SUBJECT TO COMPLETION, DATED FEBRUARY 15, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
_______, 1996
THE JAMESTOWN INTERNATIONAL EQUITY FUND
A NO-LOAD FUND
The investment objective of THE JAMESTOWN INTERNATIONAL EQUITY FUND is to
achieve superior total returns through investment in equity securities of
issuers located outside the United States.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Inc.
Richmond, Virginia
The Jamestown International Equity Fund (the "Fund") is a NO-LOAD, diversified,
open-end series of the Williamsburg Investment Trust, a registered management
investment company. This Prospectus provides you with the basic information you
should know before investing in the Fund. You should read it and keep it for
future reference. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this Prospectus.
A Statement of Additional Information, dated _______, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354, and
its telephone number is 1-800-443-4249. A copy of the Statement of Additional
Information may be obtained at no charge by calling or writing the Fund.
TABLE OF CONTENTS
PROSPECTUS SUMMARY...........................................................
SYNOPSIS OF COSTS AND EXPENSES...............................................
INVESTMENT OBJECTIVE, INVESTMENT POLICIES
AND RISK CONSIDERATIONS....................................................
HOW TO PURCHASE SHARES.......................................................
HOW TO REDEEM SHARES.........................................................
HOW NET ASSET VALUE IS DETERMINED . . . . . . . . . . . . . .................
MANAGEMENT OF THE FUND.......................................................
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION........................
APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . .................
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS SUMMARY
THE FUND. THE JAMESTOWN INTERNATIONAL EQUITY FUND (the "Fund") is a NO-LOAD,
diversified, open-end series of the Williamsburg Investment Trust, a registered
management investment company commonly known as a "mutual fund." The Fund's
investment objective is to achieve superior total returns through investment in
equity securities of issuers located outside the United States. While there is
no assurance that the Fund will achieve its investment objective, it endeavors
to do so by following the investment policies described in this Prospectus.
INVESTMENT APPROACH. The Fund aims to exploit inefficiencies that exist among
and within securities markets located outside the United States. Concentrated
positions will be established in countries and regions that look most
attractive. In choosing a country or region for the portfolio, the Fund will
look for a favorable mix of positive monetary outlook, attractive valuation
levels, accelerating corporate earnings, and a good supply and demand
relationship for equities. In general, the country or region concentration will
be further focused on liquid investments in specific companies where broadly
defined value and accelerating earnings have been identified. (See "Investment
Objective, Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR AND SUB-ADVISOR. Lowe, Brockenbrough & Tattersall, Inc. (the
"Advisor") serves as investment manager to the Fund. For its services, the
Advisor receives compensation of 1.00% of the average daily net assets of the
Fund. The Advisor currently intends to waive its advisory fees to the extent
necessary to limit the Fund's total operating expenses to 1.60% per annum of its
average daily net assets.
Oechsle International Advisors, L.P. (the "Sub-Advisor") has been retained as
sub-advisor to the Fund. The Sub-Advisor receives compensation from the Advisor
(not the Fund) in the amount of one-half of the advisory fee received by the
Advisor (net of any advisory fee waivers). (See "Management of the Fund.")
PURCHASE OF SHARES. Shares are offered "No-Load," which means they may be
purchased directly from the Fund without the imposition of any sales or 12b-1
charges. The minimum initial purchase for the Fund is $5,000. Subsequent
investments must be $1,000 or more. Shares may be purchased by individuals or
organizations and may be appropriate for use in Tax Sheltered Retirement Plans
and Systematic Withdrawal Plans. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions. Shares may
be redeemed at any time in which the Fund is open for business at the net asset
value next determined after receipt of a redemption request by the Fund. (See
"How to Redeem Shares.")
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DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is distributed
quarterly. Net capital gains, if any, are distribute annually. Shareholders may
elect to receive dividends and distributions in cash or the dividends and
distributions may be reinvested in additional Fund shares. (See "Dividends,
Distributions, Taxes and Other Information.")
MANAGEMENT. The Fund is a series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed MGF Service Corp. (the
"Administrator") to provide administration, accounting and transfer agent
services. (See "Management of the Fund.")
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SYNOPSIS OF COSTS AND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES: None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
Investment Advisory Fees . . . . . . . . . . . . . . . . . 1.00%
Administrator's Fees . . . . . . . . . . . . . . . . . . . 0.25%
Other Expenses . . . . . . . . . . . . . . . . . . . . . . 0.35%
-----
Total Fund Operating Expense . . . . . . . . . . . . . . . 1.60%
=====
EXAMPLE: You would pay the following expenses on a $1,000
investment, whether or not you redeem at the end of the period,
assuming 5% annual return:
1 Year 3 Years
----- -------
$16 $50
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees and
costs of operating the Fund. The Annual Fund Operating Expenses shown above are
based upon estimated amounts for the current fiscal year. THE EXAMPLE SHOWN
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
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INVESTMENT OBJECTIVE, INVESTMENT POLICIES
AND RISK CONSIDERATIONS
The Fund will seek superior total returns by actively investing substantially
all of its assets in equity securities of issuers located outside the United
States.
The Fund will not invest in physical commodities or speculative currency
positions. Stock and currency options may be used in a limited way. Currency
forward contracts may also be purchased.
The Fund aims to exploit inefficiencies that exist among and within securities
markets located outside the United States. Concentrated positions will be
established in countries and regions that look most attractive. In choosing a
country or region for the portfolio, the Fund will look for a favorable mix of
positive monetary outlook, attractive valuation levels, accelerating corporate
earnings, and a good supply and demand relationship for equities. In general,
the country or region concentration will be further focused on liquid
investments in specific companies where broadly defined value and accelerating
earnings have been identified.
Any investment involves risk and there can be no assurance that the Fund will
achieve its investment objective. The investment objective of the Fund may not
be altered without the prior approval of a majority (as defined by the
Investment Company Act of 1940) of the Fund's shares.
INTERNATIONAL INVESTING. The Sub-Advisor believes that investors must scan the
world for investment opportunities. International diversification is important
because (i) non-U.S. stocks now account for more than sixty percent of the
world's stock market capitalization and (ii) the Sub-Advisor believes that
international investing meaningfully reduces risk while potentially improving
returns.
In 1967, the United States represented seventy percent of the world's stock
market capitalization, thus providing U.S. investors with ample choices at home.
However, by 1980 rapid growth in the economies of other countries and the
development of their equity markets reduced the U.S. percentage to approximately
fifty percent of a much larger world market. By the end of 1995, the U.S.
percentage had declined further to less than forty percent. Therefore, non-U.S.
stocks, now nearly twice the amount of U.S. stocks in terms of market
capitalization, represent a large, increasingly significant pool presenting
opportunities which investors can no longer ignore.
The Sub-Advisor believes that international diversification significantly
reduces risk and potentially improves returns.
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Over the last 25 years, non-U.S. stocks have outperformed U.S. equities by a
large margin. For the period from 1971 to 1995, the U.S. equity market had a
total return of approximately 1,431%, whereas the Europe, Australia and Far East
index compiled by Morgan Stanley Capital International (the "EAFE Index") had a
total return, as measured in U.S. dollars, of approximately 2,611% for the same
period. Furthermore, the Sub-Advisor believes that the inclusion of
international stocks to an existing portfolio of U.S. securities results in
lower risk mainly due to the fact that foreign economies and markets are not
synchronized with the U.S. economy or the U.S. equity market.
Recognition of the enhanced risk/reward characteristics of international
investing on the part of institutional investors is demonstrated by their
rapidly increasing exposure to international equity markets. By the end of 1995,
U.S. pension funds had invested 8 percent of their equity portfolios in
international equities. This percentage is expected to significantly increase
over the next five years.
PHILOSOPHY. The Sub-Advisor combines top-down country selection with bottom-up
stock selection in order to exploit the inefficiencies within and between
international equity markets. Various academic studies have shown that 60 to 70
percent of a portfolio's returns are determined by the asset allocation mix,
while the remainder is the result of stock selection.
The world's financial markets continually change, and it is the job of the fund
manager to understand and act upon these changing trends. Over the last 25
years:
o major inflation in the United States and Europe during the
1970s decimated the performance of common stocks, resulting in
major gains in "hard assets";
o a disinflationary period in the 1980s provided some of
the best returns of this century for common stocks both
in Europe and the United States;
o the economies and securities markets of Japan and other
Pacific Rim countries performed spectacularly;
o Latin America reversed decades of economic stagnation
in the mid- to late-1980s as a result of dramatic
political and economic changes; and
o technology transformed political, economic and
financial patterns worldwide.
The Sub-Advisor believes that to consistently provide investors with superior
returns, it is imperative to focus on both country
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selection as well as stock selection. Four primary factors are reviewed in the
country selection process in order to rank all the countries for potential
returns in U.S. dollars. The Sub-Advisor looks for a positive monetary
environment that is likely to stimulate economic growth. The Sub-Advisor looks
for accelerating corporate earnings in countries selling at reasonable valuation
levels given the expected growth. Finally, the Sub-Advisor looks at the demand
and supply relationship for equities in each country.
The Sub-Advisor seeks to control risk by diversifying across a number of foreign
markets. The Fund will generally have investments in 12 or more countries, and
the Fund will never be completely out of any major market in the EAFE Index. The
Fund will be further diversified by holding, on average, 80 stocks in the
portfolio. A quantitative review of the portfolio serves to identify the risk
and return parameters of the investments.
Once the macro-economic framework is developed, the Sub-Advisor seeks to add
value through security selection. The Sub-Advisor focuses on medium and large
capitalization stocks, but the Fund will typically hold 5% to 25% of the Fund's
assets in companies that have a market capitalization of less than $1 billion.
The minimum market capitalization for an investment is $50 million. Turnover in
the portfolio will generally average between 25% and 50%.
The stock selection process is earnings driven with a particular focus on cash
earnings. In international markets where the accounting and reporting standards
are not as standardized as in the United States, the Sub-Advisor believes that
cash earnings are the best reflection of the true earnings power of a
corporation. The Sub-Advisor analyzes accounting and legal differences in order
to compare investment among different countries. The core of the equity research
process is driven by fundamental research. The Sub-Advisor's investment research
professionals annually visit more than 600 companies around the globe that are
potential investments. The Sub-Advisor feels that these company visits are an
essential part of understanding the cash generation capabilities of the
companies. The Sub-Advisor is headquartered in Boston and has offices and
investment professionals in Frankfurt, London and Tokyo.
The Fund will use currency hedges only as a defensive measure. Given its outlook
for the various currencies, the Sub-Advisor first seeks beneficial currency
exposure through country allocation. Secondly, the Sub-Advisor will concentrate
investments in securities that are likely to benefit from the currency outlook.
Finally, as a defensive measure, the Sub-Advisor may hedge some of the Fund's
currency position to protect the portfolio against a rise in the dollar of the
United States. The Fund may hedge up to 50% of its investments in international
markets.
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Investing in foreign securities involves considerations and possible risks not
typically involved in investing in securities of companies domiciled and
operating in the United States, including the instability of some governments,
the possibility of expropriation, limitations on the use or removal of funds or
other assets, changes in governmental administration or economic or monetary
policy (in the United States or elsewhere) or changed circumstances in dealings
between nations. The application of non-U.S. tax laws (e.g., the imposition of
withholding taxes on dividend or interest payments) or confiscatory taxation may
also affect investment in such securities. Higher expenses may result from
investment in non-U.S. securities than would result from investment in U.S.
securities because of the costs that must be incurred in connection with
conversions between various currencies and brokerage commissions that may be
higher than those in the United States. Securities markets located outside the
United States also may be less liquid, more volatile and less subject to
governmental supervision than those in the United States. Investments in
countries other than the United States could be affected by other factors not
present in the United States, including lack of uniform accounting, auditing and
financial reporting standards and potential difficulties in enforcing
contractual obligations.
While the Fund intends to invest primarily in equity securities, up to 20% of
the Fund's assets may be invested in convertible bonds and other debt
securities. These debt obligations consist of U.S. and foreign government
securities and corporate debt securities. The Fund will limit its purchases of
debt securities to investment grade obligations. "Investment grade" debt refers
to those securities rated within one of the four highest categories by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group. While securities in
these categories are generally accepted as being of investment grade, the fourth
highest grade is considered to be a medium grade and has speculative
characteristics even though it is regarded as having adequate capacity to pay
interest and repay principal.
Hedging Techniques
Unless otherwise indicated, the Sub-Advisor may engage in the following hedging
techniques to seek to hedge all or a portion of the Fund's assets against market
value changes resulting from changes in securities prices and currency
fluctuations. Hedging is a means of attempting to offset, or neutralize, the
price movement of an investment by making another investment, the price of which
should tend to move in the opposite direction from the original investment. The
imperfect correlation in price movement between an option and the underlying
financial instrument and/or the costs of implementing such an option may limit
the effectiveness of the hedging strategy.
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PUT AND CALL OPTIONS. The Fund may write (sell) covered put and call options as
a means of enhancing its return and may buy put and call options written by
others covering securities, futures contracts and foreign currencies to attempt
to provide protection against the adverse effects of anticipated changes in the
prices of such instruments. The Fund may write covered call options as a means
of enhancing its return through the receipt of premiums when the Adviser
determines that the underlying securities, futures contracts or foreign
currencies have achieved their potential for appreciation. However, by writing
such options, the Fund forgoes the opportunity to profit from an increase in the
market price of the underlying security, futures contract or foreign currency
above the exercise price except insofar as the premium represents such a profit.
The Fund may also seek to earn additional income through receipt of premiums by
writing covered put options. The risk involved in writing such options is that
there could be a decrease in the market value of the underlying security,
futures contract or foreign currency. If this occurred, the option could be
exercised and the underlying instrument would then be sold to the Fund at a
higher price than its then current market value. The Fund may purchase put and
call options to attempt to provide protection against adverse price effects from
anticipated changes in prevailing prices of securities, futures contracts or
foreign currencies. The purchase of a put option protects the value of portfolio
holdings in a falling market, while the purchase of a call option protects cash
reserves from a failure to participate in a rising market. In purchasing a call
option, the Fund would be in a position to realize a gain if, during the option
period, the price of the security, futures contract or foreign currency
increased by an amount greater than the premium paid. It would realize a loss if
the price of the security, futures contract or foreign currency decreased or
remained the same or did not increase during the period by more than the amount
of the premium. If a put or call option purchased by the Fund were permitted to
expire without being sold or exercised, its premium would represent a realized
loss to the Fund. When writing put options the Fund will be required to
segregate cash and/or liquid high-grade debt securities to meet its obligations.
When writing call options the Fund will be required to own the underlying
financial instrument or segregate with its Custodian cash and/or short-term high
quality securities to meet its obligations under written calls. By so doing, the
Fund's ability to meet current obligations, to honor redemptions or to achieve
its investment objective may be impaired. The staff of the Securities and
Exchange Commission has taken the position that over-the-counter options and the
assets used as "cover" for over-the-counter options are illiquid securities.
FUTURES CONTRACTS. The Fund may buy and sell futures contracts as a hedge to
protect the value of the Fund's portfolio against
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anticipated changes in securities prices and foreign currencies. There are
several risks in using futures contracts. One risk is that futures prices could
correlate imperfectly with the behavior of cash market prices of the financial
instrument being hedged so that even a correct forecast of general price trends
may not result in a successful transaction. Another risk is that the Sub-Advisor
may be incorrect in its expectation of future prices of the underlying financial
instrument. There is also a risk that a secondary market in the obligations that
the Fund holds may not exist or may not be adequately liquid to permit the Fund
to close out positions when it desires to do so. When buying or selling futures
contracts the Fund will be required to segregate cash and/or liquid high-grade
debt obligations to meet its obligations under these types of financial
instruments. By so doing, the Fund's ability to meet current obligations, to
honor redemptions or to operate in a manner consistent with its investment
objective may be impaired.
FORWARD CURRENCY EXCHANGE CONTRACTS. When the Sub- Advisor believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, it may attempt to hedge some portion or all of this
anticipated risk by entering into a forward contract to sell an amount of
foreign currency approximating the value of some or all of the Fund's portfolio
obligations denominated in such foreign currency. It may also enter into such
contracts to protect against loss between trade and settlement dates resulting
from changes in foreign currency exchange rates. Such contracts will also have
the effect of limiting any gains to the Fund between trade and settlement dates
resulting from changes in such rates.
Certain Risk Considerations
CURRENCY RISKS. The Fund's investments that are denominated in a currency other
than the U.S. dollar are subject to the risk that the value of a particular
currency will change in relation to one or more other currencies including the
U.S. dollar. Among the factors that may affect currency values are trade
balances, the level of short-term interest rates, differences in relative values
of similar assets in different currencies, long-term opportunities for
investment and capital appreciation and political developments. The Fund may try
to hedge these risks by investing in foreign currencies, currency futures
contracts and options thereon, forward currency exchange contracts, or any
combination thereof, but there can be no assurance that such strategies will be
effective.
MARKET RISKS. General price movements of securities and other investments may
significantly affect the value of the Fund's portfolio. With respect to the
investment strategy utilized by the Fund, there is always some, and occasionally
a significant,
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degree of market risk. Investing in small companies involves certain special
risks. Small companies may have limited product lines, markets, or financial
resources, and their managements may be dependent on a limited number of key
individuals. The securities of small companies may have limited market liquidity
and may be subject to more abrupt or erratic market movements than securities of
larger, more established companies or the market averages in general.
EMERGING MARKETS. The risks of foreign investing are of greater concern in the
case of investments in emerging markets which may exhibit greater price
volatility and have less liquidity. Furthermore, the economies of emerging
market countries generally are heavily dependent upon international trade and,
accordingly, have been and may continue to be adversely affected by trade
barriers, managed adjustments in relative currency values, and other
protectionist measures applied internally or imposed by the countries with which
they trade. These emerging market economies also have been and may continue to
be adversely affected by economic conditions in the countries with which they
trade.
HEDGING TECHNIQUES. The Fund's ability to establish and close out positions in
futures contracts and options will be subject to the existence of a liquid
secondary market. Although the Fund generally will purchase or sell only those
futures contracts and options for which there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange will
exist for any particular futures contract or option or at any particular time.
Transactions in options involve special risks. The Fund may not be able to enter
into a closing transaction to cancel its obligations with respect to the options
it has written or purchased. If an option purchased by the Fund expires
unexercised, the Fund will lose the premium it paid. In addition, the Fund could
suffer a loss if the premium paid by the Fund in a closing transaction exceeds
the premium income it received. When the Fund writes a call option, its ability
to participate in the capital appreciation of the underlying obligation is
limited.
CONFLICTS OF INTEREST. The Sub-Advisor may determine from time to time that some
investment opportunities are appropriate for certain of its clients and not
others, including the Fund, as the Fund has an investment objective that may
vary from that of other clients. For these and other reasons, such as differing
time horizons, liquidity needs, tax consequences and assessments of general
market conditions and of individual securities (including options), Fund
investment transactions may or may not vary from decisions made for others by
the Sub-Advisor. It may also occasionally be necessary to allocate limited
investment
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opportunities among the Fund and other clients of the Sub-Advisor, on a fair and
equitable basis deemed appropriate by the Sub-Advisor.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its investment
objective. To the extent that the major portion of the Fund's portfolio is
invested in equity securities, it may be expected that the net asset value of
the Fund will be subject to greater fluctuation than a portfolio containing
mostly fixed income securities.
Other Investment Techniques
MONEY MARKET INSTRUMENTS. Money market instruments will typically represent a
portion of the Fund's portfolio, as funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operational expenses of the Fund. For temporary
defensive purposes, when the Sub-Advisor determines that market conditions
warrant, the Fund may depart from its normal investment objective and money
market instruments may be emphasized, even to the point that 100% of the Fund's
assets may be so invested. Money market instruments mature in thirteen months or
less from the date of purchase and include U.S. Government Securities and
corporate debt securities (including those subject to repurchase agreements),
bankers' acceptances and certificates of deposit of domestic branches of U.S.
banks, and commercial paper (including variable amount demand master notes). At
the time of purchase, money market instruments will have a short-term rating in
the highest category by Moody's or S&P or, if not rated, issued by a corporation
having an outstanding unsecured debt issue rated A or better by Moody's or S&P
or, if not so rated, of equivalent quality in the Sub-Advisor's opinion. See the
Statement of Additional Information for a further description of money market
investments.
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 33.3% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
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LENDING PORTFOLIO SECURITIES. The Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio securities
exposes the Fund to the risk that the borrower may fail to return the loaned
securities or may not be able to provide additional collateral or that the Fund
may experience delays in recovery of the loaned securities or loss of rights in
the collateral if the borrower fails financially. To minimize these risks, the
borrower must agree to maintain collateral marked to market daily, in the form
of cash and/or liquid high-grade debt obligations, with the Fund's Custodian in
an amount at least equal to the market value of the loaned securities. The Fund
will limit the amount of its loans of portfolio securities to no more than 25%
of its net assets. This lending policy may not be changed without the
affirmative vote of a majority of its outstanding shares.
PORTFOLIO TURNOVER. By utilizing the approach to investing described herein, and
assuming continuation of existing market dynamics, annual portfolio turnover is
expected to average between 25% and 50%, and will generally not exceed 100%.
Market conditions may dictate, however, a higher rate of portfolio turnover in a
particular year. The degree of portfolio activity affects the brokerage costs of
the Fund and may have an impact on the amount of taxable distributions to
shareholders.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon interest rate earned by the Fund effective for the
period of time during which the repurchase agreement is in effect. Delivery
pursuant to the resale typically will occur within one to five days of the
purchase. For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is considered to be a loan collateralized by the securities
subject to the repurchase agreement. The Fund will not enter into a repurchase
agreement which will cause more than 15% of its assets to be invested in
repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT COMPANIES. The Fund may invest in the securities of open-end and
closed-end investment companies which are generally authorized to invest in
securities eligible for purchase by the Fund. To the extent the Fund does so,
Fund shareholders would indirectly pay a portion of the operating costs of the
underlying investment companies. These costs include management, brokerage,
shareholder servicing and other operational expenses.
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Indirectly, then, shareholders may pay higher operational costs than if they
owned the underlying investment companies directly.
In addition, shares of closed-end investment companies frequently trade at a
discount from their net asset values. This characteristic of shares of a
closed-end investment company is a risk separate and distinct from the risk that
its net asset value will decrease.
The Fund does not presently intend to invest more than 10% of its total assets
in securities of other investment companies. In addition, the Fund will not
invest more than 5% of its total assets in securities of any single investment
company, nor will it purchase more than 3% of the outstanding voting securities
of any investment company.
HOW TO PURCHASE SHARES
THERE ARE NO SALES COMMISSIONS CHARGED TO INVESTORS. Assistance in opening
accounts may be obtained from the Administrator by calling 1-800-443-4249, or by
writing to the Fund at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Fund. Such broker-dealer may charge you a fee for its services. Payment
for shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. Your investment will purchase
shares at the Fund's net asset value next determined after your order is
received by the Fund in proper order as indicated herein. The minimum initial
investment in the Fund, unless stated otherwise herein, is $5,000. The Fund may,
in the Advisor's sole discretion, accept certain accounts with less than the
stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Administrator, whether by mail, bank
wire or facsimile order from a qualified broker-dealer, prior to 4:00 p.m.,
Eastern time, will purchase shares at the net asset value next determined on
that business day. If your order is not received by 4:00 p.m., Eastern time,
your order will purchase shares at the net asset value determined on the next
business day. (See "How Net Asset Value is Determined.")
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
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<PAGE>
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Fund or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to The
Jamestown International Equity Fund, and mail it to:
THE JAMESTOWN INTERNATIONAL EQUITY FUND
C/O SHAREHOLDER SERVICES
P.O. BOX 5354
CINCINNATI, OHIO 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Fund, at
1-800-443-4249, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
ABA#
For Williamsburg Investment Trust #
For The Jamestown International Equity Fund
(Shareholder name and account number or
tax identification number)
It is important that the wire contain all the information and that the Fund
receives prior telephone notification to ensure proper credit. Once your wire is
sent you should, as soon as possible thereafter, complete and mail your Account
Application to the Fund as described under "Regular Mail Orders," above.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire (minimum
additional investment of $1,000) at any time by purchasing shares at the then
current net asset value as aforementioned. Before making additional investments
by bank wire, please call the Fund at 1-800-443-4249 to alert the Fund that your
wire is to be sent. Follow the wire instructions above to send your wire. When
calling for any reason, please have your account number ready, if known. Mail
orders should include, when
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<PAGE>
possible, the "Invest by Mail" stub which is attached to your Fund confirmation
statement. Otherwise, be sure to identify your account in your letter.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
net asset value on or about the last business day of the month or quarter. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.
EMPLOYEES AND AFFILIATES OF THE FUND. The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Fund or certain
parties related thereto. The minimum initial investment for such accounts is
$1,000. See the Statement of Additional Information for further details.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed on each day that the Fund is open for
business by sending a written request to the Fund. The Fund is open for business
on each day the New York Stock Exchange (the "Exchange") is open for business.
Any redemption may be for more or less than the purchase price of your shares
depending on the market value of the Fund's portfolio securities. All redemption
orders received in proper form, as indicated herein, by the Administrator prior
to 4:00 p.m., Eastern time, will redeem shares at the net asset value determined
as of that business day's close of trading. Otherwise, your order will redeem
shares on the next business day. You may also redeem your shares through a
broker-dealer who may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $5,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 60 days' written notice. If the
shareholder brings his account value up to $5,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-443-4249, or write to the address shown below.
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<PAGE>
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Jamestown
International Equity Fund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your
request for redemption must include:
1) your letter of instruction or a stock assignment specifying
the account number, and the number of shares or dollar amount
to be redeemed. This request must be signed by all
registered shareholders in the exact names in which they are
registered;
2) any required signature guarantees (see "Signature
Guarantees"); and
3) other supporting legal documents, if required in the case of
estates, trusts, guardianships, custodianships, corporations,
partnerships, pension or profit sharing plans, and other
organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Fund may
not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Fund. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Fund. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon
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<PAGE>
thirty days' written notice, to make reasonable charges for wire redemptions.
All charges will be deducted from your account by redemption of shares in your
account. Your bank or brokerage firm may also impose a charge for processing the
wire. In the event that wire transfer of funds is impossible or impractical, the
redemption proceeds will be sent by mail to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, and (2)
requests to establish or change redemption services other than through your
initial account application. Signature guarantees are acceptable from a member
bank of the Federal Reserve System, a savings and loan institution, credit
union, registered broker-dealer or a member firm of a U.S. Stock Exchange, and
must appear on the written request for redemption, or change of registration.
SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of the Fund valued at
$25,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by calling or writing the Fund. See the Statement of Additional Information
for further details.
HOW NET ASSET VALUE IS DETERMINED
The net asset value of the Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m., Eastern time). Securities held by the Fund may be primarily listed on
foreign exchanges or traded in foreign markets which are open on days (such as
Saturdays and U.S. holidays) when the New York Stock Exchange is not open for
business. As a result, the net asset value per share of the Fund may be
significantly affected by trading on days when the Fund is not open for
business. Net asset value per share is determined by dividing the total value of
all Fund securities (valued at market value) and other assets, less liabilities,
by the total number of shares then outstanding. Net asset value includes
interest on fixed income securities, which is accrued daily. See the Statement
of Additional Information for further details.
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<PAGE>
Securities which are traded over-the-counter are priced at the last sale price,
if available, otherwise, at the last quoted bid price. Securities traded on a
national stock exchange will be valued based upon the closing price on the
valuation date on the principal exchange where the security is traded.
Fixed-income securities will ordinarily be traded in the over-the-counter market
and common stocks will ordinarily be traded on a national securities exchange,
but may also be traded in the over-the-counter market. Foreign securities are
valued on the basis of quotations from the primary market in which they are
traded and are translated from the local currency into U.S. dollars using
currency exchange rates. Securities and other assets for which no quotations are
readily available will be valued in good faith at fair value using methods
determined by the Board of Trustees.
MANAGEMENT OF THE FUND
The Fund is a diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Fund under
the laws of Massachusetts governing the responsibilities of trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Fund and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, Lowe,
Brockenbrough & Tattersall, Inc. (the "Advisor") provides the Fund with general
investment supervisory services pursuant to an Investment Advisory Agreement
with the Trust.
The Advisor, organized as a Virginia corporation in 1970, is controlled by
Austin Brockenbrough III and Fred T. Tattersall. In addition to acting as
Advisor to the Fund, the Advisor also provides investment advice to
corporations, trusts, pension and profit sharing plans, other business and
institutional accounts and individuals. The Advisor also serves as investment
advisor to The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown
Bond Fund, The Jamestown Short Term Bond Fund and The Jamestown Tax Exempt
Virginia Fund (five series of the Trust), the subjects of separate prospectuses.
Compensation of the Advisor is at the annual rate of 1.00% of the Fund's average
daily net assets. The Advisor currently intends to waive its advisory fees to
the extent necessary to limit the total operating expenses of the Fund to 1.60%
per annum of its average daily net assets. However, there is no assurance that
any voluntary fee waivers will continue in the current or future fiscal years,
and expenses of the Fund may therefore exceed 1.60% of its average daily net
assets.
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<PAGE>
As of the date of this Prospectus, the Advisor is the sole shareholder of the
Fund.
The Advisor's address is 6620 West Broad Street, Suite 300, Richmond, Virginia
23230.
SUB-ADVISOR. Subject to the authority of the Board of Trustees and the
supervision of the Advisor, Oechsle International Advisors, L.P. (the
"Sub-Advisor") provides the Fund with a continuous program of supervision of the
Fund's assets, including the composition of its portfolio, and furnishes advice
and recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to a Sub-Advisory Agreement with the
Trust and the Advisor. The Sub-Advisor is also responsible for the selection of
broker-dealers through which the Fund executes portfolio transactions, subject
to brokerage policies established by the Trustees.
Oechsle Group, L.P. is the General Partner of the Sub-Advisor. The limited
partners of the Sub-Advisor are Dresdner Asset Management (U.S.A.) Corporation
(a subsidiary of Dresdner Bank A.G.) and the OIA Limited Partnership Interest
Trust (which is beneficially owned by the employees of the Sub-Advisor). The
Managing Partner of Oechsle Group, L.P. and portfolio manager of the Fund is
Walter Oechsle. Mr. Oechsle, who has 35 years experience in the international
investment arena, began his career at Arnhold and S. Bleichroeder before moving
to Putnam to become the President and Chief Investment Officer of Putnam
International Advisors. In 1986, Mr. Oechsle left with most of the team from
Putnam International Advisors and established Oechsle Group, L.P. The founding
partners of the Oechsle Group, all of whom are still actively involved, have an
average tenure of thirteen years with the current investment team. The
Sub-Advisor has eighteen investment professionals located in offices in Boston,
Frankfurt, London and Tokyo. The Sub-Advisor manages over $7 billion in
international assets in separately managed and commingled accounts for private
and institutional investors.
Compensation of the Sub-Advisor is paid by the Advisor (not the Fund) in the
amount of one-half of the advisory fee received by the Advisor (net of any
advisory fee waivers).
The Sub-Advisor's address is One International Place, Boston, Massachusetts
02110.
ADMINISTRATOR. The Fund has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio 45201, to provide administrative, pricing, accounting, dividend
disbursing, shareholder servicing and transfer agent services. The Administrator
is a subsidiary of Leshner Financial Inc., of which Robert H. Leshner is the
controlling shareholder.
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<PAGE>
The Administrator supplies executive, administrative and regulatory services,
supervises the preparation of tax returns, and coordinates the preparation of
reports to shareholders and reports to and filings with the Securities and
Exchange Commission and state securities authorities. In addition, the
Administrator calculates daily net asset value per share and maintains such
books and records as are necessary to enable it to perform its duties.
The Fund pays the Administrator a fee for these services at the annual rate of
0.25% of the average value of its daily net assets up to $25 million, 0.225% on
the next $25 million of such assets and 0.20% of such assets in excess of $50
million; provided, however, that the minimum fee is $4,000 per month. The
Administrator also charges the Fund for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is (the
"Custodian"). The Custodian's mailing address is .
The Advisor, Sub-Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Fund pays all expenses not assumed by the Advisor,
including its fees. Fund expenses include, among others, the fees and expenses,
if any, of the Trustees and officers who are not "affiliated persons" of the
Advisor or the Sub-Advisor, fees of the Fund's Custodian, interest expense,
taxes, brokerage fees and commissions, fees and expenses of the Fund's
shareholder servicing operations, fees and expenses of qualifying and
registering the Fund's shares under federal and state securities laws, expenses
of preparing, printing and distributing prospectuses and reports to existing
shareholders, auditing and legal expenses, insurance expenses, association dues,
and the expense of shareholders' meetings and proxy solicitations. The Fund is
also liable for any nonrecurring expenses that may arise such as litigation to
which the Fund may be a party. The Fund may be obligated to indemnify the
Trustees and officers with respect to such litigation. All expenses of the Fund
are accrued daily on the books of the Fund at a rate which, to the best of its
belief, is equal to the actual expenses expected to be incurred by the Fund in
accordance with generally accepted accounting practices.
In order to register its shares for sale in certain states, the Fund may be
required to place limitations on its expenses. The Advisor has agreed with the
Fund that, if expenses exceed the lesser of (i) any such state limitations or
(ii) 2% of the Fund's average daily net assets, the Advisor will either waive
its fees and/or reimburse the Fund to the extent required to conform to such
limitations. Such reimbursements, if required, would be
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<PAGE>
accounted for as a reduction of expenses. The Advisor would not be required to
make reimbursements in excess of the fees received from the Fund.
BROKERAGE. The Fund has adopted brokerage policies which allow the Sub-Advisor
to prefer brokers which provide research or other valuable services to the
Sub-Advisor and/or the Fund. In all cases, the primary consideration for
selection of broker-dealers through which to execute brokerage transactions will
be to obtain the most favorable price and execution for the Fund. Research
services obtained through the Fund's brokerage transactions may be used by the
Sub-Advisor for its other clients; conversely, the Fund may benefit from
research services obtained through the brokerage transactions of the
Sub-Advisor's other clients. Subject to the requirements of the Investment
Company Act of 1940 and procedures adopted by the Board of Trustees, the Fund
may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust or the Advisor.
The Statement of Additional Information contains more information about the
management and brokerage practices of the Fund.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general and,
particularly, with respect to dividends and distributions and other matters.
Shareholders should be aware that dividends from the Fund which are derived in
whole or in part from interest on U.S. Government Securities may not be taxable
for state income tax purposes. Other state income tax implications are not
covered, nor is this discussion exhaustive on the subject of federal income
taxation. Consequently, investors should seek qualified tax advice.
The Fund intends to qualify as a "regulated investment company" under Subchapter
M of the Internal Revenue Code of 1986 (the "Code") and will distribute all of
its net income and realized capital gains to shareholders. Shareholders are
liable for taxes on distributions of net income and realized capital gains of
the Fund but, of course, shareholders who are not subject to tax on their income
will not be required to pay taxes on amounts distributed to them. The Fund
intends to declare dividends quarterly, payable in March, June, September and
December, on a date selected by the Trustees. In addition, distributions may be
made annually in December out of any net short-term or long-term capital gains
derived from the sale of securities realized through October 31 of that year.
The Fund may make a supplemental distribution of capital gains at the end of its
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<PAGE>
fiscal year. The nature and amount of all dividends and distributions will be
identified separately when tax information is distributed by the Fund at the end
of each year. The Fund intends to withhold 30% on taxable dividends and any
other payments that are subject to such withholding and are made to persons who
are neither citizens nor residents of the U.S.
Distributions resulting from the sale of foreign currencies and foreign
obligations, to the extent of foreign exchange gains, are taxed as ordinary
income or loss. If these transactions result in reducing the Fund's net income,
a portion of the income may be classified as a return of capital (which will
lower your tax basis). If the Fund pays nonrefundable taxes to foreign
governments during the year, the taxes will reduce the Fund's net investment
income but still may be included in your taxable income. However, you may be
able to claim an offsetting tax credit or itemized deduction on your return for
your portion of foreign taxes paid by the Fund.
Under applicable tax law, the Fund may be required to limit its gains from
hedging in foreign currency forwards, futures and options. Although it is
anticipated the Fund will comply with such limits, the Fund's extensive use of
these hedging techniques involves greater risk of unfavorable tax consequences
than funds not engaging in such techniques. Hedging may also result in the
application of the mark-to-market and straddle provisions of the Internal
Revenue Code. These provisions could result in an increase (or decrease) in the
amount of taxable dividends paid by the Fund as well as affect whether dividends
paid by the Fund are classified as capital gain or ordinary income.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. Current practice of the Fund,
subject to the discretion of the Board of Trustees, is for declaration and
payment of income dividends during the last week of each calendar quarter. All
dividends and capital gains distributions are reinvested in additional shares of
the Fund unless the shareholder requests in writing to receive dividends and/or
capital gains distributions in cash. That request must be received by the Fund
prior to the record date to be effective as to the next dividend. Tax
consequences to shareholders of dividends and distributions are the same if
received in cash or if received in additional shares of the Fund.
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the
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<PAGE>
Fund, see "Additional Tax Information" in the Statement of Additional
Information.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of eleven funds,
or series, to be issued. Shares of all eleven series have currently been issued,
in addition to the Fund: shares of the FBP Contrarian Balanced Fund and the FBP
Contrarian Equity Fund, which are managed by Flippin, Bruce & Porter, Inc. of
Lynchburg, Virginia; shares of The Government Street Equity Fund, The Government
Street Bond Fund and The Alabama Tax Free Bond Fund, which are managed by T.
Leavell & Associates, Inc. of Mobile, Alabama; and shares of The Jamestown
Balanced Fund, The Jamestown Equity Fund, The Jamestown Bond Fund, The Jamestown
Short Term Bond Fund and The Jamestown Tax Exempt Virginia Fund, which are
managed by Lowe, Brockenbrough & Tattersall, Inc. The Trustees are permitted to
create additional series, or funds, at any time.
Shares are freely transferable, have no preemptive or conversion rights and,
when issued, are fully paid and non-assessable. Upon liquidation of the Trust or
a particular Fund of the Trust, holders of the outstanding shares of the Fund
being liquidated shall be entitled to receive, in proportion to the number of
shares of the Fund held by them, the excess of that Fund's assets over its
liabilities. Each outstanding share is entitled to one vote for each full share
and a fractional vote for each fractional share, on all matters which concern
the Trust as a whole. On any matter submitted to a vote of shareholders, all
shares of the Trust then issued and outstanding and entitled to vote,
irrespective of the Fund, shall be voted in the aggregate and not by Fund,
except (i) when required by the 1940 Act, shares shall be voted by individual
Fund; and (ii) when the matter does not affect any interest of a particular
Fund, then only shareholders of the affected Fund or Fund shall be entitled to
vote thereon. Examples of matters which affect only a particular Fund could be a
proposed change in the fundamental investment objectives or policies of that
Fund or a proposed change in the investment advisory agreement for a particular
Fund. The shares of the Fund have noncumulative voting rights, which means that
the holders of more than 50% of the shares voting for the election of Trustees
can elect all of the Trustees if they so choose.
The Declaration of Trust provides the Trustees may hold office indefinitely,
except that: (1) any Trustee may resign or retire; (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; (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
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<PAGE>
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. 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.
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the Statement of Additional Information for more information.
Shareholder inquiries may be made in writing, addressed to the Fund at the
address shown on the cover.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See the Statement of Additional Information
for further information about the Trust and its shares.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance.
The "total return" of the Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If a Fund has been operating less than 1, 5 or 10 years, the time period
during which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same or
different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative percentage rate of return,
actual year-by-year rates or any combination thereof.
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<PAGE>
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated.
PRIOR PERFORMANCE OF SUB-ADVISOR. The investment performance of the Sub-Advisor
illustrated below represents, from September 15, 1986 forward, the performance
for all of the Sub-Advisor's private clients' accounts (the "Accounts") which
were managed with investment objectives, policies and strategies substantially
similar to those to be employed by the Sub-Advisor in managing the Fund.
Performance prior to September 15, 1986 represents the average account
performance of Putnam International Advisors for accounts managed with
investment objectives, policies and strategies substantially similar to those to
be employed in managing the Fund. Mr. Oechsle joined Putnam International
Advisors in 1979 as President and Chief Investment Officer and served as such,
along with other partners of the Sub-Advisor, until August 20, 1986. The
investment philosophy and practices employed by these persons managing
international accounts at Putnam were substantially the same as those employed
by the Sub-Advisor.
The Sub-Advisor's gross performance numbers have been reduced by a hypothetical
management fee of 1%, which represents both the management fee the Fund will be
charged and the estimated average fee the Accounts measured below have been
charged. In addition, the rates of return are shown net of brokerage fees and
commissions.
While the Fund will employ investment objectives and strategies that are
substantially similar to those that were employed by the Sub-Advisor in managing
the Accounts, the Fund may be subject to certain restrictions on its investment
activities to which the Sub-Advisor was not previously subject. Examples include
limits on the percentage of assets invested in securities of issuers in a single
industry, and requirements on distributing income to shareholders. Operating
expenses will be incurred by the Fund which are not incurred by the Sub-Advisor
in managing the Accounts. While the Accounts incur inflows and outflows of cash,
there can be no assurance that the continuous offering of the Fund's shares and
the Fund's obligation to redeem its shares will not impact the Fund's
performance. It is not intended that the following performance data be relied
upon by investors as an indication of future performance of the Fund.
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<PAGE>
PERIODIC RATES OF RETURN
Oechsle Europe, Australia
International and
Advisors, L.P.* Far East Index
Year (Net of Fees) ("EAFE Index")
- ------------ ------------- --------------
1979 10.09% 5.40%
1980 24.84% 22.80%
1981 -3.73% -1.70%
1982 7.19% -1.40%
1983 32.97% 23.50%
1984 -2.28% 7.30%
1985 79.88% 55.10%
1986 65.94% 69.71%
1987 19.69% 24.63%
1988 13.76% 28.27%
1989 25.25% 10.53%
1990 -15.82% -23.46%
1991 9.91% 12.12%
1992 -3.42% -12.18%
1993 30.90% 32.56%
1994 9.20% 7.78%
1995 11.85% 11.21%
1979 through 1995
Annualized Return 16.49% 13.99%
Cumulative Return 1,240.22% 825.85%
* The above returns include the non-U.S. equity average account
performance of Putnam International Advisors from January 1, 1979 to
August 20, 1986. The partners of the Advisor were employed at Putnam
International Advisors until August 20, 1986. From September 15, 1986
forward, it illustrates the non-U.S. equity average account performance
of the Advisor.
- 27 -
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
Send completed application to:
The Jamestown International Equity Fund
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
=======================================================================================================================
<S> <C>
ACCOUNT REGISTRATION
[ ] Individual ____________________________________________________________________________________
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
[ ] Joint* ____________________________________________________________________________________
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right of survivorship unless
otherwise indicated.
[ ] UGMA/UTMA __________________________________ under the_______ Uniform Gifts/Transfers to Minors Act
(First Name)(Middle Initial) (Last Name) (State)
________________________________________________________________________as Custodian
(First Name) (Middle Name) (Last Name)
------------------------------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
------------------------------------------------------------------------------------
[ ] For Corporations, Name of Corporation or Partnership. If a Trust, include the name(s) of Trustees in which
Partnerships, Trusts, account will be registered, and the date of the Trust instrument.
Retirement Plans and
Third Party IRAs ____________________________________________________________________________________
(Taxpayer Identification Number)
=======================================================================================================================
ADDRESS
Street or P.O. Box____________________________________________________________________________________________
City___________________________________________________________________State____________Zip___________________
Telephone_____________________________U.S. Citizen___Resident Alien__Non Resident (Country of Residence)______
=======================================================================================================================
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name__________________________________________________________________________________________________________
Street or P.O. Box____________________________________________________________________________________________
City___________________________________________________________________State____________Zip___________________
=======================================================================================================================
INITIAL INVESTMENT (Minimum initial investment: $5,000)
[ ] Enclosed is a check payable to The Jamestown International Equity Fund for $___
[ ] Funds were wired to ________________ on_____________________________in the amount of $_____________________
By Mail:You may purchase shares by mail by completing and signing this
application. Please mail with your check to the address above.
By Wire:You may purchase shares by wire. Prior to sending the wire, please
contact the Fund at 1-800-443-4249 so that your wire transfer is
properly credited to your account. Please forward your completed
application by mail immediately thereafter to the Fund. The wire should
be routed as follows:
-------------------------------
ABA #_________________
For credit Williamsburg Investment Trust #8735-004939
For Jamestown International Equity Fund
For (shareholder name and Social Security or Taxpayer ID Number)
======================================================================================================================
DIVIDEND AND DISTRIBUTION INSTRUCTIONS
[ ] Reinvest all dividends and capital gains distributions
[ ] Reinvest all capital gain distributions; dividends to be paid in cash
[ ] Pay all dividends and capital gain distributions in cash
SIGNATURE AUTHORIZATION - FOR USE BY CORPORATIONS, TRUSTS, PARTNERSHIPS AND OTHER INSTITUTIONS
Please retain a copy of this document for your files. Any modification of the
information contained in this section will require an Amendment to this
Application Form.
[ ] New Application [ ] Amendment to previous Application dated______Account No.______________________________
Name of Registered Owner______________________________________________________________________________________
The following named person(s) are currently authorized signatories of the
Registered Owner. Any of them is/are authorized under the applicable governing
document to act with full power to sell, assign or transfer securities of The
Jamestown International Equity Fund for the Registered Owner and to execute and
deliver any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
------------------------------------ --------------------------------- ------------------------------------
------------------------------------ --------------------------------- ------------------------------------
------------------------------------ --------------------------------- ------------------------------------
The Jamestown International Equity Fund, or any agent of the Fund may, without
inquiry, rely upon the instruction of any person(s) purporting to be an
authorized person named above, or in any Amendment received by the Fund or its
agent. The Fund and its Agent shall not be liable for any claims, expenses or
losses resulting from having acted upon any instruction reasonably believed to
be genuine.
=====================================================================================================================
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
[ ] Please mail redemption proceeds to the name and address of record
[ ] Please wire redemptions to the commercial bank account indicated below (subject to a minimum wire transfer of $5,000)
SYSTEMATIC WITHDRAWAL
Please redeem sufficient shares from this account at the then net asset value,
in accordance with the instructions below: (subject to a minimum $100 per
distribution)
Dollar amount of each withdrawal $___________________ beginning the last business day of______________________
Withdrawals to be made: [ ] Monthly [ ] Quarterly
[ ] Please DEPOSIT DIRECTLY the proceeds to the bank account below
[ ] Please mail redemption proceeds to the name and address of record
AUTOMATIC INVESTMENT
Please purchase shares of The Jamestown International Equity Fund by withdrawing
from the commercial bank account below, per the instructions below:
Amount $___________________(minimum $100) [ ] Monthly [ ] Quarterly
_______________________________________________ is hereby authorized to charge
to my account the bank draft
amount here indicated. I
understand the payment of this
draft is subject to all
provisions of the contract as
stated on my bank account
signature card.
------------------------------------------------------------------
(Signature as your name appears on the bank account to be drafted)
Name as it appears on the account_____________________________________________________________________________
Commercial bank account #_____________________________________________________________________________________
ABA Routing #_________________________________________________________________________________________________
City, State and Zip in which bank is located__________________________________________________________________
For AUTOMATIC INVESTMENT or SYSTEMATIC WITHDRAWAL please attach a voided check
from the above account.
====================================================================================================================
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Fund and affirm that I have received a current prospectus and
understand the investment objective and policies stated therein. I certify under
the penalties of perjury that (1) the Social Security Number or Tax
Identification Number shown is correct and (2) I am not subject to backup
withholding. The certifications in this paragraph are required from all
non-exempt persons to prevent backup withholding of 31% of all taxable
distributions and gross redemption proceeds under the federal income tax law.
(Check here if you are subject to backup withholding) [ ].
- ----------------------------------------------------- ----------------------------------------------------
APPLICANT DATE JOINT APPLICANT DATE
- ----------------------------------------------------- ----------------------------------------------------
OTHER AUTHORIZED SIGNATORY DATE OTHER AUTHORIZED SIGNATORY DATE
</TABLE>
- 28 -
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Inc.
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
SUB-ADVISOR
Oechsle International Advisors, Inc.
One International Place
Boston, Massachusetts 02110
ADMINISTRATOR
MGF Service Corp.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
INDEPENDENT AUDITORS
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, Pennsylvania 19102
COUNSEL
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Jack E. Brinson
Austin Brockenbrough III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Samuel B. Witt III
OFFICERS
- 29 -
<PAGE>
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 15, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN
INTERNATIONAL EQUITY FUND
_______, 1996
A Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES............................................ 2
DESCRIPTION OF BOND RATINGS.................................................. 9
INVESTMENT LIMITATIONS....................................................... 12
TRUSTEES AND OFFICERS........................................................ 14
INVESTMENT ADVISOR........................................................... 17
SUB-ADVISOR.................................................................. 18
ADMINISTRATOR................................................................ 19
OTHER SERVICES............................................................... 20
BROKERAGE.................................................................... 20
SPECIAL SHAREHOLDER SERVICES................................................. 21
PURCHASE OF SHARES........................................................... 23
REDEMPTION OF SHARES......................................................... 23
NET ASSET VALUE DETERMINATION................................................ 24
ALLOCATION OF TRUST EXPENSES................................................. 24
ADDITIONAL TAX INFORMATION................................................... 25
CAPITAL SHARES AND VOTING.................................................... 27
CALCULATION OF PERFORMANCE DATA.............................................. 28
FINANCIAL STATEMENTS AND REPORTS............................................. 30
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Jamestown International Equity
Fund (the "Fund") dated _______, 1996. The Prospectus may be obtained from the
Fund, at the address and phone number shown above, at no charge.
- 1 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
FOREIGN SECURITIES. The Fund will invest primarily in foreign securities,
including those traded domestically as American Depository Receipts (ADRs).
Foreign securities investment presents special considerations not typically
associated with investments in domestic securities. Foreign taxes may reduce
income. Currency exchange rates and regulations may cause fluctuation in the
value of foreign securities. Foreign securities are subject to different
regulatory environments than in the United States and, compared to the United
States, there may be a lack of uniform accounting, auditing and financial
reporting standards, less volume and liquidity and more volatility, less public
information, and less regulation of foreign issuers. Countries have been known
to expropriate or nationalize assets, and foreign investments may be subject to
political, financial or social instability or adverse diplomatic developments.
There may be difficulties in obtaining service of process on foreign issuers and
difficulties in enforcing judgments with respect to claims under the U.S.
securities laws against such issuers. Favorable or unfavorable differences
between U.S. and foreign economies could affect foreign securities values. The
U.S. Government has, in the past, discouraged certain foreign investments by
U.S. investors through taxation or other restrictions and it is possible that
such restrictions could be imposed again.
WARRANTS AND RIGHTS. Warrants are essentially options to purchase equity
securities at specific prices and are valid for a specific period of time.
Prices of warrants do not necessarily move in concert with the prices of the
underlying securities. Rights are similar to warrants but generally have a short
duration and are distributed directly by the issuer to its shareholders. Rights
and warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The value of the Fund's portfolio
securities which are invested in non-U.S. dollar denominated instruments as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and the Fund
may incur costs in connection with conversions between various currencies. The
Fund will conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through
- 2 -
<PAGE>
forward contracts to purchase or sell foreign currencies. A forward foreign
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers. The Fund will not, however, hold
foreign currency except in connection with purchase and sale of foreign
portfolio securities.
The Fund will enter into forward foreign currency exchange contracts as
described hereafter. When the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to establish
the cost or proceeds relative to another currency. The forward contract may be
denominated in U.S. dollars or may be a "cross-currency" contract where the
forward contract is denominated in a currency other than U.S. dollars. However,
this tends to limit potential gains which might result from a positive change in
such currency relationships.
The forecasting of a short-term currency market movement is extremely difficult
and the successful execution of a short-term hedging strategy is highly
uncertain. The Fund may enter into such forward contracts if, as a result, not
more than 50% of the value of its total assets would be committed to such
contracts. Under normal circumstances, consideration of the prospect for
currency parities will be incorporated into the longer term investment decisions
made with regard to overall diversification strategies. However, the Trustees
believe that it is important to have the flexibility to enter into forward
contracts when the Sub-Advisor determines it to be in the best interests of the
Fund. The Custodian will segregate cash, U.S. Government obligations or other
liquid high-grade debt obligations in an amount not less than the value of the
Fund's total assets committed to foreign currency exchange contracts entered
into under this type of transaction. If the value of the segregated securities
declines, additional cash or securities will be added on a daily basis, i.e.,
"marked to market," so that the segregated amount will not be less than the
amount of the Fund's commitments with respect to such contracts.
Generally, the Fund will not enter into a forward foreign currency exchange
contract with a term of greater than 90 days. At the maturity of the contract,
the Fund may either sell the portfolio security and make delivery of the foreign
currency, or may retain the security and terminate the obligation to deliver the
foreign currency by purchasing an "offsetting" forward contract with the same
currency trader obligating the Fund to purchase, on the same maturity date, the
same amount of the foreign currency.
- 3 -
<PAGE>
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the contract. Accordingly, it may be
necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security if
its market value exceeds the amount of foreign currency the Fund is obligated to
deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between entering into a forward contract for the sale of a
foreign currency and the date the Fund enters into an offsetting contract for
the purchase of the foreign currency, the Fund will realize a gain to the extent
the price of the currency the Fund has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency the Fund has agreed
to purchase exceeds the price of the currency the Fund has agreed to sell.
The Fund's dealings in forward foreign currency exchange contracts will be
limited to the transactions described above. The Fund is not required to enter
into such transactions with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by the Sub-Advisor. It
should also be realized that this method of protecting the value of the Fund's
portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities held by the
Fund. It simply establishes a rate of exchange which one can achieve at some
future point in time. Additionally, although such contracts tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time, they tend to limit any potential gain which might result should the value
of such currency increase.
WRITING COVERED CALL OPTIONS. The Fund may write covered call options on equity
securities or futures contracts to earn premium income, to assure a definite
price for a security it has considered selling, or to close out options
previously purchased. A call option gives the holder (buyer) the right to
purchase a security or futures contract at a specified price (the exercise
price) at any time until a certain date (the expiration date). A
- 4 -
<PAGE>
call option is "covered" if the Fund owns the underlying security subject to the
call option at all times during the option period. A covered call writer is
required to deposit in escrow the underlying security in accordance with the
rules of the exchanges on which the option is traded and the appropriate
clearing agency.
The writing of covered call options is a conservative investment technique which
the Sub-Advisor believes involves relatively little risk. However, there is no
assurance that a closing transaction can be effected at a favorable price.
During the option period, the covered call writer has, in return for the premium
received, given up the opportunity for capital appreciation above the exercise
price should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security decline.
The Fund may write covered call options if, immediately thereafter, not more
than 30% of its net assets would be committed to such transactions. As long as
the Securities and Exchange Commission continues to take the position that
unlisted options are illiquid securities, the Fund will not commit more than 15%
of its net assets to unlisted covered call transactions and other illiquid
securities. The ability of the Fund to write covered call options may be limited
by state regulations which require the Fund to commit no more than a specified
percentage of its assets to such transactions and the tax requirement that less
than 30% of the Fund's gross income be derived from the sale or other
disposition of securities held for less than 3 months.
WRITING COVERED PUT OPTIONS. The Fund may write covered put options on equity
securities and futures contracts to assure a definite price for a security if it
is considering acquiring the security at a lower price than the current market
price or to close out options previously purchased. A put option gives the
holder of the option the right to sell, and the writer has the obligation to
buy, the underlying security at the exercise price at any time during the option
period. The operation of put options in other respects is substantially
identical to that of call options. When the Fund writes a covered put option, it
maintains in a segregated account with its Custodian cash or obligations in an
amount not less than the exercise price at all times while the put option is
outstanding.
The risks involved in writing put options include the risk that a closing
transaction cannot be effected at a favorable price and the possibility that the
price of the underlying security may fall below the exercise price, in which
case the Fund may be required to purchase the underlying security at a higher
price than the market price of the security at the time the option is exercised.
The Fund may not write a put option if, immediately thereafter, more than 25% of
its net assets would be committed to such transactions.
- 5 -
<PAGE>
OPTIONS TRANSACTIONS GENERALLY. Option transactions in which the Fund may engage
involve the specific risks described above as well as the following risks: the
writer of an option may be assigned an exercise at any time during the option
period; disruptions in the markets for underlying instruments could result in
losses for options investors; imperfect or no correlation between the option and
the securities being hedged; the insolvency of a broker could present risks for
the broker's customers; and market imposed restrictions may prohibit the
exercise of certain options. In addition, the option activities of the Fund may
affect its portfolio turnover rate and the amount of brokerage commissions paid
by the Fund. The success of the Fund in using the option strategies described
above depends, among other things, on the Sub-Advisor's ability to predict the
direction and volatility of price movements in the options, futures contracts
and securities markets and the Sub-Advisor's ability to select the proper time,
type and duration of the options.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities;
however, the aggregate of portfolio securities loaned will not exceed 25% of the
value of the Fund's net assets, measured at the time any such loan is made.
Under applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Fund receives amounts equal to the interest on loaned securities and also
receives one or more of (a) negotiated loan fees, (b) interest on securities
used as collateral, or (c) interest on short-term debt securities purchased with
such collateral; either type of interest may be shared with the borrower. The
Fund may also pay fees to placing brokers as well as custodian and
administrative fees in connection with loans. Fees may only be paid to a placing
broker provided that the Trustees determine that the fee paid to the placing
broker is reasonable and based solely upon services rendered, that the Trustees
separately consider the propriety of any fee shared by the placing broker with
the borrower, and that the fees are not used to compensate the Advisor, the
Sub-Advisor or any affiliated person of the Trust or an affiliated person of the
Advisor, the Sub-Advisor or other affiliated person. The terms of the Fund's
loans must meet applicable tests under the Internal Revenue Code and permit the
Fund to reacquire loaned securities on five days' notice or in time to vote on
any important matter.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time the
Fund purchases a
- 6 -
<PAGE>
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
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Fund holds a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Sub-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 Fund's custodian either directly or through a securities
depository.
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 Fund. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquires a Bankers' Acceptance, the
bank which "accepted" the time draft is liable
- 7 -
<PAGE>
for payment of interest and principal when due. The Bankers' Acceptance,
therefore, carries the full faith and credit of such bank. A CERTIFICATE OF
DEPOSIT ("CD") is an unsecured interest-bearing debt obligation of a bank. CDs
acquired by the Fund would generally be in amounts of $100,000 or more.
COMMERCIAL PAPER is an unsecured, short term debt obligation of a bank,
corporation or other borrower. Commercial Paper maturity generally ranges from
two to 270 days and is usually sold on a discounted basis rather than as an
interest-bearing instrument. The Fund will invest in Commercial Paper only if it
is rated in the highest rating category by any nationally recognized statistical
rating organization ("NRSRO") or, if not rated, the issuer must have an
outstanding unsecured debt issue rated in the three highest categories by any
NRSRO or, if not so rated, be of equivalent quality in the Sub-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 Fund only through the Master Note
program of the Fund's custodian, acting as administrator thereof. The
Sub-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 Fund.
U.S. GOVERNMENT SECURITIES. The 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 Fund does 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 Fund's shares.
- 8 -
<PAGE>
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 premium, such
prepayments could result in capital losses. The U.S. Government does not
guarantee premiums and market value of U.S. Government Securities.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Sub-Advisor felt such action was appropriate. In such a
case, the Fund could incur a short-term gain or loss.
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
Sub-Advisor believes that the quality of fixed-income securities in which the
Fund may invest should be continuously reviewed and that individual analysts
give different weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one NRSRO, each
rating is evaluated independently. Ratings are based on current information
furnished by the issuer or obtained by the NRSROs from other sources that they
consider reliable. Ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of such information, or for other reasons.
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<PAGE>
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS:
AAA: Bonds rated Aaa are judged to be of the best quality. These bonds
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large in Aa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements that make the long term
risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to
be considered upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present that
suggest a susceptibility to impairment sometime in the future.
BAA: Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
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
instancesthey differ from AAA issues only in small degree.
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<PAGE>
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S BOND RATINGS:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment.
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.
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<PAGE>
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average protection factors. However risk factors are
more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund. A "majority" for this purpose, means the lesser of (i) 67%
of the Fund's outstanding shares represented in person or by proxy at a meeting
at which more than 50% of its outstanding shares are represented, or (ii) more
than 50% of its outstanding shares.
Under these limitations, the Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the
securities of any one corporate issuer or purchase more than 10% of
the outstanding voting securities or of any class of securities of
any one corporate issuer;
(2) Invest 25% or more of the value of its total assets in any one
industry or group of industries (except that securities of the U.S.
Government, its agencies and instrumentalities are not subject to
these limitations);
(3) Invest in the securities of any issuer if any of the officers or
trustees of the Trust or its Advisor or Sub-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 Fund may invest in the securities of companies (other than
those which are not readily marketable) which own or deal in such
things, and the Fund may invest in certain mortgage backed
securities as described in the Prospectus under "Investment
Objective, Investment Policies and Risk Considerations";
- 12 -
<PAGE>
(6) Underwrite securities issued by others, except to the extent the
Fund may be deemed to be an underwriter under the federal securities
laws in connection with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of
transactions);
(8) Make short sales of securities or maintain a short position, except
short sales "against the box." (A short sale is made by selling a
security the Fund does not own. A short sale is "against the box" to
the extent that the Fund contemporaneously owns or has the right to
obtain at no added cost securities identical to those sold short.);
(9) Make loans of money or securities, except that the Fund may (a) make
loans of its portfolio securities in amounts not in excess of 25% of
its net assets, and (b) invest in repurchase agreements;
(10) Issue senior securities, borrow money or pledge its assets, except
that it may borrow from banks as a temporary measure (a) for
extraordinary or emergency purposes, in amounts not exceeding 5% of
the Fund's total assets, or (b) in order to meet redemption requests
which might otherwise require untimely disposition of portfolio
securities if, immediately after such borrowing, the value of the
Fund's assets, including all borrowings then outstanding, less its
liabilities (excluding all borrowings), is equal to at least 300% of
the aggregate amount of borrowings then outstanding, and may pledge
its assets to secure all such borrowings;
(11) Invest in securities of issuers which have a record of less than
three years' continuous operation (including predecessors and, in
the case of bonds, guarantors);
(12) Invest more than 15% of its net assets in illiquid securities,
including repurchase agreements maturing in over seven days, and
other securities for which there is no established market or for
which market quotations are not readily available; or
(13) Purchase or sell puts, calls options, futures, straddles,
commodities, commodities contracts or commodities futures contracts,
except as described in the Prospectus and this Statement of
Additional Information.
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
- 13 -
<PAGE>
results from a change in securities values or total assets, it will not be
considered a violation. However, in the case of the borrowing limitation
(limitation number 10, above) the Fund will, to the extent necessary, reduce its
existing borrowings to comply with the limitation.
While the Fund has reserved the right to make short sales "against the box"
(limitation number 8, above), the Sub-Advisor has no present intention of
engaging in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Fund, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1995:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ---------------- ------------------- --------------
<S> <C> <C>
Jack E. Brinson (age 63) President, Brinson Investment Co. $11,500
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886
Austin Brockenbrough III (age 58) Managing Director None
Trustee** Lowe, Brockenbrough & Tattersall, Inc.
President Richmond, Virginia
The Jamestown Tax Exempt Virginia Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John T. Bruce (age 41) 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 (age 58) Physician $8,500
Trustee** Dermatology Associates of Richmond
5600 Grove Avenue Richmond, Virginia
Richmond, Virginia 23226
- 14 -
<PAGE>
J. Finley Lee (age 55) Julian Price Professor of $9,500
Trustee Business Administration
614 Croom Court University of North Carolina
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina
Richard Mitchell (age 46) 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
Richard L. Morrill (age 56) President $11,500
Trustee University of Richmond
7000 River Road Richmond, Virginia
Richmond, Virginia 23229
Harris V. Morrissette (age 35) President $11,500
Trustee Marshall Biscuits
1500 S. Beltline Hwy. Mobile, Alabama
Mobile, Alabama 36693
Fred T. Tattersall (age 46) 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 59) Attorney at Law $9,000
Trustee
2300 Clarendon Blvd.
Suite 407
Arlington, Virginia 22201
Karen Emmett Coleman (age 35) Senior Fixed Income Portfolio Manager
Vice President Lowe, Brockenbrough & Tattersall, Inc.
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
- 15 -
<PAGE>
John M. Flippin (age 53) Principal
President Flippin, Bruce & Porter, Inc.
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healy (age 42) Vice President
Vice President T. Leavell & Associates, Inc.
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
R. Gregory Porter, III (age 54) 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 33) 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 57) 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 Stratetic Trust
Ernest H. Stephenson, Jr. (age 50) 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
- 16 -
<PAGE>
Connie R. Taylor (age 44) 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 36) Manager Client Services
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
Beth Ann Walk (age 36) 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
- -------------------------------
<FN>
** Indicates that Trustee is an Interested Person for purposes of
the 1940 Act.
</FN>
</TABLE>
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.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Inc. (the "Advisor") performs management,
statistical, portfolio advisor selection and general investment supervisory
services for the Fund pursuant to an Investment Advisory Agreement (the
"Advisory Agreement"). The Advisory Agreement is effective until April 1, 1998
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
- 17 -
<PAGE>
Fund's outstanding voting securities, provided the continuance is also approved
by a majority of the Trustees who are not "interested persons" of the Trust or
the 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 is at the annual rate of 1.00% of the Fund's average
daily net assets. The Advisor currently intends to waive its advisory fees to
the extent necessary to limit the total operating expenses of the Fund to 1.60%
per annum of its average daily net assets. However, there is no assurance that
any voluntary fee waivers will continue in the current or future fiscal years,
and expenses of the Fund may therefore exceed 1.60% of its average daily net
assets.
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 Fund, the Advisor serves as investment advisor to five
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 also provides, at its own expense, certain Executive Officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Fund to clients of such dealers or others or based on the average balance of all
accounts in the Fund for which such dealers or others are designated as the
person responsible for the account.
SUB-ADVISOR
Oechsle International Advisors, L.P. (the "Sub-Advisor") supervises the Fund's
investments pursuant to a Sub-Advisory Agreement (the "Sub-Advisory Agreement")
between the Sub-Advisor, the Advisor and the Trust. The Sub-Advisory Agreement
is effective until April 1, 1998 and will be renewed thereafter for one year
periods only so long as such renewal and continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority of the Fund's
outstanding voting securities, provided the continuance is also approved by a
majority of the Trustees who are not "interested persons" of the Trust, the
Advisor or the Sub-Advisor by vote cast in person at a meeting called for the
purpose of voting on such approval. The
- 18 -
<PAGE>
Sub-Advisory Agreement is terminable without penalty on sixty days notice by the
Board of Trustees of the Trust, by the Advisor or by the Sub-Advisor. The
Sub-Advisory Agreement provides that it will terminate automatically in the
event of its assignment.
Compensation of the Sub-Advisor is paid by the Advisor (not the Fund) in the
amount of one-half of the advisory fee (net of any waivers) received by the
Advisor.
The Sub-Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Fund. The Sub-Advisor determines what
securities and other investments will be purchased, retained or sold by the
Fund, and does so in accordance with the investment objective and policies of
the Fund as described herein and in the Prospectus. The Sub-Advisor places all
securities orders for the Fund, determining with which broker, dealer, or issuer
to place the orders.
The Sub-Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Sub-Advisor must seek at
all times the most favorable price and execution for all securities brokerage
transactions.
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 the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Fund and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Fund pays the
Administrator a fee at the annual rate of 0.25% of the average value of its
daily net assets up to $25,000,000, 0.225% of such assets from $25,000,000 to
$50,000,000 and 0.20% of such assets in excess of $50,000,000; provided,
however, that the minimum fee is $4,000 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
- 19 -
<PAGE>
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 prepare the Fund's
federal and state tax returns and to consult with the Trust as to matters of
accounting and federal and state income taxation.
The Custodian of the Fund's assets is
. The Custodian holds all cash
and securities of the Fund (either in its possession or in its favor through
"book entry systems" authorized by the Trustees in accordance with the 1940
Act), collects all income and effects all securities transactions on behalf of
the Fund.
BROKERAGE
It is the Fund's practice to seek the best price and execution for all portfolio
securities transactions. The Sub-Advisor (subject to the general supervision of
the Board of Trustees and the Advisor) directs the execution of the Fund's
portfolio transactions. The Sub-Advisor may effect Fund portfolio transactions
with broker-dealers which may be interested persons of the Fund, the Trust, any
Trustee, officer or director of the Trust or its investment advisors or any
interested person of such persons.
The Fund's common stock portfolio transactions will normally be exchange traded
and will be effected through broker-dealers who will charge brokerage
commissions. With respect to securities traded only in the over-the-counter
market, orders will be executed on a principal basis with primary market makers
in such securities except where better prices or executions may be obtained on
an agency basis or by dealing with other than a primary market maker.
While there is no formula, agreement or undertaking to do so, the Sub-Advisor
may allocate a portion of the Fund's brokerage commissions to persons or firms
providing the Sub-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 Sub-Advisor for the benefit of the other clients it may have.
Conversely, the Fund may benefit from such transactions effected for the benefit
of other clients. In all cases, the Sub-Advisor is obligated to effect
transactions for the Fund based upon obtaining the most favorable price and
execution. Factors considered by the Advisor in determining whether the Fund
will receive the most favorable
- 20 -
<PAGE>
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 Sub-Advisor's perception of the broker's reliability, integrity and
financial condition.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, 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 Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $25,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within 7 days
of the valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees"). A corporation (or partnership) must
also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Fund. Shareholders
- 21 -
<PAGE>
should be aware that such systematic withdrawals may deplete or use up entirely
their initial investment and may result in realized long-term or short-term
capital gains or losses. The Systematic Withdrawal Plan may be terminated at any
time by the Fund upon sixty days' written notice or by a shareholder upon
written notice to the Fund. Applications and further details may be obtained by
calling the Fund at 1-800-443-4249, or by writing to:
The Jamestown International Equity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares of the Fund. The acceptance of such securities is at the
sole discretion of the Sub-Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Sub-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 Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election may be filed under
Rule 18f-1 of the 1940 Act, wherein the Fund commits itself to pay redemptions
in cash, rather than in kind, to any shareholder of record of the Fund who
redeems during any ninety day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the existing account registration; (2) signature(s) of the
registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (see the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
- 22 -
<PAGE>
PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m., Eastern time,
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Fund until
confirmed in writing (or unless other arrangements have been made with the Fund,
for example in the case of orders utilizing wire transfer of funds) and payment
has been received.
The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUND. The Fund has adopted initial investment
minimums for the purpose of reducing the cost to the Fund (and consequently to
the shareholders) of communicating with and servicing its shareholders. However,
a reduced minimum initial investment requirement of $1,000 applies to Trustees,
officers and employees of the Fund, the Advisor, the Sub-Advisor and certain
parties related thereto, including clients of the Advisor and the Sub-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 minimum investment if they consent in writing to share a
single mailing of shareholder reports, proxy statements (but each such
shareholder would receive his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the 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 Fund for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Fund.
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NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund, and they have
adopted procedures to do so, as follows. The net asset value of the Fund is
determined as of the close of 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.
The value of non-dollar denominated portfolio instruments held by the Fund will
be determined by converting all assets and liabilities initially expressed in
foreign currency values into U.S. dollar values at the mean between the bid and
offered quotations of such currencies against U.S. dollars as last quoted by any
recognized dealer. If such quotations are not available, the rate of exchange
will be determined in accordance with policies established in good faith by the
Board of Trustees. Gains or losses between trade and settlement dates resulting
from changes in exchange rates between the U.S. dollar and a foreign currency
are borne by the Fund. To protect against such losses, the Fund may enter into
forward foreign currency exchange contracts, which will also have the effect of
limiting any such gains.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor,
Sub-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 Trustees to be of overall
benefit to the Fund and its shareholders; legal and auditing expenses; and the
cost of stationery and forms prepared exclusively for the Fund. General Trust
expenses are allocated among the series, or funds, on a fair and equitable basis
by the Board of Trustees, which may be based on relative net assets of each fund
(on the date the expense is paid) or the nature of the services performed and
the relative applicability to each fund.
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Under the Advisory Agreement, the Advisor may be required to reimburse the Fund
if its 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 the Fund an amount of money in excess of its advisory fee.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, the Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, the Fund must derive at least 90% of its gross
income each taxable year from dividends, interest, payments with respect to
securities' loans, gains from the disposition of stock or securities, and
certain other income. The 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 Fund as regulated
investment companies under Subchapter M of the Code, the Fund also intends to
comply with certain requirements of the Code to avoid liability for federal
income and excise tax. If the Fund remains qualified under Subchapter M, it will
not be subject to federal income tax to the extent it distributes its taxable
net investment income and net realized capital gains. A nondeductible 4% federal
excise tax will be imposed on the Fund to the extent it does not distribute at
least 98% of its ordinary taxable income for a calendar year, plus 98% of its
capital gain net taxable income for the one year period ending each October 31,
plus certain undistributed amounts from prior years. While the Fund intends to
distribute its taxable income and capital gains in a manner so as to avoid
imposition of the federal excise and income taxes, there can be no assurance
that the Fund indeed will make sufficient distributions to avoid entirely
imposition of federal excise or income taxes.
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.
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TAX STATUS OF THE FUND'S DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the Fund
derived from net investment income or net short-term capital gains are taxable
to shareholders as ordinary income, whether received in cash or reinvested in
additional shares. 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.
For corporate shareholders, the dividends received deduction, if applicable,
should apply to dividends from the Fund. The Fund will send shareholders
information each year on the tax status of dividends and disbursements. A
dividend or capital gains distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income taxation. Dividends from net investment income, along with capital gains,
will be taxable to shareholders, whether received in cash or shares and no
matter how long you have held Fund shares, even if they reduce the net asset
value of shares below your cost and thus in effect result in a return of a part
of your investment.
Investments by the Fund in certain options, futures contracts and options on
futures contracts are "section 1256 contracts." Any gains or losses on section
1256 contracts are generally considered 60% long-term and 40% short-term capital
gains or losses ("60/40"). Section 1256 contracts held by the Fund at the end of
each taxable year are treated for federal income tax purposes as being sold on
such date for their fair market value. The resultant paper gains or losses are
also treated as 60/40 gains or losses. When the section 1256 contract is
subsequently disposed of, the actual gain or loss will be adjusted by the amount
of any preceding year-end gain or loss. The use of section 1256 contracts may
force the Fund to distribute to shareholders paper gains that have not yet been
realized in order to avoid federal income tax liability.
Foreign currency gains or losses on non-U.S. dollar denominated bonds and other
similar debt instruments and on any non-U.S. dollar denominated futures
contracts, options and forward contracts that are not section 1256 contracts
generally will be treated as ordinary income or loss.
Certain hedging transactions undertaken by the Fund may result in "straddles"
for federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by the Fund. In addition, losses realized by the Fund
on positions that are part of a straddle may be deferred, rather than being
taken into account in calculating taxable income for the taxable year in which
such losses are realized. Because only a few regulations implementing the
straddle rules have been
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promulgated, the tax consequences of hedging transactions to the Fund are not
entirely clear. The hedging transactions may increase the amount of short-term
capital gain realized by the Fund which is taxed as ordinary income when
distributed to shareholders. The Fund may make one or more of the elections
available under the Internal Revenue Code of 1986, as amended, which are
applicable to straddles. If the Fund makes any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
elections made. The rules applicable under certain of the elections operate to
accelerate the recognition of gains or losses from the affected straddle
positions. Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain in any year, may be increased or decreased
substantially as compared to a fund that did not engage in such hedging
transactions.
The 30% limit on gains from the sale of certain assets held for less than three
months and the diversification requirements applicable to the Fund's assets may
limit the extent to which the Fund will be able to engage in transactions in
options, futures contracts or options on futures contracts.
CAPITAL SHARES AND VOTING
Shares of the Fund, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at 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
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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, the Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Fund for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of the Fund ("T") is computed by using the redeemable value at the end of
a specified period of time ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of time ("n") according to the formula P(l+T)n=ERV.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, the Fund may advertise its yield. 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
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Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest earned (for the purpose of "a" above) on
debt obligations is computed by reference to the yield to maturity of each
obligation held based on the market value of the obligation (including actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month) period for which yield is being calculated,
or, with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest).
The Fund's performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Fund may compare its performance to the Europe,
Australia and Far East Index (the "EAFE Index"), which is generally considered
to be representative of the performance of unmanaged common stocks that are
publicly traded in the securities markets located outside the United States.
Comparative performance may also be expressed by reference to a ranking prepared
by a mutual fund monitoring service, such as Lipper Analytical Services, Inc. or
Morningstar, Inc., or by one or more newspapers, newsletters or financial
periodicals. Performance comparisons may be useful to investors who wish to
compare the Fund's past performance to that of other mutual funds and investment
products. Of course, past performance is not a guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote
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total returns that are calculated on non-standardized base periods. The total
returns represent the historic change in the value of an investment in the Fund
based on monthly reinvestment of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Fund will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor.
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