International Equity Fund
The Jamestown Tax Exempt Virginia Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John T. Bruce (age 42) Principal 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 59) Physician $8,000
Trustee** Dermatology Associates of Richmond
5600 Grove Avenue Richmond, Virginia
Richmond, Virginia 23226
J. Finley Lee (age 56) Julian Price Professor Emeritus of $8,000
Trustee Business Administration
614 Croom Court University of North Carolina
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina
Richard Mitchell (age 47) Principal 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
<PAGE>
<CAPTION>
<S> <C> <C>
Richard L. Morrill (age 57) President $8,000
Trustee University of Richmond
7000 River Road Richmond, Virginia
Richmond, Virginia 23229
Harris V. Morrissette (age 36) President $6,500
Trustee Marshall Biscuits
1500 S. Beltline Hwy. Mobile, Alabama
Mobile, Alabama 36693
Fred T. Tattersall (age 47) Managing Director None
Trustee** Lowe, Brockenbrough & Tattersall, Inc.
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Samuel B. Witt III (age 60) Attorney at Law $8,000
Trustee
2300 Clarendon Blvd.
Suite 407
Arlington, Virginia 22201
Charles M. Caravati III (age 30) Assistant Portfolio Manager
Vice President Lowe, Brockenbrough & Tattersall, Inc.
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 54) Principal
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 43) Vice President
Vice President T. Leavell & Associates, Inc.
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
<PAGE>
<CAPTION>
<S> <C> <C>
R. Gregory Porter, III (age 55) Principal
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 34) Vice President, MGF Service Corp.
Treasurer and Leshner Financial, Inc.; Treasurer,
312 Walnut Street, 21st Floor Midwest Trust, Midwest Group
Cincinnati, Ohio 45202 Tax Free Trust and Midwest Strategic Trust
Henry C. Spalding, Jr. (age 58) Executive Vice President
President Lowe, Brockenbrough & Tattersall, Inc.
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John F. Splain (age 39) Secretary and General Counsel,
Secretary MGF Service Corp., Midwest
312 Walnut Street, 21st Floor Group Financial Services, Inc. and
Cincinnati, Ohio 45202 Leshner Financial, Inc.; Secretary,
Midwest Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust
Ernest H. Stephenson, Jr. (age 51) Vice President
Vice President Lowe, Brockenbrough & Tattersall, Inc.
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 45) Administrator
Vice President Lowe, Brockenbrough & Tattersall, Inc.
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 37) Senior Vice President
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Bond Fund since 1992;
The Jamestown Short Term Bond Fund (previously Vice President,
6620 West Broad Street Julius Straus
Suite 300 Richmond, Virginia)
Richmond, Virginia 23230
<PAGE>
<CAPTION>
<S> <C> <C>
Beth Ann Walk (age 37) Portfolio Manager
Vice President Lowe, Brockenbrough & Tattersall, Inc.
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
</TABLE>
- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act
Messrs. Brinson (Chairman), Caravati, Lee, Morrill, Morrissette and Witt
constitute the Trust's 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. The Trustees have not
appointed a compensation committee or a nominating committee.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 5, 1996, 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 Bond Fund
and 6.8% of the then outstanding shares of the Short Term Fund. On the same
date, Rockingham Health Care, Inc., 235 Cantrell Avenue, Harrisonburg,
Virginia 22801, owned of record 56.2% of the then outstanding shares of the
Short Term Fund and may therefore be deemed to control the Short Term Fund. On
the same date, Halifax Regional Hospital, 2204 Wilborn Avenue, South Boston,
Virginia 24592, owned of record 12.2% of the then outstanding shares of the
Bond Fund; Crestar Bank as Trustee for Hourly Employees Norshipco Pension
Plans, P.O. Box 2642, Norfolk, Virginia 23501, owned of record 5.4% of the
then outstanding shares of the Bond Fund; the Estate of Morton Blaustein, P.O.
Box 238, Baltimore, Maryland 21203, owned of record 11.0% of the then
outstanding shares of the Bond Fund; Rockingham Health Care, Inc., 235
Cantrell Avenue, Harrisonburg, Virginia 22801, owned of record 11.9% of the
then outstanding shares of the Bond Fund; Rockingham Memorial Hospital
Retirement Plan, 235 Cantrell Avenue, Harrisonburg, Virginia 22801, owned of
record 7.4% of the then outstanding shares of the Bond Fund; Calvert Memorial
Hospital, 100 Hospital Road, Prince Frederick, Maryland 20678, owned of record
9.6% of the then outstanding shares of the Bond Fund; Virginia International
Terminals, Inc. Pension Plan, P.O. Box 1387, Norfolk, Virginia 23501, owned of
record 10.9% of the then outstanding shares of the Bond Fund; Light & Co.,
P.O. Box 1596, Baltimore, Maryland, owned of record 6.1% of the then
outstanding shares of the Bond Fund; the Lowe, Brockenbrough & Tattersall
Money Purchase Pension
<PAGE>
Plan, 6620 West Broad Street, Richmond, Virginia 23230, owned of record 6.8%
of the then outstanding shares of the Short Term Fund; the McKay-Dee
Foundation, 3939 Harrison Boulevard, Ogden, Utah 84403, owned of record 9.5%
of the then outstanding shares of the Short Term Fund; and The Trust Company
of the South, P.O. Box 1898, Burlington, North Carolina 27216, owned of record
16.6% of the then outstanding shares of the Short Term Fund.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Inc. (the "Advisor") 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, 1997 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
Advisor 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 Advisor. The
Advisory Agreement provides that it will terminate automatically in the event
of its assignment.
Compensation of the Advisor with respect to each Fund, is at the annual rate
of 0.375% of such Fund's average daily net assets. For the fiscal years ended
March 31, 1996, 1995 and 1994, the Bond Fund paid the Advisor advisory fees of
$305,247, $242,915 and $227,910, respectively. For the fiscal years ended
March 31, 1996, 1995 and 1994, the Short Term Fund paid the Advisor advisory
fees of $3,786 (which was net of voluntary fee waivers of $43,635), $3,372
(net of voluntary fee waivers of $49,560) and $11,707 (net of voluntary fee
waivers of $52,586).
The Advisor, organized as a Virginia corporation in 1970, is controlled by its
shareholders, Austin Brockenbrough, III and Fred T. Tattersall. In addition to
acting as Advisor to the Funds, the Advisor serves as investment advisor to
four 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 Advisor 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 Advisor 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
<PAGE>
of the Funds as described herein and in the Prospectus. The Advisor places all
securities orders for the Funds, determining with which broker, dealer, or
issuer to place the orders.
The Advisor must adhere to the brokerage policies of the Funds in placing all
orders, the substance of which policies are that the Advisor must seek at all
times the most favorable price and execution for all securities brokerage
transactions.
The Advisor also provides, at its own expense, certain Executive Officers to
the Trust, and pays the entire cost of distributing Fund shares.
ADMINISTRATOR
MGF Service Corp. (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, each 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; provided, however, that the minimum fee is $2,000 per month for
each Fund. 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.
For the fiscal years ended March 31, 1996 and 1995, the Administrator received
fees of $61,029 and $49,025, respectively, from the Bond Fund and $24,000 and
$23,301, respectively, from the Short Term Fund.
OTHER SERVICES
The firm of Tait, Weller & Baker, Two Penn Center Plaza, Philadelphia,
Pennsylvania 19102, 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.
<PAGE>
The Custodian of the Funds' assets is Star 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.
BROKERAGE
It is the Funds' practice to seek the best price and execution for all
portfolio securities transactions. The Advisor (subject to the general
supervision of the Board of Trustees) directs the execution of the Funds'
portfolio transactions. The Trust has adopted a policy which prohibits the
Advisor from effecting Fund portfolio transactions with broker-dealers which
may be interested persons of either Fund, the Trust, any Trustee, officer or
director of the Trust or its investment advisors or any interested person of
such persons.
The Funds' 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. However, the Bond Fund typically transacts
in shares of closed-end investment companies on an agency basis, and pays
commissions in connection with these transactions.
For the fiscal years ended March 31, 1996, 1995 and 1994, the total amount of
brokerage commissions paid by the Bond Fund was $126,787, $0 and $0,
respectively. No brokerage commissions were paid by the Short Term Fund for
the last three fiscal years.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of either Fund's brokerage commissions to persons or firms
providing the Advisor 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 Advisor 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 Advisor is obligated to effect
transactions for the Funds based upon obtaining the most favorable price and
execution. Factors considered by the Advisor 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 Advisor's perception of the
broker's reliability, integrity and financial condition. During the fiscal
year ended March 31, 1996, the amount of brokerage transactions and related
commissions directed by the Bond Fund to brokers because of research services
provided were $11,731,411 and $65,720.
<PAGE>
In an effort to reduce the total operating expenses of the Bond Fund, a
portion of the Fund's custodian fees have been reimbursed through an
arrangement with a third party broker-dealer who is compensated through
security trades. Total custodian expenses reimbursed by the broker-dealer for
the year ended March 31, 1996 were $22,423.
As of March 31, 1996, the Short Term Fund held bonds (having a market value of
$211,216) issued by Bear Stearns Company, the parent of one of the Trust's
"regular broker-dealers" as defined in the 1940 Act.
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.
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 Advisor 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 Advisor 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
<PAGE>
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 Fund is the net asset value next
determined after the order is received. An order received prior to 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
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
$5,000 applies to Trustees, officers and employees of the Funds, the Advisor
and certain parties related thereto, including clients of the Advisor 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
<PAGE>
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 New York Stock Exchange (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 Funds 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 Funds.
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 trading of 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, Presidents'
Day, Good Friday, Memorial Day, Fourth of July, Labor Day, Columbus Day,
Veterans 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 Advisor
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
<PAGE>
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.
Under the Advisory Agreement, the Advisor may be required to reimburse a Fund
if that Fund's annual ordinary operating expenses exceed certain limits. This
expense limitation is calculated and administered separately with respect to
each series of the Trust in accordance with the requirements of state
securities authorities. Expenses which are not subject to this limitation are
interest, taxes and extraordinary expenses. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities,
which are capitalized in accordance with generally accepted accounting
principles applicable to investment companies, are accounted for as capital
items and not as expenses. Reimbursement, if any, will be on a monthly basis,
subject to year end adjustment. The Advisor in its discretion may, but is not
required to, reimburse a Fund an amount of money in excess of its advisory
fee.
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. Each Fund will also be required to
derive less than 30% of its gross income from the sale or other disposition of
securities held for less than 90 days.
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
<PAGE>
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.
As of March 31, 1996, the Bond Fund and the Short Term Fund had capital loss
carryforwards for federal income tax purposes of $1,046,606 and $443,059,
respectively, which expire on March 31, 2003. These capital loss carryforwards
may be utilized in future years to offset net realized 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 "How to Purchase
Shares" in the Prospectus.
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 part of your investment.
CAPITAL SHARES AND VOTING
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
<PAGE>
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 least
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.
Prior to January 24, 1994 the Trust was called The Nottingham Investment
Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, each Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Funds 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
quotations for the Bond Fund for the one year period ended March 31, 1996, for
the five year period ended March 31, 1996 and for the period since inception
(December 13, 1990) to March 31, 1996 are 11.23%, 7.92% and 7.79%,
respectively. The average annual total return quotations for the Short Term
Fund for the one year period ended March 31, 1996 and for the period since
inception (January 21, 1992) to March 31, 1996 are 7.38% and 5.05%,
respectively.
- 124 -
<PAGE>
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:
Yield = 2[(a-b/cd + 1)6 - 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 yields of the Bond Fund and the Short Term
Fund for the 30 days ended March 31, 1996 were 6.30% and 5.84%, 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 Bond Fund may compare its performance to the
Lehman Brothers Government/Corporate Index and the Lehman Brothers Aggregate
Index, which are generally considered to be representative of the performance
of taxable bonds, and the Short Term Fund may compare its performance to the
Merrill Lynch 1-3 Year Treasury Index. 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.
<PAGE>
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 non-standardized 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.
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 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 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.
<PAGE>
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, 1996, together with the report of the
independent accountants thereon, are included on the following pages.
<PAGE>
The Jamestown Bond Fund
No Load Mutual Fund
Annual Report
March 31, 1996
Investment Adviser Administrator
Lowe, Brockenbrough & Tattersall, Inc. MGF Service Corp.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45202-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN BOND FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1996
Performance of The Jamestown Bond Fund
First Quarter 1996
What a difference a few months can make! The clearly bullish sentiment
that investors had at the end of 1995 was quickly reversed during the first
quarter of this year as the Lehman Aggregate Index fell 1.8% and the Lehman
Government/Corporate Index fell 2.3%. While the 3-month Treasury bill yield
remained fairly stable, 2-year and longer rates rose between 60 and 75 basis
points in reaction to an economy that caught investors off guard with its
strength. As economic growth rates were being revised up, expectations for
further rate cuts from the Federal Reserve were being revised down. Interest
rates also reflected disappointment with the prospects for a balanced budget
and a restructured tax system. Except for Italy and France, where rates fell
slightly, other G-7 countries followed our lead and experienced higher rates
for the quarter. Central Bankers did little to reverse the trend.
For the quarter, your Fund performed in line with its comparative
indices. Even though our maturity strategy remained slightly biased toward
falling interest rates, our sector strategies gave our performance a boost. In
assessing the economy, we underestimated the improvement in employment and the
stimulative effect that last year's low rates had on spending. The strength
appeared to transcend even the most obvious drags of unusually inclement
weather, the government shutdown and the General Motors strike. As for
sectors, our performance benefited from an overweighting in mortgages. Despite
the increased volatility in interest rates during the quarter, mortgages
performed well as higher rates helped to dispel prepayment fears. Our holdings
in seasoned mortgages performed even stronger than the mortgage market in
general. Closed-end mutual funds contributed to performance for the quarter as
renewed buying interest in the area caused discounts to narrow.
Fiscal Year Ended March 31, 1996
In 1995, the bond market experienced one of the best years in its history
on the heels of one of its worst. The stage was set for 1995's rally by 1994's
monetary tightening, although few investors foresaw it at the time. Except for
a brief backup in July, the bond market posted positive returns in every month
and its third best annual return ever on a calendar year basis. The market hit
a "sweet spot", benefiting from slower economic growth, subdued inflation and,
finally, the prospect of a balanced federal budget. For the year, 2 to 5-year
Treasury yields fell about 2.5%, while 10 to 30-year Treasury yields fell
about 2.0%. The year started with yields ranging between 5.5% for 3-month
Treasury bills and nearly 8.0% for 30-year Treasury bonds and closed the year
with all maturities yielding "5 something". Returns from overseas were
impressive but, in general, ranged between 13.5% and 17.5%.
For most of the year our strategy was to stay fully invested with a
duration either the same as or slightly longer than that of the Aggregate
Index. While we did not fully participate in the early stage of the rally, our
neutral to slightly bullish posture during the second half of 1995 enabled
your Fund to benefit from falling yields. Corporate bonds performed well,
largely due to corporate America's prospects for increased revenue growth, but
also due to the longer duration of the corporate market. We remained
underweighted in long corporates and overweighted in short corporates all
year. This strategy added value as most corporate spread narrowing occurred in
short maturities. We also concentrated on bank and finance paper which was the
best performing sector of the corporate market. Mortgage-backed securities had
a volatile year with strong relative performance in the first and third
quarters and weak relative performance in the second and fourth quarters. For
the year, mortgages underperformed on an absolute basis, but slightly
outperformed Treasuries on a duration-adjusted basis. Our mortgage strategies
also added value and were active as we shifted from an underweighting at the
beginning of the year when mortgages appeared to offer little value, to an
overweighting by year-end as the value of mortgages increased with higher
levels of volatility and lower levels of rates. We also correctly emphasized
seasoned production throughout the year.
<PAGE>
Your Fund participated fully in the rally throughout the last three
quarters of 1995 and held its ground during the first quarter of 1996. For the
fiscal year ended March 31, 1996, the Fund's total return (net of expenses)
was 11.23%, as compared to 10.93% for the Lehman Government/Corporate Index
and 10.78% for the Lehman Aggregate Index. We are particularly gratified that
the Fund, prior to expenses, has been able to outperform the market over the
past two years which encompassed one of the worst and one of the best years in
bond market history.
Looking Ahead
The market remains vulnerable to further signs of economic strength. It
is also vulnerable to higher grain, oil and other commodity prices. While we
believe the chance of further cuts in rates by the Federal Reserve is becoming
more and more remote for this year, we also believe that it is too soon in the
year to anticipate any rate increases. We are not yet convinced that the
economic strength will carry forward much beyond the Spring, but we certainly
respect the fact that the trend of the market remains negative. Rate cuts in
Europe are still a strong possibility as governments continue to downsize in
accordance with unification objectives. With Japan's recovery tentative and
Europe still sluggish, it is too early to look to the export sector as a
source of growth.
Although the economic climate remains uncertain, we believe that
long-term interest rates will trade in a range of 6.5% to 7.5% for the rest of
the year. There may be short-term opportunities to benefit from rates as they
fluctuate within this range, but we believe that the greater source of
outperformance for this year will come from sector strategies emphasizing
yield. Our corporate exposure is influenced by the late phase of the current
economic cycle and is limited to short maturities where credit risk is
minimal. This strategy allows us to match the yield of the corporate component
of the Aggregate Index, with less price volatility. Our overweighting in
mortgages is still appropriate since the mortgage market benefits from
stabilizing interest rates. We expect that our emphasis will shift away from
seasoned paper which has already performed so well in favor of more recently
issued passthroughs. As Lehman begins a tiering pricing in its mortgage index
to recognize each separate year of mortgage issuance, we believe some of the
inefficiencies and opportunities previously associated with "seasoning" may be
eliminated. Closed-end fund discounts still have room to narrow, which is why
we anticipate maintaining our commitment to the area. Term trusts, with their
known liquidation dates, are particularly attractive. Based on yields of close
to 7.5% from both mortgages and closed-end funds, we believe the risk/reward
profile of the portfolio is clearly in favor of reward and should continue to
prove effective going forward.
For a comparison of the Fund's performance from inception versus the
Lehman Government/Corporate Index, the Lehman Aggregate Index and the Consumer
Price Index, please refer to the chart below:
<PAGE>
A representation of the graphic material contained in THE JAMESTOWN BOND
FUND Annual Report is set forth below.
Comparison of the Change in Value of a $10,000 Investment in the
Jamestown Bond Fund, the Lehman Government/Corporate Index, the Lehman
Aggregate Index and the Consumer Price Index
LEHMAN BROTHERS GOVERNMENT THE JAMESTOWN BOND FUND:
CORPORATE INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
12/31/90 10,000 12/31/90 10,000
03/31/91 2.52% 10,252 03/31/91 1.63% 10,163
06/30/91 1.78% 10,434 06/30/91 1.39% 10,305
09/30/91 4.77% 10,932 09/30/91 5.02% 10,822
12/31/91 5.33% 11,515 12/31/91 5.18% 11,382
03/31/92 -1.50% 11,342 03/31/92 -1.49% 11,213
06/30/92 4.06% 11,803 06/30/92 3.35% 11,588
09/30/92 4.88% 12,379 09/30/92 3.83% 12,033
12/31/92 0.07% 12,387 12/31/92 0.27% 12,065
03/31/93 4.66% 12,965 03/31/93 3.81% 12,524
06/30/93 3.01% 13,355 06/30/93 2.26% 12,807
09/30/93 3.32% 13,798 09/30/93 2.22% 13,091
12/31/93 -0.29% 13,758 12/31/93 0.25% 13,124
03/31/94 -3.15% 13,325 03/31/94 -2.55% 12,789
06/30/94 -1.24% 13,160 06/30/94 -1.04% 12,656
09/30/94 0.50% 13,225 09/30/94 0.51% 12,719
12/31/94 0.37% 13,274 12/31/94 0.26% 12,752
03/31/95 4.98% 13,935 03/31/95 4.87% 13,372
06/30/95 6.49% 14,840 06/30/95 5.87% 14,157
09/30/95 1.91% 15,123 09/30/95 2.45% 14,505
12/31/95 4.66% 15,828 12/31/95 4.49% 15,156
03/31/96 -2.34% 15,458 03/31/96 -1.86% 14,874
<PAGE>
LEHMAN BROTHERS AGGREGATE INDEX: CONSUMER PRICE INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
12/31/90 10,000 12/31/90 10,000
03/31/91 2.81% 10,281 03/31/91 0.90% 10,090
06/30/91 1.62% 10,448 06/30/91 0.40% 10,130
09/30/91 5.68% 11,041 09/30/91 0.60% 10,191
12/31/91 5.07% 11,601 12/31/91 0.90% 10,283
03/31/92 -1.27% 11,453 03/31/92 0.70% 10,355
06/30/92 4.04% 11,916 06/30/92 0.80% 10,438
09/30/92 4.30% 12,429 09/30/92 0.70% 10,511
12/31/92 0.26% 12,461 12/31/92 0.80% 10,595
03/31/93 4.14% 12,977 03/31/93 0.90% 10,690
06/30/93 2.66% 13,322 06/30/93 0.60% 10,754
09/30/93 2.61% 13,670 09/30/93 0.40% 10,797
12/31/93 0.05% 13,676 12/31/93 0.70% 10,873
03/31/94 -2.87% 13,284 03/31/94 0.50% 10,927
06/30/94 -1.03% 13,147 06/30/94 0.60% 10,993
09/30/94 0.61% 13,227 09/30/94 0.90% 11,092
12/31/94 0.38% 13,278 12/31/94 0.60% 11,158
03/31/95 5.04% 13,947 03/31/95 0.80% 11,248
06/30/95 6.09% 14,796 06/30/95 0.90% 11,349
09/30/95 1.96% 15,086 09/30/95 0.40% 11,395
12/31/95 4.26% 15,729 12/31/95 0.50% 11,452
03/31/96 -1.77% 15,450 03/31/96 0.80% 11,544
Past performance is not predictive of future performance.
The Jamestown Bond Fund - Average Annual Total Returns
1 Year ........................11.23%
5 Years ....................... 7.92%
Since Inception*............... 7.79%
*Initial public offering of shares was December 13, 1990.
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 73,410,257
===============
At value (Note 1) $ 73,305,618
Investments in repurchase agreements (Note 1) 2,750,854
Receivable for securities sold 3,225,020
Interest receivable 714,438
Dividends receivable 2,991
Other assets 5,748
---------------
TOTAL ASSETS 80,004,669
---------------
LIABILITIES
Payable for securities purchased 4,821,836
Dividends payable 369,855
Accrued advisory fees (Note 3) 25,745
Accrued administration fees (Note 3) 5,100
Other accrued expenses 8,014
---------------
TOTAL LIABILITIES 5,230,550
---------------
NET ASSETS $ 74,774,119
===============
Net assets consist of:
Capital shares $ 75,894,568
Accumulated net realized losses from security transactions (1,137,569)
Undistributed net investment income 121,759
Net unrealized depreciation on investments (104,639)
---------------
Net assets $ 74,774,119
===============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 7,195,530
===============
Net asset value, offering price and redemption price per share (Note 1) $ 10.39
===============
<FN>
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1996
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest $ 5,219,265
Dividends 521,632
--------------
TOTAL INVESTMENT INCOME 5,740,897
--------------
EXPENSES
Investment advisory fees (Note 3) 305,247
Administrative fees (Note 3) 61,029
Custodian fees 40,002
Professional fees 15,279
Pricing costs 8,037
Trustees' fees and expenses 5,573
Registration fees 5,198
Postage and supplies 1,060
Printing of shareholder reports 887
Other expenses 11,528
--------------
TOTAL EXPENSES 453,840
Expenses reimbursed through a directed brokerage arrangement (Note 4) (22,423)
--------------
NET EXPENSES 431,417
--------------
NET INVESTMENT INCOME 5,309,480
--------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains from security transactions 3,596,533
Net change in unrealized appreciation/depreciation of investments (949,624)
--------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 2,646,909
--------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,956,389
==============
<FN>
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Years Ended March 31, 1996 and 1995
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1996 1995
FROM OPERATIONS:
<S> <C> <C>
Net investment income $ 5,309,480 $ 4,070,955
Net realized gains (losses) from security transactions 3,596,533 (3,791,347)
Net change in unrealized appreciation/depreciation
on investments (949,624) 2,701,756
--------------- ---------------
Net increase in net assets from operations 7,956,389 2,981,364
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (5,212,243) (4,060,588)
--------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS (a):
Proceeds from shares sold 16,330,832 10,057,911
Net asset value of shares issued in reinvestment
of distributions to shareholders 4,066,804 3,496,446
Payments for shares redeemed (20,396,366) (4,475,836)
--------------- ---------------
Net increase in net assets from capital share transactions 1,270 9,078,521
--------------- ---------------
TOTAL INCREASE IN NET ASSETS 2,745,416 7,999,297
NET ASSETS:
Beginning of year 72,028,703 64,029,406
--------------- ---------------
End of year - (including undistributed net investment
income of $121,759 and $24,522, respectively) $ 74,774,119 $ 72,028,703
=============== ===============
(a) Summary of capital share activity follows:
Shares sold 1,534,918 1,014,124
Shares issued in reinvestment of distributions to shareholders 386,962 355,655
Shares redeemed (1,951,756) (454,880)
--------------- ---------------
Net increase (decrease) in shares outstanding (29,876) 914,899
Shares outstanding, beginning of year 7,225,406 6,310,507
--------------- ---------------
Shares outstanding, end of year 7,195,530 7,225,406
=============== ===============
<FN>
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
<CAPTION>
Years Ended March 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $9.97 $10.15 $10.82 $10.42 $9.97
------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.70 0.62 0.55 0.64 0.54
Net realized and unrealized gains (losses) on investments 0.41 (0.18) (0.30) 0.55 0.48
------- ------- ------- ------- -------
Total from investment operations 1.11 0.44 0.25 1.19 1.02
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.69) (0.62) (0.55) (0.64) (0.54)
Distributions from net realized gains -- -- (0.19) (0.15) (0.03)
Distributions in excess of net realized gains -- -- (0.18) -- --
------- ------- ------- ------- -------
Total distributions (0.69) (0.62) (0.92) (0.79) (0.57)
------- ------- ------- ------- -------
Net asset value at end of year $10.39 $9.97 $10.15 $10.82 $10.42
======= ======= ======= ======= =======
Total return 11.23% 4.56% 2.12% 11.69% 10.33%
======= ======= ======= ======= =======
Net assets at end of year (000's) $74,774 $72,029 $64,029 $55,718 $29,727
======= ======= ======= ======= =======
Ratio of expenses to average net assets (a) 0.56% 0.53% 0.60% 0.59% 0.60%
Ratio of net investment income to average net assets 6.54% 6.28% 5.03% 6.09% 6.67%
Portfolio turnover rate 268% 381% 381% 454% 484%
<FN>
(a)For the year ended March 31, 1996, the ratio of expenses to average
net assets was determined based on gross expenses prior to expense
reimbursements through a directed brokerage arrangement (Note 4). For the year
ended March 31, 1995, the ratio was determined based on net expenses after
expense reimbursements through the directed brokerage arrangement. Absent such
expense reimbursements, the ratio of expenses to average net assets would have
been 0.57% for the year ended March 31, 1995. Absent investment advisory fees
waived by the Adviser, the ratio of expenses to average net assets would have
been 0.80% for the year ended March 31, 1992.
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1996
<CAPTION>
Par Value Value
<S> <C> <C>
U.S. TREASURY AND AGENCY OBLIGATIONS - 24.4%
U.S. Treasury Bonds - 13.0%
$ 3,135,000 8.50%, due 02/15/2020 $ 3,723,784
5,800,000 7.125%, due 02/15/2023 5,980,322
---------------
9,704,106
---------------
U.S. Treasury Notes - 11.4%
2,700,000 5.875%, due 03/31/1999 2,694,924
3,425,000 7.125%, due 02/29/2000 3,550,218
2,190,000 7.25%, due 08/15/2004 2,310,450
---------------
8,555,592
---------------
Total U.S. Treasury and Agency Obligations
(Cost $18,191,576) $ 18,259,698
---------------
MORTGAGE-BACKED SECURITIES - 40.0%
Federal Home Loan Mortgage Corporation - 13.4%
$ 1,398,850 Pool #C00248, 6.50%, due 07/01/2023 1,335,958
1,218,278 Pool #C00290, 6.50%, due 01/01/2024 1,158,546
1,228,218 Pool #C80091, 6.50%, due 01/01/2024 1,167,998
4,680,000 Pool #D69139, 6.50%, due 03/01/2026 4,451,850
2,025,000 Gold TBA, 6.50%, due 04/15/2026 1,926,281
---------------
10,040,633
---------------
Federal National Mortgage Association - 8.6%
857 Series #92-61F, 5.869%, floating rate, due 05/25/2001 858
950,000 Series #92-22HC, 7.00%, due 03/25/2007 955,339
1,020,000 Pool #340687, 6.00%, due 03/01/2011 977,537
750,000 TBA, 6.00%, due 04/01/2011 718,359
1,025,000 Series #89-76E, 9.00%, due 11/25/2019 1,098,985
625,000 Series #90-103K, 7.50%, due 09/25/2020 629,881
875,000 Series #91-10J, 7.95%, due 02/25/2021 880,189
585,000 Series #X-19B-EC, 6.50%, due 03/25/2021 533,264
555,306 Pool #224229, 9.50%, due 08/01/2021 597,392
---------------
6,391,804
---------------
Government National Mortgage Association - 13.3%
1,482,705 Pool #780215, 8.50%, due 10/15/2017 1,572,571
528,912 Pool #327273, 7.50%, due 08/15/2022 530,250
486,615 Pool #325612, 7.50%, due 10/15/2022 487,846
510,409 Pool #333658, 7.50%, due 01/15/2023 512,333
1,271,565 Pool #349314, 7.50%, due 02/15/2023 1,274,782
1,070,269 Pool #342526, 7.50%, due 02/15/2023 1,072,977
135,343 Pool #352166, 7.50%, due 06/15/2023 135,685
948,636 Pool #352143, 7.50%, due 07/15/2023 951,036
958,255 Pool #372822, 7.50%, due 11/15/2023 956,904
1,255,728 Pool #359451, 7.50%, due 12/15/2023 1,258,905
501,376 Pool #354831, 7.50%, due 06/15/2024 500,669
725,000 TBA, 6.00%, adjustable rate, due 04/15/2026 723,188
---------------
9,977,146
---------------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
Other Mortgage-Backed Securities - 4.7%
Lehman Brothers Mortgage Trust #91-2-A1,
$ 1,102,731 8.00%, due 03/20/1999 $ 1,125,476
Resolution Trust Corporation #95-1A-A-2D,
1,295,000 7.50%, due 10/25/2028 1,284,478
Vendee Mortgage Trust #95-3-1J,
485,000 7.25%, due 10/15/2008 471,056
Vendee Mortgage Trust #96-1-1K,
635,000 6.75%, due 11/15/2012 600,075
---------------
3,481,085
---------------
Total Mortgage-Backed Securities (Cost $30,034,938) $ 29,890,668
---------------
ASSET-BACKED SECURITIES - 5.1%
CIT RV Trust #95-B, class A,
$ 472,724 6.50%, due 04/15/2011 $ 475,087
CIT RV Trust #96-A, class A,
1,132,538 5.40%, due 12/15/2011 1,107,056
Contimortgage Home Equity Loan Trust #95-4-A3,
1,495,000 6.20%, due 10/15/2010 1,491,412
Fleetwood Credit Corporation Grantor Trust #94-A-A,
798,647 4.70%, due 07/15/2009 769,695
---------------
Total Asset-Backed Securities (Cost $3,881,800) $ 3,843,250
---------------
CORPORATE BONDS - 18.3%
Associates Corporation,
$ 700,000 5.75%, due 10/15/2003 $ 653,912
Baltimore Gas & Electric Corporation,
1,000,000 8.90%, due 07/01/1998 1,055,600
Beneficial Corporation Medium Term Notes,
900,000 8.27%, due 11/30/1998 941,787
Ford Motor Credit Corporation,
1,150,000 5.625%, due 01/15/1999 1,125,643
General Motors Acceptance Corporation Medium Term Notes,
1,725,000 6.375%, due 09/01/1998 1,730,399
Golden West Financial Corporation,
590,000 8.625%, due 08/30/1998 619,512
International Lease Finance Medium Term Notes,
1,315,000 6.42%, due 09/11/2000 1,302,771
Key Corporation Medium Term Notes,
835,000 5.52%, due 03/25/1997 831,927
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
CORPORATE BONDS - Continued
Paccar Financial Corporation Medium Term Notes,
$ 785,000 8.09%, due 11/14/1997 $ 811,046
Public Service Electric and Gas Corporation,
1,500,000 7.125%, due 11/01/1997 1,518,615
Sears Roebuck & Company,
1,300,000 6.18%, due 12/01/2000 1,276,041
TCI Communications,
1,000,000 6.82%, floating rate, due 09/15/2010 1,000,510
Virginia Electric & Power Corporation,
825,000 7.25%, due 03/01/1997 835,189
---------------
Total Corporate Bonds (Cost $13,464,508) $ 13,702,952
---------------
<PAGE>
<CAPTION>
Shares
<S> <C> <C>
CLOSED-END MUTUAL FUNDS - 10.2%
134,200 Blackrock 2001 Term Trust, Inc. $ 1,006,500
1,500 Blackrock Broad Investment Grade 2009 Term Trust 16,125
53,900 Blackrock Investment Quality Term Trust, Inc. 404,250
70,300 Blackrock Strategic Term Trust, Inc. 527,250
7,400 Excelsior Income Shares, Inc. 115,625
88,600 Hyperion 1999 Term Trust 575,900
113,900 Hyperion 2002 Term Trust 797,300
51,300 Hyperion 2005 Investment Grade Opportunity Term Trust, Inc. 384,750
26,400 Income Opportunities Fund, Inc. - 1999 217,800
24,200 Kemper Intermediate Government Trust 175,450
14,700 Liberty Term Trust, Inc. - 1999 108,413
158,900 MFS Government Markets Income Trust 993,125
193,400 MFS Intermediate Income Trust 1,257,100
51,000 Putnam Intermediate Government Trust 382,500
40,300 TCW/DW Term Trust 2000 297,212
27,000 TCW/DW Term Trust 2003 195,750
22,000 Templeton Global Income Fund, Inc. 154,000
---------------
Total Closed-End Funds (Cost $7,837,435) $ 7,609,050
---------------
Total Investments at Value (Cost $73,410,257) - 98.0% $ 73,305,618
---------------
<PAGE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENT (a) - 3.7%
Lehman Brothers,
$ 2,750,854 5.38%, dated 03/31/1996, due 04/01/1996
repurchase proceeds $2,752,087 (Cost $2,750,854) $ 2,750,854
---------------
Total Investments and Repurchase Agreements
at Value - 101.7% $ 76,056,472
Liabilities in Excess of Other Assets - (1.7)% (1,282,353)
---------------
Net Assets - 100.0% $ 74,774,119
===============
<FN>
(a) Joint repurchase agreement is fully collateralized by $15,840,000
U.S. Treasury Note, 7.75%, due 03/31/1996. The aggregate market value of the
collateral at March 31, 1996 was $16,453,800. The Fund's pro-rata interest in
the collateral at March 31, 1996 was $2,817,418.
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
THE JAMESTOWN BOND FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
1. Significant Accounting Policies
The Jamestown Bond Fund (the Fund) is a no-load, diversified, open-end
series of the Williamsburg Investment Trust (the Trust), a registered
management investment company under the Investment Company Act of 1940, as
amended. The Trust was organized as a Massachusetts business trust on July 18,
1988. The Fund began operations on December 13, 1990.
The Fund's investment objective is to maximize total return, consisting
of current income and capital appreciation (both realized and unrealized),
consistent with the preservation of capital through active management of
investment grade fixed income securities.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of
the close of business of the regular session of the New York Stock Exchange
(currently 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 exchange are
valued based upon the closing price on the principal exchange where the
security is traded. It is expected that fixed income securities of the Fund
will ordinarily be traded on the over-the-counter market. When market
quotations are not readily available, securities may be valued on the basis of
prices provided by an independent pricing service. If a pricing service cannot
provide a valuation, securities will be valued in good faith at fair market
value using methods consistent with those determined by the Board of Trustees.
Repurchase agreements -- The Fund generally enters 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. At the time the
Fund enters into the joint repurchase agreement, 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, the Fund actively monitors and seeks additional collateral, as
needed.
Share valuation -- The net asset value per share of the Fund is
calculated daily by dividing the total value of the Fund's assets, less
liabilities, by the number of shares outstanding. The offering price and
redemption price per share of the 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
which approximate generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment
income are declared and paid quarterly to shareholders of the 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 distributions and capital gain distributions are
determined in accordance with income tax regulations.
Security transactions -- Security transactions are accounted for on trade
date. Securities sold are valued on a specific identification basis.
Securities traded on a "to-be-announced" basis -- The Fund occasionally
trades securities on a "to-be-announced" (TBA) basis. In a TBA transaction,
the Fund has committed to purchase securities for which all specific
information is not yet known at the time of the trade, particularly the face
amount in mortgage-backed securities transactions. Securities purchased on a
TBA basis are not settled until they are delivered to the Fund, normally 15 to
45 days later. These transactions are subject to market fluctuations and their
current value is determined in the same manner as for other portfolio
securities.
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 revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>
Federal income tax -- It is the 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 the 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 the Fund as of March 31, 1996:
Gross unrealized appreciation ...................$ 827,951
Gross unrealized depreciation..................... (1,023,553)
--------------
Net unrealized depreciation.......................$ (195,602)
==============
As of March 31, 1996, the tax cost basis of investments of the Fund was
$73,501,220. As of March 31, 1996, the Fund had capital loss carryforwards for
federal income tax purposes of $1,046,606 which expire on March 31, 2003.
These capital loss carryforwards 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, 1996, purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $208,417,443 and $204,599,441, respectively.
3. Transactions with Affiliates
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Lowe, Brockenbrough & Tattersall,
Inc. (the Adviser) under the terms of an Investment Advisory Agreement. Under
the Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .375% on its
average daily net assets.
States in which shares of the Fund are offered may impose an expense
limitation based upon net assets. The Adviser has agreed to reimburse the Fund
for expenses which exceed the most restrictive applicable expense limitation
of any state. No waiver or reimbursement was required from the Adviser for the
year ended March 31, 1996.
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 MGF Service Corp. (MGF), MGF provides administrative, pricing, accounting,
dividend disbursing, shareholder servicing and transfer agent services for the
Fund. For these services, MGF receives a monthly fee from the Fund at an
annual rate of .075% on its average daily net assets up to $200 million and
.05% on such net assets in excess of $200 million, subject to a $2,000 minimum
monthly fee. In addition, the Fund pays out-of-pocket expenses including, but
not limited to, pricing costs and postage and supplies.
Certain officers of the Trust are also officers of MGF.
4. Directed Brokerage Arrangement
In order to reduce the total operating expenses of the Fund, a portion of
the Fund's custodian fees have been paid through an arrangement with a
third-party broker-dealer who is compensated through security trades. Expenses
reimbursed through the directed brokerage arrangement totaled $22,423 for the
year ended March 31, 1996.
<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 statement of assets and liabilities of
The Jamestown Bond Fund (a series of The Williamsburg Investment Trust),
including the portfolio of investments, as of March 31, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements 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, 1996 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Bond Fund as of March 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the 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 26, 1996
<PAGE>
The Jamestown Short Term Bond Fund
No Load Mutual Fund
Annual Report
March 31, 1996
Investment Adviser Administrator
Lowe, Brockenbrough & Tattersall, Inc. MGF Service Corp.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45202-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1996
Performance of The Jamestown Short Term Bond Fund
First Quarter 1996
What a difference a few months can make! The clearly bullish sentiment
that investors had at the end of 1995 was quickly reversed during the first
quarter of this year. While the 3-month Treasury bill yield remained fairly
stable, 2-year and longer rates rose between 60 and 75 basis points in
reaction to an economy that caught investors off guard with its strength. As
economic growth rates were being revised up, expectations for further rate
cuts from the Federal Reserve were being revised down. Interest rates also
reflected disappointment with the prospects for a balanced budget and a
restructured tax system. Except for Italy and France, where rates fell
slightly, other G-7 countries followed our lead and experienced higher rates
for the quarter. Central Bankers did little to reverse the trend.
Our maturity strategy had a negative impact on performance as we remained
slightly biased toward falling interest rates, but our sector strategies gave
performance a boost, enabling your Fund to perform in line with its
comparative index, the Merrill Lynch 1-3 Year Treasury Index. In assessing the
economy, we underestimated the improvement in employment and the stimulative
effect that last year's low rates had on spending. The strength appeared to
transcend even the most obvious drags of unusually inclement weather, the
government shutdown and the General Motors strike. As for sectors, our
performance benefited from an overweighting in mortgages. Despite the
increased volatility in interest rates during the quarter, mortgages performed
well as higher rates helped to dispel prepayment fears. Our holdings in
seasoned mortgages performed even stronger than the mortgage market in
general.
Fiscal Year Ended March 31, 1996
In 1995, the bond market experienced one of the best years in its history
on the heels of one of its worst. The stage was set for 1995's rally by 1994's
monetary tightening, although few investors foresaw it at the time. Except for
a brief backup in July, the bond market posted positive returns in every month
and its third best annual return ever on a calendar year basis. The market hit
a "sweet spot", benefiting from slower economic growth, subdued inflation and,
finally, the prospect of a balanced federal budget. For the year, 3-month
Treasury bill yields fell 0.5%, 2 to 5-year Treasury yields fell about 2.5%,
and 10 to 30-year Treasury yields fell about 2.0%. The year started with
yields ranging between 5.5% for 3-month Treasury bills and nearly 8.0% for
30-year Treasury bonds and closed the year with all maturities yielding "5
something". Returns from overseas were impressive but, in general, ranged
between 13.5% and 17.5%.
Your Fund participated fully in the rally throughout the last three
quarters of 1995 and held its ground during the first quarter of 1996. For the
fiscal year ended March 31, 1996, the Fund's total return (net of expenses)
was 7.38%, as compared to 7.76% for the Merrill Lynch 1-3 Year Treasury Index
and 5.75% for the 90-Day Treasury Bill Index. We are particularly gratified
that the Fund, prior to expenses, has been able to outperform the market over
the past two years which encompassed one of the worst and one of the best
years in bond market history.
Looking Ahead
The market remains vulnerable to further signs of economic strength. It
is also vulnerable to higher grain, oil and other commodity prices. While we
believe the chance of further cuts in rates by the Federal Reserve is becoming
more and more remote for this year, we also believe that it is too soon in the
year to anticipate any rate increases. We are not yet convinced that the
economic strength will carry forward much beyond the Spring, but we certainly
respect the fact that the trend of the market remains negative. Rate cuts in
Europe are still a strong possibility as governments continue to downsize in
accordance with unification objectives. With Japan's recovery tentative and
Europe still sluggish, it is too early to look to the export sector as a
source of growth.
<PAGE>
Although the economic climate remains uncertain, we believe that
long-term interest rates will trade in a range of 6.5% to 7.5% for the rest of
the year. There may be short-term opportunities to benefit from rates as they
fluctuate within this range, but we believe that the greater source of
outperformance for this year will come from sector strategies emphasizing
yield. Our corporate exposure is influenced by the late phase of the current
economic cycle and is limited to short maturities where credit risk is
minimal. This strategy allows us to match the yield of the corporate component
of the Aggregate Index, with less price volatility. Our overweighting in
mortgages is still appropriate since the mortgage market benefits from
stabilizing interest rates. We expect that our emphasis will shift away from
seasoned paper which has already performed so well in favor of more recently
issued passthroughs. As Lehman begins a tiering pricing in its mortgage index
to recognize each separate year of mortgage issuance, we believe some of the
inefficiencies and opportunities previously associated with "seasoning" may be
eliminated.
For a comparison of the Fund's performance from inception versus the
Merrill Lynch 1-3 Year Treasury Index, the 90-Day Treasury Bill Index and the
Consumer Price Index, please refer to the chart below:
A representation of the graphic material contained in THE JAMESTOWN SHORT
TERM BOND FUND Annual Report is set forth below.
Comparison of the Change in Value of a $10,000 Investment in the
Jamestown Short Term Bond Fund, the Merrill Lynch 1-3 Year Treasury Index, the
90-Day Treasury Bill Index and the Consumer Price Index
MERRILL LYNCH 1-3 YEAR TREASURY INDEX: THE JAMESTOWN SHORT TERM BOND FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
01/31/92 10,000 01/31/92 10,000
03/31/92 0.31% 10,031 03/31/92 0.25% 10,025
06/30/92 2.88% 10,319 06/30/92 2.03% 10,229
09/30/92 2.98% 10,627 09/30/92 2.14% 10,448
12/31/92 0.18% 10,646 12/31/92 0.15% 10,463
03/31/93 2.21% 10,882 03/31/93 1.95% 10,667
06/30/93 1.08% 10,999 06/30/93 1.27% 10,803
09/30/93 1.44% 11,157 09/30/93 1.34% 10,947
12/31/93 0.59% 11,222 12/31/93 0.61% 11,015
03/31/94 -0.50% 11,166 03/31/94 -0.48% 10,962
06/30/94 0.08% 11,176 06/30/94 0.23% 10,987
09/30/94 0.99% 11,286 09/30/94 0.93% 11,090
12/31/94 0.00% 11,286 12/31/94 -0.05% 11,084
03/31/95 3.36% 11,665 03/31/95 3.38% 11,458
06/30/95 3.21% 12,039 06/30/95 3.01% 11,803
09/30/95 1.50% 12,220 09/30/95 1.33% 11,960
12/31/95 2.52% 12,528 12/31/95 2.62% 12,273
03/31/96 0.33% 12,570 03/31/96 0.25% 12,304
<PAGE>
CONSUMER PRICE INDEX: 90-DAY TREASURY BILL INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
01/31/92 10,000 01/31/92 10,000
03/31/92 0.40% 10,040 03/31/92 0.64% 10,064
06/30/92 0.80% 10,120 06/30/92 1.10% 10,174
09/30/92 0.70% 10,191 09/30/92 1.01% 10,277
12/31/92 0.80% 10,273 12/31/92 0.77% 10,357
03/31/93 0.90% 10,365 03/31/93 0.78% 10,437
06/30/93 0.60% 10,427 06/30/93 0.77% 10,518
09/30/93 0.40% 10,469 09/30/93 0.82% 10,604
12/31/93 0.70% 10,542 12/31/93 0.78% 10,687
03/31/94 0.50% 10,595 03/31/94 0.77% 10,768
06/30/94 0.60% 10,659 06/30/94 0.96% 10,872
09/30/94 0.90% 10,755 09/30/94 1.08% 10,989
12/31/94 0.60% 10,819 12/31/94 1.33% 11,135
03/31/95 0.80% 10,906 03/31/95 1.50% 11,302
06/30/95 0.90% 11,004 06/30/95 1.50% 11,472
09/30/95 0.40% 11,048 09/30/95 1.42% 11,635
12/31/95 0.50% 11,104 12/31/95 1.47% 11,806
03/31/96 0.80% 11,193 03/31/96 1.23% 11,951
Past performance is not predictive of future performance.
The Jamestown Short Term Bond Fund - Average Annual Total Returns
1 Year ........................ 7.38%
Since Inception*............... 5.05%
*Initial public offering of shares was January 21, 1992.
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 9,158,952
================
At value (Note 1) $ 9,111,381
Investments in repurchase agreements (Note 1) 144,684
Cash 1,232
Receivable for securities sold 463,777
Interest receivable 117,437
Other assets 968
----------------
TOTAL ASSETS 9,839,479
----------------
LIABILITIES
Payable for securities purchased 403,185
Dividends payable 2,292
Accrued advisory fees (Note 3) 3,786
Accrued administration fees (Note 3) 2,000
Other accrued expenses 2,460
----------------
TOTAL LIABILITIES 413,723
----------------
NET ASSETS $ 9,425,756
================
Net assets consist of:
Capital shares $ 9,914,073
Accumulated net realized losses from security transactions (444,405)
Undistributed net investment income 3,659
Net unrealized depreciation on investments (47,571)
----------------
Net assets $ 9,425,756
================
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 969,934
================
Net asset value, offering price and redemption price per share (Note 1) $ 9.72
================
<FN>
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1996
<S> <C>
INVESTMENT INCOME
Interest $ 853,612
----------------
EXPENSES
Investment advisory fees (Note 3) 47,421
Administrative fees (Note 3) 24,000
Professional fees 11,779
Custodian fees 8,213
Trustees' fees and expenses 5,572
Pricing costs 3,775
Registration fees 2,585
Postage and supplies 1,004
Printing of shareholder reports 741
Other expenses 1,772
----------------
TOTAL EXPENSES 106,862
Fees waived by the Adviser (Note 3) (43,635)
----------------
NET EXPENSES 63,227
----------------
NET INVESTMENT INCOME 790,385
----------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains from security transactions 192,225
Net change in unrealized appreciation/depreciation on investments (10,516)
----------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 181,709
----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 972,094
================
<FN>
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Years Ended March 31, 1996 and 1995
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1996 1995
FROM OPERATIONS:
<S> <C> <C>
Net investment income $ 790,385 $ 852,780
Net realized gains (losses) from security transactions 192,225 (384,848)
Net change in unrealized appreciation/depreciation
on investments (10,516) 136,445
---------------- ---------------
Net increase in net assets from operations 972,094 604,377
---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (793,655) (852,243)
From net realized gains from security transactions --- (4,059)
---------------- ---------------
Decrease in net assets from distributions to shareholders (793,655) (856,302)
---------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS (a):
Proceeds from shares sold 2,046,872 1,529,815
Net asset value of shares issued in reinvestment
of distributions to shareholders 563,410 565,090
Payments for shares redeemed (7,485,406) (6,435,813)
---------------- ---------------
Net decrease in net assets from capital share transactions (4,875,124) (4,340,908)
---------------- ---------------
TOTAL DECREASE IN NET ASSETS (4,696,685) (4,592,833)
NET ASSETS:
Beginning of year 14,122,441 18,715,274
---------------- ---------------
End of year - (including undistributed net investment
income of $3,659 and $6,929, respectively) $ 9,425,756 $ 14,122,441
================ ===============
(a)Summary of capital share activity follows:
Shares sold 208,453 157,550
Shares issued in reinvestment of distributions to shareholders 57,652 58,839
Shares redeemed (761,014) (657,850)
---------------- ---------------
Net decrease in shares outstanding (494,909) (441,461)
Shares outstanding, beginning of year 1,464,843 1,906,304
---------------- ---------------
Shares outstanding, end of year 969,934 1,464,843
================ ===============
<FN>
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
<CAPTION>
Period
Years Ended March 31, Ended
March 31,
1996 1995 1994 1993 1992 (a)
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $9.64 $9.82 $10.07 $9.93 $10.00
------ ------- ------- ------- ------
Income from investment operations:
Net investment income 0.62 0.60 0.51 0.50 0.09
Net realized and unrealized gains (losses)
on investments 0.08 (0.17) (0.23) 0.13 (0.07)
------ ------- ------- ------- ------
Total from investment operations 0.70 0.43 0.28 0.63 0.02
------ ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.62) (0.61) (0.51) (0.49) (0.09)
Distributions from net realized gains -- -- (0.02) -- --
------ ------- ------- ------- ------
Total distributions (0.62) (0.61) (0.53) (0.49) (0.09)
------ ------- ------- ------- ------
Net asset value at end of period $9.72 $9.64 $9.82 $10.07 $9.93
====== ======= ======= ======= ======
Total return 7.38% 4.53% 2.76% 6.40% 0.99%(c)
====== ======= ======= ======= ======
Net assets at end of period (000's) $9,426 $14,122 $18,715 $15,580 $5,320
====== ======= ======= ======= ======
Ratio of expenses to average net assets (b) 0.50% 0.50% 0.50% 0.50% 0.50%(c)
Ratio of net investment income to average net assets 6.27% 6.04% 5.22% 5.24% 4.86%(c)
Portfolio turnover rate 157% 144% 324% 289% 97%
<FN>
(a) Represents the period from the commencement of operations (January
21, 1992) through March 31, 1992.
(b) Absent investment advisory fees waived by the Adviser, the ratios of
expenses to average net assets would have been 0.85%, 0.85%, 0.81%, 0.82% and
0.81% (c) for the periods ended March 31, 1996, 1995, 1994, 1993 and 1992,
respectively (Note 3).
(c) Annualized.
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1996
<CAPTION>
Par Value Value
<S> <C> <C>
U.S. TREASURY NOTES - 35.2%
$ 200,000 5.125%, due 04/30/1998 $ 197,374
1,015,000 5.875%, due 03/31/1999 1,013,092
2,100,000 6.25%, due 08/31/2000 2,110,500
-----------------
Total U.S. Treasury Notes (Cost $3,341,675) $ 3,320,966
-----------------
MORTGAGE-BACKED SECURITIES - 20.5%
Federal Home Loan Mortgage Corporation - 2.4%
$ 225,331 Series #162-E, 7.00%, due 02/15/2020 $ 227,020
-----------------
Federal National Mortgage Association - 13.4%
225,000 Series #91-131E, 7.709%, due 10/25/1998 231,397
274,266 Pool #124029, 8.00%, due 12/01/2002 282,148
392,700 Pool #322830, 7.50%, due 11/01/2010 398,713
306,755 Pool #303346, 11.50%, due 02/01/2020 346,955
-----------------
1,259,213
-----------------
Other Mortgage-Backed Securities - 4.7%
Lehman Brothers Mortgage Trust #91-2-A1,
166,744 8.00%, due 03/20/1999 170,183
Resolution Trust Corporation #95-1-A2B,
275,000 7.50%, due 10/25/2028 276,375
-----------------
446,558
-----------------
Total Mortgage-Backed Securities (Cost $1,935,167) $ 1,932,791
-----------------
ASSET-BACKED SECURITIES - 2.7%
Chemical Financial Acceptance Corporation Grantor Trust #90-A,
$ 246,686 9.40%, due 03/15/1997 (Cost $249,962) $ 248,149
-----------------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
CORPORATE BONDS - 38.3%
Bear Stearns Company,
$ 205,000 7.625%, due 09/15/1999 $ 211,216
Beneficial Corporation,
400,000 8.27%, due 11/30/1998 418,572
Ford Motor Credit Corporation,
350,000 7.50%, due 02/14/1997 355,152
40,000 8.00%, due 12/01/1997 41,171
Golden West Financial,
350,000 8.625%, due 08/30/1998 367,507
International Bank Reconstruction and Development,
265,000 5.10%, due 09/15/1999 255,956
Mellon Financial,
375,000 6.50%, due 12/01/1997 376,976
National City Corporation,
215,000 5.659%, floating rate, due 01/31/1997 215,370
Norwest Financial,
275,000 6.25%, due 02/15/1997 275,811
J.C. Penny & Company,
300,000 10.00%, due 10/15/1997 316,932
Ryder System, Inc.,
300,000 8.38%, due 12/08/1999 317,757
Virginia Electric & Power Company,
275,000 7.25%, due 03/01/1997 278,396
Xerox Corporation Medium Term Notes,
175,000 7.13%, due 04/30/1999 178,659
-----------------
Total Corporate Bonds (Cost $3,632,148) $ 3,609,475
-----------------
Total Investments at Value (Cost $9,158,952) - 96.7% $ 9,111,381
-----------------
<PAGE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (a) - 1.5%
$ 144,684 Lehman Brothers, 5.38%, dated 03/29/1996, due 04/01/1996,
repurchase proceeds $144,749 (Cost $144,684) $ 144,684
-----------------
Total Investments and Repurchase Agreements
at Value - 98.2% $ 9,256,065
Other Assets in Excess of Liabilities - 1.8% 169,691
-----------------
Net Assets - 100.0% $ 9,425,756
=================
<FN>
(a) Joint repurchase agreement is fully collaterized by $15,840,000 U.S.
Treasury Note, 7.75%, due 03/31/1996. The aggregate market value of the
collateral at March 31, 1996 was $16,453,800. The Fund's pro-rata interest in
the collateral at March 31, 1996 was $148,185.
See accompanying notes to the financial statements.
</FN>
</TABLE>
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
1. Significant Accounting Policies
The Jamestown Short Term Bond Fund (the Fund) is a no-load, diversified,
open-end series of the Williamsburg Investment Trust (the Trust), a registered
management investment company under the Investment Company Act of 1940, as
amended. The Trust was organized as a Massachusetts business trust on July 18,
1988. The Fund began operations on January 21, 1992.
The Fund's investment objective is to maximize total return, consisting
of current income and capital appreciation (both realized and unrealized),
consistent with the preservation of capital through active management of high
quality short-term fixed income securities.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of
the close of business of the regular session of the New York Stock Exchange
(currently 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 exchange are
valued based upon the closing price on the principal exchange where the
security is traded. It is expected that securities of the Fund will ordinarily
be traded on the over-the-counter market. When market quotations are not
readily available, securities may be valued on the basis of prices provided by
an independent pricing service. If a pricing service cannot provide a
valuation, securities will be valued in good faith at fair market value using
methods consistent with those determined by the Board of Trustees.
Repurchase agreements -- The Fund generally enters 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. At the time the
Fund enters into the joint repurchase agreement, 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, the Fund actively monitors and seeks additional collateral, as
needed.
Share valuation -- The net asset value per share of the Fund is
calculated daily by dividing the total value of the Fund's assets, less
liabilities, by the number of shares outstanding. The offering price and
redemption price per share of the Fund is equal to the net asset value per
share.
Investment income -- Interest income is accrued as earned. Discounts and
premiums on securities purchased are amortized in accordance with income tax
regulations which approximate generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment
income are declared and paid quarterly to shareholders of the 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 distributions and capital gain distributions are
determined in accordance with income tax regulations.
Security transactions -- Security transactions are accounted for on trade
date. Securities sold are valued on a specific identification basis.
Securities traded on a "to-be-announced" basis -- The Fund occasionally
trades securities on a "to-be-announced" (TBA) basis. In a TBA transaction,
the Fund has committed to purchase securities for which all specific
information is not yet known at the time of the trade, particularly the face
amount in mortgage-backed securities transactions. Securities purchased on a
TBA basis are not settled until they are delivered to the Fund, normally 15 to
45 days later. These transactions are subject to market fluctuations and their
current value is determined in the same manner as for other portfolio
securities.
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 revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the 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 the 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 the Fund as of March 31, 1996:
Gross unrealized appreciation................$ 45,579
Gross unrealized depreciation................. (94,496)
----------
Net unrealized depreciation..................$ (48,917)
==========
As of March 31, 1996, the tax cost basis of investments of the Fund was
$9,160,298 and the Fund had capital loss carryforwards for federal income tax
purposes of $443,059 which expire on March 31, 2003. These capital loss
carryforwards and 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, 1996, purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $17,899,670 and $21,645,446, respectively.
3. Transactions with Affiliates
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Lowe, Brockenbrough & Tattersall,
Inc. (the Adviser) under the terms of an Investment Advisory Agreement. Under
the Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .375% on its
average daily net assets.
The Adviser currently intends to limit the total operating expenses of
the Fund to .50% of average net assets. Accordingly, the Adviser waived
$43,635 of its investment advisory fees for the year ended March 31, 1996.
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 MGF Service Corp. (MGF), MGF provides administrative, pricing, accounting,
dividend disbursing, shareholder servicing and transfer agent services for the
Fund. For these services, MGF receives a monthly fee from the Fund at an
annual rate of .075% on its average daily net assets up to $200 million and
.05% on such net assets in excess of $200 million, subject to a $2,000 minimum
monthly fee. In addition, the Fund pays out-of-pocket expenses including, but
not limited to, pricing costs and postage and supplies.
Certain officers of the Trust are also officers of MGF.
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Short Term Bond Fund (a series of The Williamsburg Investment
Trust), including the portfolio of investments, as of March 31, 1996, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements 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, 1996 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Short Term Bond Fund as of March 31, 1996, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 26, 1996
