THE TATTERSALL
BOND FUNDS
No-Load Funds
Service Group Shares
PROSPECTUS
AUGUST 1, 1998
REVISED
DECEMBER 31, 1998
Investment Advisor
Tattersall Advisory Group, Inc.
Richmond, Virginia
<PAGE>
PROSPECTUS
August 1, 1998
Revised December 31, 1998
THE TATTERSALL BOND FUNDS
SERVICE GROUP SHARES
No-Load Funds
================================================================================
The investment objective of The Tattersall Bond Fund (the "Bond Fund") is to
maximize total return, consisting of current income and capital appreciation
(both realized and unrealized), consistent with the preservation of capital
through active management of investment grade fixed income securities.
The investment objective of The Tattersall Short Term Bond Fund (the "Short Term
Fund") is identical to that of the Bond Fund, with the distinction that the
Short Term Fund intends to achieve this objective by investing in a portfolio of
investment grade fixed income securities having a shorter average duration.
The Tattersall Bond Fund and The Tattersall Short Term Bond Fund are designed
primarily for institutional investors who wish to take advantage of the
professional investment management expertise of Tattersall Advisory Group, Inc.,
which serves as investment advisor to the Funds.
The Funds offer two classes of shares: Service Group Shares, sold subject to a
12b-1 fee up to .15% of average daily net assets, and Institutional Shares, sold
without a 12b-1 fee. Each Service Group and Institutional Share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except that (i) Service Group Shares bear the expenses of
distribution fees, which will cause Service Group Shares to have a higher
expense ratio and to pay lower dividends than Institutional Shares; (ii) certain
class specific expenses will be borne solely by the class to which such expenses
are attributable; and (iii) each class has exclusive voting rights with respect
to matters affecting only that class.
INVESTMENT ADVISOR
Tattersall Advisory Group, Inc.
Richmond, Virginia
The Tattersall Bond Fund and the Tattersall Short Term Bond Fund (the "Funds")
are 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 Funds. You should
read it and keep it for future reference. While there is no assurance that the
Funds will achieve their investment objectives, they endeavor to do so by
following the investment policies described in this Prospectus. Institutional
Shares are offered in a separate prospectus and additional information about
Institutional Shares may be obtained by calling 1-800-443-4249.
A Statement of Additional Information, dated August 1, 1998, as revised on
December 31, 1998 containing additional information about the Funds, has been
filed with the Securities and Exchange Commission and is incorporated by
reference in this Prospectus in its entirety. The Funds' address is P.O. Box
5354, Cincinnati, Ohio 45201-5354, and their 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 Funds.
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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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1
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TABLE OF CONTENTS
================================================================================
Prospectus Summary ....................................................... 3
Synopsis of Costs and Expenses ........................................... 4
Financial Highlights ..................................................... 5
Investment Objectives, Investment Policies and Risk Considerations ....... 8
How to Purchase Shares ................................................... 13
How to Redeem Shares ..................................................... 14
How Net Asset Value is Determined ........................................ 16
Management of the Funds .................................................. 16
Plan of Distribution ..................................................... 18
Dividends, Distributions, Taxes and Other Information .................... 18
Application .............................................................. 21
2
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PROSPECTUS SUMMARY
================================================================================
THE FUNDS. The Tattersall Bond Fund (the "Bond Fund") and the Tattersall Short
Term Bond Fund (the "Short Term Fund") are NO-LOAD, diversified, open-end series
of the Williamsburg Investment Trust, a registered management investment company
commonly known as a "mutual fund." Each represents a separate mutual fund with
its own objectives and policies. An investor may elect one or both of the Funds
to meet individual investment objectives, and may switch from one Fund to the
other without charge when a shareholder's investment objectives or plans change.
While there is no assurance that the Funds will achieve their investment
objectives, they each endeavor to do so by following the investment policies
described in this Prospectus. The Funds are primarily designed for tax exempt
institutional investors such as pension and profit-sharing plans, endowments,
foundations, and employee benefit trusts. Corporations and individual investors
may invest in either Fund, although it should be noted that investment decisions
of the Funds will not be influenced by any federal tax considerations, other
than those considerations which apply to the Funds themselves.
INVESTMENT OBJECTIVES. The Bond Fund and the Short Term Fund are governed by
virtually identical investment objectives and policies, WITH THE EXCEPTION of
the average duration range of the individual Funds. Each Fund seeks to maximize
total return, consisting of current income and capital appreciation (both
realized and unrealized), consistent with the preservation of capital through
active management of investment grade fixed income securities. For a more
detailed explanation of the definition of "investment grade" securities, see
"Investment Objectives, Investment Policies and Risk Considerations."
INVESTMENT APPROACH. The Advisor's philosophy in managing fixed income
portfolios is to emphasize a disciplined balance between sector selection and
moderate portfolio duration shifts to maximize total return. Duration is an
important concept in the Advisor's fixed income management philosophy and, in
the Advisor's opinion, provides a better measure of interest rate sensitivity
than maturity for many fixed income securities. Each Fund intends to invest only
in investment grade securities. Due to their controlled duration and quality
standards, the Funds expect to exhibit less volatility than would mutual funds
with longer average maturities and lower quality portfolios.
INVESTMENT ADVISOR. Tattersall Advisory Group, Inc. (the "Advisor") serves as
investment advisor to each of the Funds. For its services, the Advisor receives
compensation of 0.375% of the average daily net assets of each Fund. (See
"Management of the Funds.")
PURCHASE OF SHARES. Service Group Shares are offered "No-Load," which means they
may be purchased directly from the Funds without the imposition of any front-end
or contingent deferred sales charges. However, Service Group Shares are subject
to the imposition of a 12b-1 fee of up to .15% of average daily net assets. (See
"Plan of Distribution.")
The minimum initial purchase for the Bond Fund is $500,000.
The minimum initial purchase for the Short Term Fund is $100,000.
Subsequent investments in both Funds 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. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions from either
Fund. Shares may be redeemed at any time in which the Funds are open for
business at the net asset value next determined after receipt of a redemption
request by the Funds. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Funds is distributed
quarterly. Net capital gains, if any, are distributed at least annually.
Shareholders may elect to receive dividends and capital gain distributions in
cash or the dividends and capital gain distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Funds are series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Funds. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Funds.")
3
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SYNOPSIS OF COSTS AND EXPENSES
================================================================================
THE TATTERSALL BOND FUND
SERVICE GROUP SHARES
SHAREHOLDER TRANSACTION EXPENSES: .............................. None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ....................... 0.36%
Administrator's Fees ........................................... 0.08%
12b-1 Fees ..................................................... 0.15%
Other Expenses ................................................. 0.07%
-----
Total Fund Operating Expenses .................................. 0.66%
=====
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 5 Years 10 Years
------ ------- ------- --------
$ 7 $21 $37 $82
THE TATTERSALL SHORT TERM BOND FUND
SERVICE GROUP SHARES
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ........................ 0.00%
Administrator's Fees ............................................ 0.24%
12b-1 Fees ...................................................... 0.15%
Other Expenses (after expense reimbursements) ................... 0.26%
-----
Total Fund Operating Expenses ................................... 0.65%
=====
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 5 Years 10 Years
------ ------- ------- --------
$ 7 $21 $36 $81
The purpose of the foregoing tables is to assist investors in the Funds in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Funds" for more information about the fees
and costs of operating the Funds. The Annual Fund Operating Expenses shown above
are based upon actual operating history of Institutional Shares of the Fund for
the fiscal year ended March 31, 1998, adjusted to reflect the imposition of
12b-1 fees applicable to Service Group Shares. Absent the fee waivers by the
Advisor, the Bond Fund's investment advisory fees would have been 0.375% of
average daily net assets and total fund operating expenses would have been 0.68%
of average daily net assets. Absent the fee waivers and expense reimbursements
by the Advisor, the Short Term Fund's investment advisory fees would have been
0.375% of average daily net assets, other expenses would have been 0.33% of
average net assets and total fund operating expenses would have been 1.10% of
average daily net assets. THE EXAMPLES 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.
The footnotes to the Financial Highlights table contain information concerning a
decrease in the Bond Fund's expense ratio as a result of a directed brokerage
arrangement.
4
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
The following audited financial information has been audited by Tait, Weller &
Baker, independent accountants, whose report covering the fiscal year ended
March 31, 1998 is contained in the Statement of Additional Information. This
information should be read in conjunction with the Funds' latest audited annual
financial statements and notes thereto, which are also contained in the
Statement of Additional Information, a copy of which may be obtained at no
charge by calling the Funds.
THE TATTERSALL BOND FUND
SERVICE GROUP SHARES
Selected Per Share Data and Ratios for a Share
Outstanding Throughout Each Period
Period
Ended
March 31,
1998(a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period ..................... $ 10.69
---------
Income from investment operations:
Net investment income ................................... 0.37
Net realized and unrealized gains on investments ........ 0.08
---------
Total from investment operations ........................... 0.45
---------
Less distributions:
Dividends from net investment income .................... (0.31)
---------
Net asset value at end of period ........................... $ 10.83
=========
Total return ............................................... 8.55%(C)
=========
Net assets at end of period (000's) ........................ $ 3,069
=========
Ratio of gross expenses to average net assets .............. 0.68%(C)
Ratio of net expenses to average net assets(b) ............. 0.65%(C)
Ratio of net investment income to average net assets ....... 5.96%(C)
Portfolio turnover rate .................................... 235%
(a) Represents the period from the initial public offering of Service Group
Shares (October 2, 1997) through March 31, 1998.
(b) Ratios were determined based on net expenses after reimbursements through a
directed brokerage arrangement and investment advisory fees waived for the
year ended March 31, 1998.
(c) Annualized.
5
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The following per share data and ratios for the Institutional Shares of the
Funds are included for informational purposes. Institutional Shares do not bear
12b-1 fees and therefore have a lower expense ratio and pay higher dividends
than Service Group Shares.
THE TATTERSALL BOND FUND
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
Period
Years Ended March 31, Ended
------------------------------------------------------------------- March 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 10.26 $ 10.39 $ 9.97 $ 10.15 $ 10.82 $ 10.42 $ 9.97 $ 10.00
------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ....................... 0.58 0.68 0.70 0.62 0.55 0.64 0.54 0.20
Net realized and unrealized gains (losses)
on investments ........................... 0.63 (0.12) 0.41 (0.18) (0.30) 0.55 0.48 (0.03)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations ............... 1.21 0.56 1.11 0.44 0.25 1.19 1.02 0.17
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ........ (0.64) (0.69) (0.69) (0.62) (0.55) (0.64) (0.54) (0.20)
Distributions from net realized gains ....... -- -- -- -- (0.19) (0.15) (0.03) --
Distributions in excess of net realized gains -- -- -- -- (0.18) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total distributions ............................ (0.64) (0.69) (0.69) (0.62) (0.92) (0.79) (0.57) (0.20)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ............... $ 10.83 $ 10.26 $ 10.39 $ 9.97 $ 10.15 $ 10.82 $ 10.42 $ 9.97
======= ======= ======= ======= ======= ======= ======= =======
Total return ................................... 12.06% 5.52% 11.23% 4.56% 2.12% 11.69% 10.33% 5.70%(c)
======= ======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) ............ $96,250 $76,499 $74,774 $72,029 $64,029 $55,718 $29,727 $ 794
======= ======= ======= ======= ======= ======= ======= =======
Ratio of gross expenses to average net assets .. 0.53% 0.53% 0.56% 0.57% 0.60% 0.59% 0.80% 3.08%(c)
Ratio of net expenses to average net assets (b) 0.50% 0.50% 0.53% 0.53% 0.60% 0.59% 0.60% 0.90%(c)
Ratio of net investment income to
average net assets .......................... 6.06% 6.48% 6.54% 6.28% 5.03% 6.09% 6.67% 7.07%(c)
Portfolio turnover rate ........................ 235% 207% 268% 381% 381% 454% 484% 54%
</TABLE>
(a) Represents the period from the commencement of operations (December 13,
1990) through March 31, 1991.
(b) Ratios were determined based on net expenses after reimbursements through a
directed brokerage arrangement for periods after March 31, 1994 and
investment advisory fees waived for the periods ended March 31, 1998, 1992
and 1991.
(c) Annualized.
6
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THE TATTERSALL SHORT TERM BOND FUND
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
Period
Years Ended March 31, Ended
-------------------------------------------------------------- March 31,
1998 1997 1996 1995 1994 1993 1992(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93 $ 10.00
------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ........................... 0.54 0.58 0.62 0.60 0.51 0.50 0.09
Net realized and unrealized gains (losses)
on investments ............................... 0.00 (0.11) 0.08 (0.17) (0.23) 0.13 (0.07)
------- ------- ------- ------- ------- ------- -------
Total from investment operations ................... 0.54 0.47 0.70 0.43 0.28 0.63 0.02
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ............ (0.54) (0.58) (0.62) (0.61) (0.51) (0.49) (0.09)
Distributions from net realized gains ........... -- -- -- -- (0.02) -- --
------- ------- ------- ------- ------- ------- -------
Total distributions ................................ (0.54) (0.58) (0.62) (0.61) (0.53) (0.49) (0.09)
------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ................... $ 9.61 $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93
======= ======= ======= ======= ======= ======= =======
Total return ....................................... 5.76% 5.01% 7.38% 4.53% 2.76% 6.40% 0.99%(c)
======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) ................ $10,212 $ 9,924 $ 9,426 $14,122 $18,715 $15,580 $ 5,320
======= ======= ======= ======= ======= ======= =======
Ratio of net expenses to average net assets (b) .... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%(c)
Ratio of net investment income to average net assets 5.64% 5.96% 6.27% 6.04% 5.22% 5.24% 4.86%(c)
Portfolio turnover rate ............................ 109% 62% 157% 144% 324% 289% 97%
</TABLE>
(a) Represents the period from the commencement of operations (January 21,
1992) through March 31, 1992.
(b) Absent investment advisory fees waived and expenses reimbursed by the
Advisor, the ratios of expenses to average net assets would have been
0.95%, 0.94%, 0.85%, 0.85%, 0.81%, 0.82% and 0.81%(c) for the periods ended
March 31, 1998, 1997, 1996, 1995, 1994, 1993 and 1992, respectively.
(c) Annualized.
Further information about the performance of the Funds is contained in the
Annual Report, a copy of which may be obtained at no charge by calling the
Funds.
7
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
================================================================================
The investment objective of each Fund is to maximize total return, consisting of
current income and capital appreciation, both realized and unrealized, through
active management of a portfolio of investment grade fixed income securities.
Any investment involves risk, and there can be no assurance that the Funds will
achieve their investment objectives. The investment objective of each 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.
The Advisor's philosophy in the management of fixed income securities utilizes a
disciplined balance between sector selection and moderate portfolio duration
shifts to maximize total return. The Advisor's determination of optimal duration
for each Fund is based on economic indicators, inflation trends, credit demands,
monetary policy and global influences as well as psychological and technical
factors. The Funds endeavor to invest in securities and market sectors which the
Advisor believes are undervalued by the marketplace. The selection of
undervalued bonds by the Advisor is based on, among other things, historical
yield relationships, credit risk, market volatility and absolute levels of
interest rates, as well as supply and demand factors.
The Funds are designed primarily to allow institutional investors to take
advantage of the professional investment management expertise of Tattersall
Advisory Group, Inc. Each Fund will be managed in a manner that closely
resembles that of other bond portfolios of similar maturity and duration managed
by the Advisor. The Advisor uses a wide variety of securities and techniques in
managing fixed income portfolios. As the fixed income markets evolve, the
Advisor may invest in other types of securities than those specifically
identified in this Prospectus if the Advisor views these investments to be
consistent with the overall investment objectives and policies of the Funds. The
securities and techniques the Advisor currently expects to utilize are described
below.
DURATION. Duration is an important concept in the Advisor's fixed income
management philosophy. "Duration" and "maturity" are different concepts and
should not be substituted for one another for purposes of understanding the
investment philosophy of either Fund. The Advisor believes that for most fixed
income securities "duration" provides a better measure of interest rate
sensitivity than maturity. Whereas maturity takes into account only the final
principal payments to determine the risk of a particular bond, duration weights
all potential cash flows (principal, interest and reinvestment income) on an
expected present value basis, to determine the "effective life" of the security.
The Advisor intends to limit the portfolio duration of the Bond Fund to a 2 year
minimum and a 6 year maximum. The Advisor intends to maintain a portfolio
duration for the Short Term Fund of less than 3 years. In addition, the Advisor
intends to limit the duration of any one single security of the Short Term Fund
to a maximum duration of 5 years. The precise point of each Fund's duration
within these ranges will depend on the Advisor's view of the market. For the
purposes of the Funds, the duration calculation used is Macaulay duration
adjusted for option features (such as call features or prepayment options).
Adjusting for option features requires assumptions with respect to the
probability of that option being exercised. These assumptions will be determined
by the Advisor based on then current market conditions.
The Funds expect the average maturity of their portfolios to be longer than the
average duration. How much longer will depend upon, among other factors, the
composition of coupons (higher coupons imply shorter duration), as well as
overall interest rate levels (higher interest rates generally will result in
shorter duration relative to maturity). It should be noted that for some
securities the standard duration calculation does not accurately reflect
interest rate sensitivity. For example, mortgage pass-through securities,
Collateralized Mortgage Obligations and Asset Backed Securities require
estimates of principal prepayments which are critical in determining interest
rate sensitivity. Floating rate securities, because of the interest rate
adjustment feature, are not appropriate for the standard duration calculation.
In these and other similar situations, the Advisor will use more sophisticated
techniques to determine interest rate sensitivity of securities of the Funds.
8
<PAGE>
INVESTMENT GRADE SECURITIES. Each Fund intends to limit its investment purchases
to investment grade securities. The Funds define investment grade securities as
those securities which, in the Advisor's opinion, have the characteristics
described by any of the nationally recognized statistical rating organizations
("NRSROs"), Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P"), in their four highest rating grades. For S&P, Fitch and D&P those
ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa, Aa, A and
Baa. For a description of each rating grade, see the Statement of Additional
Information.
Each Fund invests exclusively in those securities rated investment grade by one
or more of the NRSROs or, if not rated, are considered by the Advisor to have
essentially the same characteristics and quality as securities having such
ratings. There may also be instances where the Advisor purchases securities
which are rated investment grade by one NRSRO and which are not rated or rated
below investment grade by other NRSROs, and such securities would be eligible
for purchase by the Funds. Issues rated within the fourth highest grade (those
rated lower than A) are considered speculative in certain respects and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to pay principal and interest than is the case with higher
grade securities. The final determination of quality and value will remain with
the Advisor. Although the Advisor utilizes the ratings of various credit rating
services as one factor in establishing creditworthiness. For as long as the
Funds hold a fixed income issue, the Advisor monitors the issuer's credit
standing. In the event a security's rating is reduced below a Fund's minimum
requirements, the Fund will sell the security, subject to market conditions and
the Advisor's assessment of the most opportune time for sale. Although lower
rated securities will generally provide higher yields than higher rated
securities of similar maturities, they are subject to a greater degree of market
fluctuation.
U.S. GOVERNMENT SECURITIES. U.S. Government Securities include direct
obligations of the U.S. Treasury, securities issued or guaranteed as to interest
and principal by agencies or instrumentalities of the U.S. Government, or any of
the foregoing subject to repurchase agreements (See "Repurchase Agreements.")
While obligations of some U.S. Government sponsored entities are supported by
the full faith and credit of the U.S. Government, several are supported by the
right of the issuer to borrow from the U.S. Government, and still others are
supported only by the credit of the issuer itself. The guarantee of the U.S.
Government does not extend to the yield or value of the U.S. Government
Securities held by the Funds or to either Fund's shares. See the Statement of
Additional Information for a more detailed description.
MORTGAGE PASS-THROUGH CERTIFICATES. Obligations of the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC") include direct
pass-through certificates representing undivided ownership interests in pools of
mortgages. Such certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the issuer. In the case of
securities issued by GNMA, the payment of principal and interest would be backed
by the full faith and credit of the U.S. Government. Mortgage pass-through
certificates issued by FNMA or FHLMC would be guaranteed as to payment of
principal and interest by the credit of the issuing U.S. Government agency.
Securities issued by other non-governmental entities (such as commercial banks
or mortgage bankers) may offer credit enhancement such as guarantees, insurance,
or letters of credit. Mortgage pass-through certificates are subject to more
rapid prepayment than their stated maturity date would indicate; their rate of
prepayment tends to accelerate during periods of declining interest rates or
increased property transfers and, as a result, the proceeds from such
prepayments may be reinvested in instruments which have lower yields. To the
extent such securities were purchased at a premium, such prepayments could
result in capital losses. The issuer of a pass-through mortgage certificate does
not guarantee premiums or market value of its issue.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Funds intend to invest in
collateralized mortgage obligations ("CMOs") which are generally backed by
mortgage pass-through securities or whole mortgage loans. CMOs are usually
structured into classes of varying maturities and principal payment priorities.
The prepayment sensitivity of each class may or may not resemble that of the
CMOs' collateral depending on the maturity and structure of that class. CMOs pay
interest and principal (including prepayments) monthly, quarterly or
semiannually. Most CMOs are
9
<PAGE>
AAA rated, reflecting the credit quality of the underlying collateral; however,
some classes carry greater price risk than that of their underlying collateral.
The Advisor will invest in CMO classes only if their characteristics and
interest rate sensitivity fit the investment objectives and policies of the
individual Fund.
OTHER MORTGAGE RELATED SECURITIES. In addition to the mortgage pass-through
securities and the CMOs mentioned above, the Funds may also invest in other
mortgage derivative products if the Advisor views them to be consistent with the
overall policies and objectives of the Funds. Current offerings include
"principal only" (PO) and "interest only" (IO) Stripped Mortgage Backed
Securities ("SMBS"). POs and IOs are created when a mortgage pass-through
certificate is separated into two securities - one security representing a claim
to principal distributions and the other representing a claim to the
corresponding interest payments. As prepayments on the underlying mortgage loans
rise (typically when interest rates fall), the PO security holders receive their
principal sooner than expected, which serves to increase the POs' yield. The IO
security holders receive interest payments only on the outstanding principal
amount of the underlying mortgage loans. Therefore, if prepayments on the
notional principal of the IO rise, the IOs' price will fall. As POs generally
benefit from declining interest rates and IOs generally benefit from rising
interest rates, these securities can provide an effective way to stabilize
portfolio value.
SMBS are much more sensitive to prepayment fluctuations than are regular
mortgage-backed securities and therefore involve more risk. Due to the deep
discounted prices of SMBS, any mismatch in actual versus anticipated prepayments
of principal will significantly increase or decrease the yield to maturity. In
general, changes in interest rate levels will have the greatest effect on
prepayments. Sufficiently high prepayment rates could result in purchasers of
IOs not recovering the full amount of their initial investment. The Funds will
not invest more than 10% of their total assets in SMBS.
The Advisor expects that governmental, government related and private entities
may create other mortgage related securities offering mortgage pass-through and
mortgage collateralized instruments in addition to those described herein. As
new types of mortgage related securities are developed and offered to the
investment community, the Advisor will, consistent with the particular Fund's
investment objectives, policies and quality standards, consider making
investments in such new types of mortgage related securities.
ASSET BACKED SECURITIES. Other Asset Backed Securities have been offered to
investors backed by loans such as automobile loans, home equity loans, credit
card receivables, marine loans, recreational vehicle loans and manufactured
housing loans. Typically, Asset Backed Securities represent undivided fractional
interests in a fund whose assets consist of a pool of loans and security
interests in the collateral securing the loans. Payments of principal and
interest on Asset Backed Securities are passed through monthly to certificate
holders. In some cases Asset Backed Securities are divided into senior and
subordinated classes so as to enhance the quality of the senior class.
Underlying loans are subject to prepayment, which may reduce the overall return
to certificate holders. If the subordinated classes are exhausted and the full
amounts due on underlying loans are not received because of unanticipated costs,
depreciation, damage or loss of the collateral securing the contracts, or other
factors, certificate holders may experience delays in payment or losses on Asset
Backed Securities. The Funds may invest in other Asset Backed Securities that
may be developed in the future.
ZERO COUPON AND ORIGINAL ISSUE DISCOUNT ("OID") BONDS. Some securities may be
offered without coupons or with very low coupons. These bonds will typically be
more interest rate sensitive than a comparable maturity current coupon bond. The
majority of zero coupon bonds have been created when a qualified U.S. Government
Security is exchanged for a series of "Strips" through the Federal Reserve Bank.
Strips have been created from, among others, U.S. Treasury, Resolution Trust
Corporation and Financing Corporation securities. A number of U.S. Government
Securities have also been repackaged by broker-dealers or commercial banks into
trusts which issue zero coupon receipts such as U.S. Treasury Receipts ("TRs")
or Treasury Investment Growth Receipts ("TIGRs"). Zero coupon and original issue
discount bonds generate income under generally accepted accounting principles,
but do not generate cash flow, resulting in the possibility that the Funds may
be required to sell portfolio securities to make distributions as required under
Subchapter M of the Internal Revenue Code.
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<PAGE>
CORPORATE BONDS. The Funds' investments in corporate debt securities will be
based on credit analysis and value determination by the Advisor. The Advisor's
selection of bonds or industries within the corporate bond sector is determined
by, among other factors, historical yield relationships between bonds or
industries, the current and anticipated credit of the borrower, and call
features, as well as supply and demand factors.
VARIABLE AND FLOATING RATE SECURITIES. The Funds may invest in variable or
floating rate securities which adjust the interest rate paid at periodic
intervals based on an interest rate index. Typically floating rate securities
use as their benchmark an index such as the 1, 3 or 6 month LIBOR, 3, 6 or 12
month Treasury bills, or the Federal Funds rate. Resets of the rates can occur
at predetermined intervals or whenever changes in the benchmark index occur.
MONEY MARKET INSTRUMENTS. Money market instruments will typically represent a
portion of each Fund's portfolio, as funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operational expenses of the Funds. Money market
instruments mature in thirteen months or less from the date of purchase and
include U.S. Government Securities (defined above) 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 from
any NRSRO or, if not so rated, issued by a corporation having an outstanding
unsecured debt issue rated in the three highest categories of any NRSRO or, if
not so rated, of equivalent quality in the Advisor's opinion. See the Statement
of Additional Information for a further description of money market instruments.
INVESTMENT COMPANIES. Each 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 Funds. To the extent the Funds do 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. 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.
Neither Fund presently intends to invest more than 10% of its total assets in
securities of other investment companies. In addition, neither Fund will invest
more than 5% of its total assets in securities of any single investment company,
nor will either Fund purchase more than 3% of the outstanding voting securities
of any investment company.
FACTORS TO CONSIDER. Neither Fund is intended to be a complete investment
program and there can be no assurance that the Funds will achieve their
investment objectives. The fixed income securities in which the Funds will
invest are subject to fluctuation in value. Such fluctuations may be based on
movements in interest rates or on changes in the creditworthiness of the
issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Funds' fixed income securities will generally
vary inversely with the direction of prevailing interest rate movements.
Consequently, should interest rates increase or the creditworthiness of an
issuer deteriorate, the value of the Funds' fixed income securities would
decrease in value, which would have a depressing influence on the Funds' net
asset values. The Funds may borrow using their assets as collateral, but only
under certain limited conditions. Borrowing, if done, would tend to exaggerate
the effects of market fluctuations on a Fund's net asset value until repaid.
(See "Borrowing.")
SECURITIES LENDING. Each Fund may lend up to 33% of its portfolio securities to
broker-dealers or other institutional investors. Since there could be a delay in
the recovery of loaned securities or even a loss of rights in collateral
supplied should the borrower fail financially, loans will not be made unless, in
the judgment of the Advisor, the consideration to be earned from such loans
would justify the risk. Collateral will be maintained in excess of 100%
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<PAGE>
of the value of the underlying securities, determined by marking to market daily
those securities involved in the lending program. It is expected that the Funds
will use the cash portions of loan collateral to invest in short-term
income-producing securities. These practices may be amended from time to time as
regulatory provisions permit. Securities lending for purposes of discussion in
this Prospectus should not be confused with "Borrowing" below.
BORROWING. Each Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 15% of its total assets to
meet redemption requests which might otherwise require untimely disposition of
portfolio holdings. To the extent the Funds borrow 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 particular
Fund's assets declines, the Fund would be forced to liquidate portfolio
securities when it is disadvantageous to do so. The Funds would incur interest
and other transaction costs in connection with such borrowing. A Fund will not
make any additional investments while its outstanding borrowings exceed 5% of
the current value of its total assets.
PORTFOLIO TURNOVER. Portfolio turnover will not be a limiting factor when the
Advisor deems changes appropriate. While portfolio turnover is difficult to
predict in an active fixed income portfolio, it is expected that annual
portfolio turnover will vary between 100% and 500% with respect to each Fund.
Market conditions may dictate, however, a higher rate of turnover in a
particular year. The degree of portfolio turnover affects the brokerage costs of
the Funds and may have an impact on the amount of taxable distributions to
shareholders.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Funds acquire a security and
simultaneously resell 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 market interest rate earned by the Funds 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. Neither Fund will enter into a
repurchase agreement which will cause more than 10% of its assets to be invested
in repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Funds' exposure to risk,
each Fund has adopted certain limitations which, together with its investment
objective, are considered fundamental policies which may not be changed without
shareholder approval. Each Fund will not: (1) 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 either Fund's total assets, or (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities, in amounts
not exceeding 15% of either Fund's total assets, and may pledge its assets to
secure all such borrowings; (2) invest more than 10% of a Fund's assets in other
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; (3) write, acquire or sell puts,
calls or combinations thereof, or purchase or sell commodities, commodities
contracts, futures contracts or related options; and (4) invest more than 5% of
its total assets in the securities of any one issuer. Other fundamental
investment limitations are listed in the Statement of Additional Information.
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<PAGE>
HOW TO PURCHASE SHARES
================================================================================
There are NO FRONT-END OR CONTINGENT DEFERRED 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 Funds at the address shown below
for regular mail orders. Assistance is also available through any broker-dealer
authorized to sell shares of the Funds. 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 a Fund's net asset value next determined
after your order is received by the Funds in proper order as indicated herein.
The minimum initial investment in the Bond Fund is $500,000.
The minimum initial investment in the Short Term Fund is $100,000.
The Funds 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 Funds are required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Funds within 60 days.
Investors should be aware that the Funds' account application contains
provisions in favor of the Funds, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
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
Funds or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
appropriate Fund, and mail it to:
The Tattersall Bond Funds
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 Funds, at
1-800-443-4249, before wiring funds, to advise the Funds 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:
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Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For either: The Tattersall Bond Fund or
The Tattersall Short Term Bond Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Funds
receive 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 Funds 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 Funds at 1-800-443-4249 to alert the Funds that
your wire is to be sent. Follow the wire instructions above to send your wire.
When calling for any reason, please have your account number ready, if known.
Mail orders should include, when possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, be sure to identify
your account in your letter.
EXCHANGE PRIVILEGE. You may use proceeds from the redemption of shares of either
Fund to purchase Service Group Shares of the other Fund offering shares for sale
in your state of residence. There is no charge for this exchange privilege.
Before making an exchange, you should read the portion of the Prospectus
relating to the Fund into which the shares are to be exchanged. The shares of
the Fund to be acquired will be purchased at the net asset value next determined
after acceptance of the exchange request in writing by the Administrator. The
exchange of shares of one Fund for shares of the other Fund is treated, for
federal income tax purposes, as a sale on which you may realize taxable gain or
loss. To prevent the abuse of the exchange privilege to the disadvantage of
other shareholders, each Fund reserves the right to terminate or modify the
exchange offer upon 60 days' notice to shareholders.
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 Funds may be redeemed on each day that the Funds are open for
business by sending a written request to the Funds. The Funds are 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 Funds' 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 $100,000 (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 $100,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Funds, at 1-800-443-4249, or write to the address shown below.
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<PAGE>
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Tattersall
Bond Funds, 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 Bond Fund
or the Short Term Fund, 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, a 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 Funds 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 Funds to dispose of securities owned by them, or
to fairly determine the value of their 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 Funds
may not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Funds. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Funds. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Funds from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a redemption in an amount over $25,000, or a change in registration
or standing instructions for your account. Signature guarantees are required for
(1) requests to redeem shares having a value of greater than $25,000, (2) change
of registration requests, and (3) 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.
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HOW NET ASSET VALUE IS DETERMINED
================================================================================
The net asset value of each 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). 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.
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 exchange will be valued based upon the closing price on the valuation
date on the principal exchange where the security is traded. It is expected that
fixed income securities will ordinarily be traded in the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service. The prices provided by the pricing service are determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities and developments related
to specific securities. The Trustees will satisfy themselves that such pricing
services consider all appropriate factors relevant to the value of such
securities in determining their fair value. Securities and other assets for
which no quotations are readily available will be valued in good faith at fair
value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUNDS
================================================================================
The Funds are 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 Funds 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 Funds and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees,
Tattersall Advisory Group, Inc. (the "Advisor") provides the Funds with a
continuous program of supervision of each Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to Investment Advisory Agreements with the Trust. The
Advisor is also responsible for the selection of broker-dealers through which
the Funds execute portfolio transactions, subject to brokerage policies
established by the Trustees, and provides certain executive personnel to the
Funds.
The Advisor is a Virginia corporation controlled by Fred T. Tattersall. Prior to
February 28, 1997, the investment advisor to each Fund was Lowe, Brockenbrough &
Tattersall, Inc. ("LB&T"), of which Mr. Tattersall and Austin Brockenbrough III
were the controlling shareholders. On February 28, 1997, LB&T was reorganized by
means of a corporate restructuring into two separate legal entities: LB&T, owned
by Mr. Brockenbrough, and the Advisor, owned by Mr. Tattersall. The Advisor
manages the fixed-income accounts (including the Funds) formerly managed by
LB&T. In addition to acting as Advisor to the Funds, the Advisor provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals.
Both the Bond Fund and the Short Term Fund are managed on a day to day basis by
a committee comprised of the Advisor's fixed income portfolio management
professionals, with each portfolio professional responsible for designated
specific sectors of the fixed income market. Prior to February 28, 1997, the
Funds were managed by the same group of professionals, but such professionals
were employed by LB&T.
Compensation of the Advisor is at the annual rate of 0.375% of each Fund's
average daily net assets. For the fiscal year ended March 31, 1998, the Advisor
received $310,227 in investment advisory fees from the Bond Fund (net
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<PAGE>
of fee waivers), which represented 0.36% of the Bond Fund's average daily net
assets. For the fiscal year ended March 31, 1998, the Advisor waived its entire
investment advisory fee from the Short Term Fund and reimbursed the Fund for
$6,909 of other operating expenses.
The Advisor currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of Service Group Shares
of each Fund to 0.65% per annum of its average daily net assets. However, there
is no assurance that any voluntary fee waivers will continue in the current or
future fiscal years, and expenses of Service Group Shares of each Fund may
therefore exceed 0.65% of its average daily net assets.
The Advisor's address is 6802 Paragon Place, Suite 200, Richmond, Virginia
23230.
ADMINISTRATOR. The Funds have retained Countrywide Fund Services, Inc. (the
"Administrator"), P.O. Box 5354, Cincinnati, Ohio 45201, to provide
administrative, pricing, accounting, dividend disbursing, shareholder servicing
and transfer agent services. The Administrator is a wholly-owned indirect
subsidiary of Countrywide Credit Industries, Inc., a New York Stock Exchange
listed company principally engaged in the business of residential mortgage
lending. 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.
Each Fund pays the Administrator a base fee for these services at the annual
rate of 0.075% of the average value of its daily net assets up to $200 million
and 0.05% of such assets in excess of $200 million (subject to a minimum fee of
$2,000 per month with respect to each Fund) plus a surcharge of $1,000 per
month. The Administrator also charges the Funds for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses.
CUSTODIAN. The Custodian of the Funds' assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Funds pay 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, fees of the Funds' Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Funds' shareholder servicing
operations, fees and expenses of qualifying and registering the Funds' 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 Funds are also liable for
any nonrecurring expenses that may arise such as litigation to which the Funds
may be a party. The Funds may be obligated to indemnify the Trustees and
officers with respect to such litigation. All expenses of a Fund are accrued
daily on the books of such 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.
BROKERAGE. The Funds have adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Funds. 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 Funds. Research services obtained
through the Funds' brokerage transactions may be used by the Advisor for its
other clients; conversely, the Funds may benefit from research services obtained
through the brokerage transactions of the Advisor's other clients. The Statement
of Additional Information contains more information about the management and
brokerage practices of the Funds. It is anticipated that most securities
transactions of the Funds will be handled on a principal, rather than agency,
basis. Fixed income securities are normally traded on a net basis (without
commission) through broker-dealers and banks acting for their own account.
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<PAGE>
Such firms attempt to profit from buying at the bid price and selling at the
higher asked price of the market, the difference being referred to as the
spread.
PLAN OF DISTRIBUTION
================================================================================
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, Service Group
Shares of the Fund have adopted a plan of distribution (the "Plan") under which
such shares may directly incur or reimburse the Advisor for certain
distribution-related expenses, including payments to securities dealers and
others who are engaged in the sale of such shares and who may be advising
investors regarding the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by the Transfer
Agent; expenses of formulating and implementing marketing and promotional
activities, including direct mail promotions and mass media advertising;
expenses of preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports for recipients
other than existing shareholders of the Funds; expenses of obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of such shares.
Pursuant to the Plan, the Funds may make payments to dealers and other persons
who may be advising investors regarding the purchase, sale or retention of
Service Group Shares. For the fiscal period ended March 31, 1998, the Bond Fund
paid $2,672 to dealers and other persons who may be advising shareholders in
this regard.
The annual limitation for payment of expenses pursuant to the Plan is .15% of
the average daily net assets allocable to Service Group Shares. Unreimbursed
expenditures will not be carried over from year to year. In the event the Plan
is terminated by the Funds in accordance with its terms, the Funds will not be
required to make any payments for expenses incurred by the Advisor after the
date the Plan terminates.
Pursuant to the Plan, the Funds may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass-Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Funds or their shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by regulatory authorities, and the
overall return to those shareholders availing themselves of bank services will
be lower than to those shareholders who do not. The Funds may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Funds, no preference will be shown for such
securities.
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 Funds in general
and, particularly, with respect to dividends and distributions and other
matters. Shareholders should be aware that dividends from the Funds 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
18
<PAGE>
implications are not covered, nor is this discussion exhaustive on the subject
of federal income taxation. Consequently, investors should seek qualified tax
advice.
Each Fund intends to remain qualified 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 Funds but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed to
them. The Funds intend 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. Each Fund may make a supplemental distribution of
capital gains at the end of its fiscal year. The nature and amount of all
dividends and distributions will be identified separately when tax information
is distributed by the Funds at the end of each year. The Funds intend to
withhold 30% on taxable dividends and any other payments that are subject to
such withholding and are neither citizens nor residents of the U.S.
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 for either Fund. Current
practice of the Funds, 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 Funds unless the shareholder requests in writing to
receive dividends and/or capital gains distributions in cash. That request must
be received by the Funds prior to the record date to be effective as to the next
dividend. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or if received in additional shares of the Funds.
TAX STATUS OF THE FUNDS. If a 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 Funds, see "Additional
Tax Information" in the Statement of Additional Information.
PRINCIPAL SHAREHOLDERS. Rockingham Health Care, Inc., 235 Cantrell Avenue,
Harrisonburg, Virginia, owned of record 36.6% of the Short Term Fund's
outstanding shares as of July 2, 1998 and therefore may be deemed to control the
Fund.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Bond Fund and the Short Term Fund described in this
Prospectus: 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; shares of The Jamestown Balanced Fund, The
Jamestown Equity Fund, The Jamestown International Equity Fund and The Jamestown
Tax Exempt Virginia Fund, which are are managed by Lowe, Brockenbrough &
Company, Inc. of Richmond, Virginia; and shares of The Davenport Equity Fund,
which is managed by Davenport & Company LLC of Richmond, Virginia. The Trustees
are permitted to create additional series 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 Funds shall be entitled to
vote thereon. Examples of matters which affect only
19
<PAGE>
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. Service Group Shares of the Funds
shall vote separately on matters relating to the plan of distribution pursuant
to Rule 12b-1 (see "Plan of Distribution"). The shares of the Funds 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 that the Trustees may 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; (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. 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 Funds 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 each Fund may advertise its
total return. Each Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance. Total return and yield are computed separately for Service Group
and Institutional Shares. The yield of Institutional Shares is expected to be
higher than the yield of Service Group Shares due to the distribution fees
imposed on Service Group Shares.
The "total return" of a 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 Funds 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.
The "yield" of a 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 Funds all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated.
20
<PAGE>
THE TATTERSALL BOND FUNDS
Service Group Shares
Send completed application to:
THE TATTERSALL BOND FUNDS
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
================================================================================
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(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: $500,000 for Bond Fund; $100,000
for Short Term Bond Fund)
o Enclosed is a check payable to the applicable Fund for $________________
(Please indicate Fund below)
o Tattersall Bond Fund o Tattersall Short Term Bond Fund
By Mail: You may purchase shares by mail by completing and signing this
application. Please mail with your check to the address above.
By Wire: You may purchase shares by wire. PRIOR TO SENDING THE WIRE, PLEASE
CONTACT THE FUNDS 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 Funds. The wire
should be routed as follows:
Star Bank, N.A.
ABA #042000013
For credit Williamsburg Investment Trust #485777056
For The Tattersall Bond Fund or The Tattersall Short Term Bond Fund
For (shareholder name and Social Security or Taxpayer ID Number)
21
<PAGE>
DIVIDEND AND DISTRIBUTION INSTRUCTIONS
o Reinvest all dividends and capital gains distributions
o Reinvest all capital gain distributions; dividends to be paid in cash
o Pay all dividends and capital gain distributions in cash
o By Check o By ACH to my bank checking or savings account.
PLEASE ATTACH A VOIDED CHECK.
================================================================================
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.
o New Application o 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 TATTERSALL BOND FUNDS for the Registered Owner and to execute and deliver
any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
__________________________ __________________________ ______________________
__________________________ __________________________ ______________________
__________________________ __________________________ ______________________
THE TATTERSALL BOND FUNDS, or any agent of the Funds may, without inquiry, rely
upon the instruction of any person(s) purporting to be an authorized person
named above, or in any Amendment received by the Funds or their agent. The Funds
and their Agent shall not be liable for any claims, expenses or losses resulting
from having acted upon any instruction reasonably believed to be genuine.
================================================================================
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
o Please mail redemption proceeds to the name and address of record
o Please wire redemptions to the commercial bank account indicated below
(subject to a minimum wire transfer of $5,000)
Name as it appears on the account ______________________________________________
Commercial bank account # ______________________________________________________
ABA Routing # __________________________________________________________________
City, State and Zip in which bank is located ___________________________________
================================================================================
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Funds and affirm that I have received a current prospectus and
understand the investment objectives and policies stated therein. The investor
hereby ratifies any instructions given pursuant to this Application and for
himself and his successors and assigns does hereby release Countrywide Fund
Services, Inc., Williamsburg Investment Trust, Tattersall Advisory Group, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The 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.
The Internal Revenue Service does not require my consent to any provision of
this document other than the certifications required to avoid backup
withholding. (Check here if you are subject to backup withholding) [ ].
____________________________________ ______________________________________
APPLICANT DATE JOINT APPLICANT DATE
____________________________________ ______________________________________
OTHER AUTHORIZED SIGNATORY DATE OTHER AUTHORIZED SIGNATORY DATE
22
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
23
<PAGE>
THE TATTERSALL BOND FUNDS
INVESTMENT ADVISOR
Tattersall Advisory Group, Inc.
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
OFFICERS
Fred T. Tattersall, President
Craig D. Truitt, Vice President
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 Funds. This Prospectus does not constitute an offer by the Funds to sell
shares in any State to any person to whom it is unlawful for the Funds to make
such offer in such State.
<PAGE>
THE TATTERSALL
BOND FUNDS
No-Load Funds
Institutional Shares
PROSPECTUS
AUGUST 1, 1998
REVISED
DECEMBER 31, 1998
Investment Advisor
Tattersall Advisory Group, Inc.
Richmond, Virginia
<PAGE>
PROSPECTUS
August 1, 1998
Revised December 31, 1998
THE TATTERSALL BOND FUNDS
INSTITUTIONAL SHARES
No-Load Funds
================================================================================
The investment objective of THE TATTERSALL BOND FUND (the "Bond Fund") is to
maximize total return, consisting of current income and capital appreciation
(both realized and unrealized), consistent with the preservation of capital
through active management of investment grade fixed income securities.
The investment objective of THE TATTERSALL SHORT TERM BOND FUND (the "Short Term
Fund") is identical to that of the Bond Fund, with the distinction that the
Short Term Fund intends to achieve this objective by investing in a portfolio of
investment grade fixed income securities having a shorter average duration.
The Tattersall Bond Fund and The Tattersall Short Term Bond Fund are designed
primarily for institutional investors who wish to take advantage of the
professional investment management expertise of Tattersall Advisory Group, Inc.,
which serves as investment advisor to the Funds.
The Funds offer two classes of shares: Service Group Shares, sold subject to a
12b-1 fee up to .15% of average daily net assets, and Institutional Shares, sold
without a 12b-1 fee. Each Service Group and Institutional Share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except that (i) Service Group Shares bear the expenses of
distribution fees, which will cause Service Group Shares to have a higher
expense ratio and to pay lower dividends than Institutional Shares; (ii) certain
class specific expenses will be borne solely by the class to which such expenses
are attributable; and (iii) each class has exclusive voting rights with respect
to matters affecting only that class.
INVESTMENT ADVISOR
Tattersall Advisory Group, Inc.
Richmond, Virginia
The Tattersall Bond Fund and the Tattersall Short Term Bond Fund (the "Funds")
are 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 Funds. You should
read it and keep it for future reference. While there is no assurance that the
Funds will achieve their investment objectives, they endeavor to do so by
following the investment policies described in this Prospectus. Service Group
Shares are offered in a separate prospectus and additional information about
Service Group Shares may be obtained by calling 1-800-443-4249.
A Statement of Additional Information, dated August 1, 1998, as revised on
December 31, 1998 containing additional information about the Funds, has been
filed with the Securities and Exchange Commission and is incorporated by
reference in this Prospectus in its entirety. The Funds' address is P.O. Box
5354, Cincinnati, Ohio 45201-5354, and their 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 Funds.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
1
<PAGE>
TABLE OF CONTENTS
================================================================================
Prospectus Summary ....................................................... 3
Synopsis of Costs and Expenses ........................................... 4
Financial Highlights ..................................................... 5
Investment Objectives, Investment Policies and Risk Considerations ....... 7
How to Purchase Shares ................................................... 12
How to Redeem Shares ..................................................... 13
How Net Asset Value is Determined ........................................ 15
Management of the Funds .................................................. 15
Dividends, Distributions, Taxes and Other Information .................... 17
Application .............................................................. 21
2
<PAGE>
PROSPECTUS SUMMARY
================================================================================
THE FUNDS. The Tattersall Bond Fund (the "Bond Fund") and the Tattersall Short
Term Bond Fund (the "Short Term Fund") are NO-LOAD, diversified, open-end series
of the Williamsburg Investment Trust, a registered management investment company
commonly known as a "mutual fund." Each represents a separate mutual fund with
its own objectives and policies. An investor may elect one or both of the Funds
to meet individual investment objectives, and may switch from one Fund to the
other without charge when a shareholder's investment objectives or plans change.
While there is no assurance that the Funds will achieve their investment
objectives, they each endeavor to do so by following the investment policies
described in this Prospectus. The Funds are primarily designed for tax exempt
institutional investors such as pension and profit-sharing plans, endowments,
foundations, and employee benefit trusts. Corporations and individual investors
may invest in either Fund, although it should be noted that investment decisions
of the Funds will not be influenced by any federal tax considerations, other
than those considerations which apply to the Funds themselves.
INVESTMENT OBJECTIVES. The Bond Fund and the Short Term Fund are governed by
virtually identical investment objectives and policies, WITH THE EXCEPTION of
the average duration range of the individual Funds. Each Fund seeks to maximize
total return, consisting of current income and capital appreciation (both
realized and unrealized), consistent with the preservation of capital through
active management of investment grade fixed income securities. For a more
detailed explanation of the definition of "investment grade" securities, see
"Investment Objectives, Investment Policies and Risk Considerations."
INVESTMENT APPROACH. The Advisor's philosophy in managing fixed income
portfolios is to emphasize a disciplined balance between sector selection and
moderate portfolio duration shifts to maximize total return. Duration is an
important concept in the Advisor's fixed income management philosophy and, in
the Advisor's opinion, provides a better measure of interest rate sensitivity
than maturity for many fixed income securities. Each Fund intends to invest only
in investment grade securities. Due to their controlled duration and quality
standards, the Funds expect to exhibit less volatility than would mutual funds
with longer average maturities and lower quality portfolios.
INVESTMENT ADVISOR. Tattersall Advisory Group, Inc. (the "Advisor") serves as
investment advisor to each of the Funds. For its services, the Advisor receives
compensation of 0.375% of the average daily net assets of each Fund. (See
"Management of the Funds.")
PURCHASE OF SHARES. Institutional Shares are offered "No-Load," which means they
may be purchased directly from the Funds without the imposition of any sales or
12b-1 charges.
The minimum initial purchase for the Bond Fund is $500,000.
The minimum initial purchase for the Short Term Fund is $100,000.
Subsequent investments in both Funds 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. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions from either
Fund. Shares may be redeemed at any time in which the Funds are open for
business at the net asset value next determined after receipt of a redemption
request by the Funds. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Funds is distributed
quarterly. Net capital gains, if any, are distributed at least annually.
Shareholders may elect to receive dividends and capital gain distributions in
cash or the dividends and capital gain distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Funds are series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Funds. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Funds.")
3
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
================================================================================
THE TATTERSALL BOND FUND
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES: .............................. None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ....................... 0.36%
Administrator's Fees ........................................... 0.08%
Other Expenses ................................................. 0.07%
-----
Total Fund Operating Expenses .................................. 0.51%
=====
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 5 Years 10 Years
------ ------- ------- --------
$ 5 $ 16 $ 29 $ 64
THE TATTERSALL SHORT TERM BOND FUND
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ........................ 0.00%
Administrator's Fees ............................................ 0.24%
Other Expenses (after expense reimbursements) ................... 0.26%
-----
Total Fund Operating Expenses ................................... 0.50%
=====
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 5 Years 10 Years
------ ------- ------- --------
$ 5 $ 16 $ 28 $ 63
The purpose of the foregoing tables is to assist investors in the Funds in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Funds" for more information about the fees
and costs of operating the Funds. The Annual Fund Operating Expenses shown above
are based upon actual operating history for the fiscal year ended March 31,
1998. Absent the fee waivers by the Advisor, the Bond Fund's investment advisory
fees would have been 0.375% of average daily net assets and total fund operating
expenses would have been 0.53% of average daily net assets. Absent the fee
waivers and expense reimbursements by the Advisor, the Short Term Fund's
investment advisory fees would have been 0.375% of average daily net assets,
other expenses would have been 0.33% of average net assets and total fund
operating expenses would have been 0.95% of average daily net assets. THE
EXAMPLES 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.
The footnotes to the Financial Highlights table contain information concerning a
decrease in the Bond Fund's expense ratio as a result of a directed brokerage
arrangement.
4
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
The following audited financial information with respect to Institutional Shares
of the Fund has been audited by Tait, Weller & Baker, independent accountants,
whose report covering the fiscal year ended March 31, 1998 is contained in the
Statement of Additional Information. This information should be read in
conjunction with the Funds' latest audited annual financial statements and notes
thereto, which are also contained in the Statement of Additional Information, a
copy of which may be obtained at no charge by calling the Funds.
THE TATTERSALL BOND FUND
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
Period
Years Ended March 31, Ended
------------------------------------------------------------------- March 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 10.26 $ 10.39 $ 9.97 $ 10.15 $ 10.82 $ 10.42 $ 9.97 $ 10.00
------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ....................... 0.58 0.68 0.70 0.62 0.55 0.64 0.54 0.20
Net realized and unrealized gains (losses)
on investments ........................... 0.63 (0.12) 0.41 (0.18) (0.30) 0.55 0.48 (0.03)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations ............... 1.21 0.56 1.11 0.44 0.25 1.19 1.02 0.17
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ........ (0.64) (0.69) (0.69) (0.62) (0.55) (0.64) (0.54) (0.20)
Distributions from net realized gains ....... -- -- -- -- (0.19) (0.15) (0.03) --
Distributions in excess of net realized gains -- -- -- -- (0.18) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total distributions ............................ (0.64) (0.69) (0.69) (0.62) (0.92) (0.79) (0.57) (0.20)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ............... $ 10.83 $ 10.26 $ 10.39 $ 9.97 $ 10.15 $ 10.82 $ 10.42 $ 9.97
======= ======= ======= ======= ======= ======= ======= =======
Total return ................................... 12.06% 5.52% 11.23% 4.56% 2.12% 11.69% 10.33% 5.70%(c)
======= ======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) ............ $96,250 $76,499 $74,774 $72,029 $64,029 $55,718 $29,727 $ 794
======= ======= ======= ======= ======= ======= ======= =======
Ratio of gross expenses to average net assets .. 0.53% 0.53% 0.56% 0.57% 0.60% 0.59% 0.80% 3.08%(c)
Ratio of net expenses to average net assets (b) 0.50% 0.50% 0.53% 0.53% 0.60% 0.59% 0.60% 0.90%(c)
Ratio of net investment income to
average net assets .......................... 6.06% 6.48% 6.54% 6.28% 5.03% 6.09% 6.67% 7.07%(c)
Portfolio turnover rate ........................ 235% 207% 268% 381% 381% 454% 484% 54%
</TABLE>
(a) Represents the period from the commencement of operations (December 13,
1990) through March 31, 1991.
(b) Ratios were determined based on net expenses after reimbursements through a
directed brokerage arrangement for periods after March 31, 1994 and
investment advisory fees waived for the periods ended March 31, 1998, 1992
and 1991.
(c) Annualized.
5
<PAGE>
THE TATTERSALL SHORT TERM BOND FUND
Institutional Shares
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
Period
Years Ended March 31, Ended
-------------------------------------------------------------- March 31,
1998 1997 1996 1995 1994 1993 1992(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93 $ 10.00
------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ........................... 0.54 0.58 0.62 0.60 0.51 0.50 0.09
Net realized and unrealized gains (losses)
on investments ............................... 0.00 (0.11) 0.08 (0.17) (0.23) 0.13 (0.07)
------- ------- ------- ------- ------- ------- -------
Total from investment operations ................... 0.54 0.47 0.70 0.43 0.28 0.63 0.02
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ............ (0.54) (0.58) (0.62) (0.61) (0.51) (0.49) (0.09)
Distributions from net realized gains ........... -- -- -- -- (0.02) -- --
------- ------- ------- ------- ------- ------- -------
Total distributions ................................ (0.54) (0.58) (0.62) (0.61) (0.53) (0.49) (0.09)
------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ................... $ 9.61 $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93
======= ======= ======= ======= ======= ======= =======
Total return ....................................... 5.76% 5.01% 7.38% 4.53% 2.76% 6.40% 0.99%(c)
======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) ................ $10,212 $ 9,924 $ 9,426 $14,122 $18,715 $15,580 $ 5,320
======= ======= ======= ======= ======= ======= =======
Ratio of net expenses to average net assets (b) .... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%(c)
Ratio of net investment income to average net assets 5.64% 5.96% 6.27% 6.04% 5.22% 5.24% 4.86%(c)
Portfolio turnover rate ............................ 109% 62% 157% 144% 324% 289% 97%
</TABLE>
(a) Represents the period from the commencement of operations (January 21,
1992) through March 31, 1992.
(b) Absent investment advisory fees waived and expenses reimbursed by the
Advisor, the ratios of expenses to average net assets would have been
0.95%, 0.94%, 0.85%, 0.85%, 0.81%, 0.82% and 0.81%(c) for the periods ended
March 31, 1998, 1997, 1996, 1995, 1994, 1993 and 1992, respectively.
(c) Annualized.
Further information about the performance of the Funds is contained in the
Annual Report, a copy of which may be obtained at no charge by calling the
Funds.
6
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
================================================================================
The investment objective of each Fund is to maximize total return, consisting of
current income and capital appreciation, both realized and unrealized, through
active management of a portfolio of investment grade fixed income securities.
Any investment involves risk, and there can be no assurance that the Funds will
achieve their investment objectives. The investment objective of each 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.
The Advisor's philosophy in the management of fixed income securities utilizes a
disciplined balance between sector selection and moderate portfolio duration
shifts to maximize total return. The Advisor's determination of optimal duration
for each Fund is based on economic indicators, inflation trends, credit demands,
monetary policy and global influences as well as psychological and technical
factors. The Funds endeavor to invest in securities and market sectors which the
Advisor believes are undervalued by the marketplace. The selection of
undervalued bonds by the Advisor is based on, among other things, historical
yield relationships, credit risk, market volatility and absolute levels of
interest rates, as well as supply and demand factors.
The Funds are designed primarily to allow institutional investors to take
advantage of the professional investment management expertise of Tattersall
Advisory Group, Inc. Each Fund will be managed in a manner that closely
resembles that of other bond portfolios of similar maturity and duration managed
by the Advisor. The Advisor uses a wide variety of securities and techniques in
managing fixed income portfolios. As the fixed income markets evolve, the
Advisor may invest in other types of securities than those specifically
identified in this Prospectus if the Advisor views these investments to be
consistent with the overall investment objectives and policies of the Funds. The
securities and techniques the Advisor currently expects to utilize are described
below.
DURATION. Duration is an important concept in the Advisor's fixed income
management philosophy. "Duration" and "maturity" are different concepts and
should not be substituted for one another for purposes of understanding the
investment philosophy of either Fund. The Advisor believes that for most fixed
income securities "duration" provides a better measure of interest rate
sensitivity than maturity. Whereas maturity takes into account only the final
principal payments to determine the risk of a particular bond, duration weights
all potential cash flows (principal, interest and reinvestment income) on an
expected present value basis, to determine the "effective life" of the security.
The Advisor intends to limit the portfolio duration of the Bond Fund to a 2 year
minimum and a 6 year maximum. The Advisor intends to maintain a portfolio
duration for the Short Term Fund of less than 3 years. In addition, the Advisor
intends to limit the duration of any one single security of the Short Term Fund
to a maximum duration of 5 years. The precise point of each Fund's duration
within these ranges will depend on the Advisor's view of the market. For the
purposes of the Funds, the duration calculation used is Macaulay duration
adjusted for option features (such as call features or prepayment options).
Adjusting for option features requires assumptions with respect to the
probability of that option being exercised. These assumptions will be determined
by the Advisor based on then current market conditions.
The Funds expect the average maturity of their portfolios to be longer than the
average duration. How much longer will depend upon, among other factors, the
composition of coupons (higher coupons imply shorter duration), as well as
overall interest rate levels (higher interest rates generally will result in
shorter duration relative to maturity). It should be noted that for some
securities the standard duration calculation does not accurately reflect
interest rate sensitivity. For example, mortgage pass-through securities,
Collateralized Mortgage Obligations and Asset Backed Securities require
estimates of principal prepayments which are critical in determining interest
rate sensitivity. Floating rate securities, because of the interest rate
adjustment feature, are not appropriate for the standard duration calculation.
In these and other similar situations, the Advisor will use more sophisticated
techniques to determine interest rate sensitivity of securities of the Funds.
7
<PAGE>
INVESTMENT GRADE SECURITIES. Each Fund intends to limit its investment purchases
to investment grade securities. The Funds define investment grade securities as
those securities which, in the Advisor's opinion, have the characteristics
described by any of the nationally recognized statistical rating organizations
("NRSROs"), Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P"), in their four highest rating grades. For S&P, Fitch and D&P those
ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa, Aa, A and
Baa. For a description of each rating grade, see the Statement of Additional
Information.
Each Fund invests exclusively in those securities rated investment grade by one
or more of the NRSROs or, if not rated, are considered by the Advisor to have
essentially the same characteristics and quality as securities having such
ratings. There may also be instances where the Advisor purchases securities
which are rated investment grade by one NRSRO and which are not rated or rated
below investment grade by other NRSROs, and such securities would be eligible
for purchase by the Funds. Issues rated within the fourth highest grade (those
rated lower than A) are considered speculative in certain respects and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to pay principal and interest than is the case with higher
grade securities. The final determination of quality and value will remain with
the Advisor. Although the Advisor utilizes the ratings of various credit rating
services as one factor in establishing creditworthiness, it relies primarily
upon it own analysis of factors establishing creditworthiness. For as long as
the Funds hold a fixed income issue, the Advisor monitors the issuer's credit
standing. In the event a security's rating is reduced below a Fund's minimum
requirements, the Fund will sell the security, subject to market conditions and
the Advisor's assessment of the most opportune time for sale. Although lower
rated securities will generally provide higher yields than higher rated
securities of similar maturities, they are subject to a greater degree of market
fluctuation.
U.S. GOVERNMENT SECURITIES. U.S. Government Securities include direct
obligations of the U.S. Treasury, securities issued or guaranteed as to interest
and principal by agencies or instrumentalities of the U.S. Government, or any of
the foregoing subject to repurchase agreements (See "Repurchase Agreements.")
While obligations of some U.S. Government sponsored entities are supported by
the full faith and credit of the U.S. Government, several are supported by the
right of the issuer to borrow from the U.S. Government, and still others are
supported only by the credit of the issuer itself. The guarantee of the U.S.
Government does not extend to the yield or value of the U.S. Government
Securities held by the Funds or to either Fund's shares. See the Statement of
Additional Information for a more detailed description.
MORTGAGE PASS-THROUGH CERTIFICATES. Obligations of the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC") include direct
pass-through certificates representing undivided ownership interests in pools of
mortgages. Such certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the issuer. In the case of
securities issued by GNMA, the payment of principal and interest would be backed
by the full faith and credit of the U.S. Government. Mortgage pass-through
certificates issued by FNMA or FHLMC would be guaranteed as to payment of
principal and interest by the credit of the issuing U.S. Government agency.
Securities issued by other non-governmental entities (such as commercial banks
or mortgage bankers) may offer credit enhancement such as guarantees, insurance,
or letters of credit. Mortgage pass-through certificates are subject to more
rapid prepayment than their stated maturity date would indicate; their rate of
prepayment tends to accelerate during periods of declining interest rates or
increased property transfers and, as a result, the proceeds from such
prepayments may be reinvested in instruments which have lower yields. To the
extent such securities were purchased at a premium, such prepayments could
result in capital losses. The issuer of a pass-through mortgage certificate does
not guarantee premiums or market value of its issue.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Funds intend to invest in
collateralized mortgage obligations ("CMOs") which are generally backed by
mortgage pass-through securities or whole mortgage loans. CMOs are usually
structured into classes of varying maturities and principal payment priorities.
The prepayment sensitivity of each class may or may not resemble that of the
CMOs' collateral depending on the maturity and structure of
8
<PAGE>
that class. CMOs pay interest and principal (including prepayments) monthly,
quarterly or semiannually. Most CMOs are AAA rated, reflecting the credit
quality of the underlying collateral; however, some classes carry greater price
risk than that of their underlying collateral. The Advisor will invest in CMO
classes only if their characteristics and interest rate sensitivity fit the
investment objectives and policies of the individual Fund.
OTHER MORTGAGE RELATED SECURITIES. In addition to the mortgage pass-through
securities and the CMOs mentioned above, the Funds may also invest in other
mortgage derivative products if the Advisor views them to be consistent with the
overall policies and objectives of the Funds. Current offerings include
"principal only" (PO) and "interest only" (IO) Stripped Mortgage Backed
Securities ("SMBS"). POs and IOs are created when a mortgage pass-through
certificate is separated into two securities - one security representing a claim
to principal distributions and the other representing a claim to the
corresponding interest payments. As prepayments on the underlying mortgage loans
rise (typically when interest rates fall), the PO security holders receive their
principal sooner than expected, which serves to increase the POs' yield. The IO
security holders receive interest payments only on the outstanding principal
amount of the underlying mortgage loans. Therefore, if prepayments on the
notional principal of the IO rise, the IOs' price will fall. As POs generally
benefit from declining interest rates and IOs generally benefit from rising
interest rates, these securities can provide an effective way to stabilize
portfolio value.
SMBS are much more sensitive to prepayment fluctuations than are regular
mortgage-backed securities and therefore involve more risk. Due to the deep
discounted prices of SMBS, any mismatch in actual versus anticipated prepayments
of principal will significantly increase or decrease the yield to maturity. In
general, changes in interest rate levels will have the greatest effect on
prepayments. Sufficiently high prepayment rates could result in purchasers of
IOs not recovering the full amount of their initial investment. The Funds will
not invest more than 10% of their total assets in SMBS.
The Advisor expects that governmental, government related and private entities
may create other mortgage related securities offering mortgage pass-through and
mortgage collateralized instruments in addition to those described herein. As
new types of mortgage related securities are developed and offered to the
investment community, the Advisor will, consistent with the particular Fund's
investment objectives, policies and quality standards, consider making
investments in such new types of mortgage related securities.
ASSET BACKED SECURITIES. Other Asset Backed Securities have been offered to
investors backed by loans such as automobile loans, home equity loans, credit
card receivables, marine loans, recreational vehicle loans and manufactured
housing loans. Typically, Asset Backed Securities represent undivided fractional
interests in a fund whose assets consist of a pool of loans and security
interests in the collateral securing the loans. Payments of principal and
interest on Asset Backed Securities are passed through monthly to certificate
holders. In some cases Asset Backed Securities are divided into senior and
subordinated classes so as to enhance the quality of the senior class.
Underlying loans are subject to prepayment, which may reduce the overall return
to certificate holders. If the subordinated classes are exhausted and the full
amounts due on underlying loans are not received because of unanticipated costs,
depreciation, damage or loss of the collateral securing the contracts, or other
factors, certificate holders may experience delays in payment or losses on Asset
Backed Securities. The Funds may invest in other Asset Backed Securities that
may be developed in the future.
ZERO COUPON AND ORIGINAL ISSUE DISCOUNT ("OID") BONDS. Some securities may be
offered without coupons or with very low coupons. These bonds will typically be
more interest rate sensitive than a comparable maturity current coupon bond. The
majority of zero coupon bonds have been created when a qualified U.S. Government
Security is exchanged for a series of "Strips" through the Federal Reserve Bank.
Strips have been created from, among others, U.S. Treasury, Resolution Trust
Corporation and Financing Corporation securities. A number of U.S. Government
Securities have also been repackaged by broker-dealers or commercial banks into
trusts which issue zero coupon receipts such as U.S. Treasury Receipts ("TRs")
or Treasury Investment Growth Receipts ("TIGRs"). Zero coupon and original issue
discount bonds generate income under generally accepted
9
<PAGE>
accounting principles, but do not generate cash flow, resulting in the
possibility that the Funds may be required to sell portfolio securities to make
distributions as required under Subchapter M of the Internal Revenue Code.
CORPORATE BONDS. The Funds' investments in corporate debt securities will be
based on credit analysis and value determination by the Advisor. The Advisor's
selection of bonds or industries within the corporate bond sector is determined
by, among other factors, historical yield relationships between bonds or
industries, the current and anticipated credit of the borrower, and call
features, as well as supply and demand factors.
VARIABLE AND FLOATING RATE SECURITIES. The Funds may invest in variable or
floating rate securities which adjust the interest rate paid at periodic
intervals based on an interest rate index. Typically floating rate securities
use as their benchmark an index such as the 1, 3 or 6 month LIBOR, 3, 6 or 12
month Treasury bills, or the Federal Funds rate. Resets of the rates can occur
at predetermined intervals or whenever changes in the benchmark index occur.
MONEY MARKET INSTRUMENTS. Money market instruments will typically represent a
portion of each Fund's portfolio, as funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operational expenses of the Funds. Money market
instruments mature in thirteen months or less from the date of purchase and
include U.S. Government Securities (defined above) 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 from
any NRSRO or, if not so rated, issued by a corporation having an outstanding
unsecured debt issue rated in the three highest categories of any NRSRO or, if
not so rated, of equivalent quality in the Advisor's opinion. See the Statement
of Additional Information for a further description of money market instruments.
INVESTMENT COMPANIES. Each 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 Funds. To the extent the Funds do 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. 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.
Neither Fund presently intends to invest more than 10% of its total assets in
securities of other investment companies. In addition, neither Fund will invest
more than 5% of its total assets in securities of any single investment company,
nor will either Fund purchase more than 3% of the outstanding voting securities
of any investment company.
FACTORS TO CONSIDER. Neither Fund is intended to be a complete investment
program and there can be no assurance that the Funds will achieve their
investment objectives. The fixed income securities in which the Funds will
invest are subject to fluctuation in value. Such fluctuations may be based on
movements in interest rates or on changes in the creditworthiness of the
issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Funds' fixed income securities will generally
vary inversely with the direction of prevailing interest rate movements.
Consequently, should interest rates increase or the creditworthiness of an
issuer deteriorate, the value of the Funds' fixed income securities would
decrease in value, which would have a depressing influence on the Funds' net
asset values. The Funds may borrow using their assets as collateral, but only
under certain limited conditions. Borrowing, if done, would tend to exaggerate
the effects of market fluctuations on a Fund's net asset value until repaid.
(See "Borrowing.")
10
<PAGE>
SECURITIES LENDING. Each Fund may lend up to 33% of its portfolio securities to
broker-dealers or other institutional investors. Since there could be a delay in
the recovery of loaned securities or even a loss of rights in collateral
supplied should the borrower fail financially, loans will not be made unless, in
the judgment of the Advisor, the consideration to be earned from such loans
would justify the risk. Collateral will be maintained in excess of 100% of the
value of the underlying securities, determined by marking to market daily those
securities involved in the lending program. It is expected that the Funds will
use the cash portions of loan collateral to invest in short-term
income-producing securities. These practices may be amended from time to time as
regulatory provisions permit. Securities lending for purposes of discussion in
this Prospectus should not be confused with "Borrowing" below.
BORROWING. Each Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 15% of its total assets to
meet redemption requests which might otherwise require untimely disposition of
portfolio holdings. To the extent the Funds borrow 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 particular
Fund's assets declines, the Fund would be forced to liquidate portfolio
securities when it is disadvantageous to do so. The Funds would incur interest
and other transaction costs in connection with such borrowing. A Fund will not
make any additional investments while its outstanding borrowings exceed 5% of
the current value of its total assets.
PORTFOLIO TURNOVER. Portfolio turnover will not be a limiting factor when the
Advisor deems changes appropriate. While portfolio turnover is difficult to
predict in an active fixed income portfolio, it is expected that annual
portfolio turnover will vary between 100% and 500% with respect to each Fund.
Market conditions may dictate, however, a higher rate of turnover in a
particular year. The degree of portfolio turnover affects the brokerage costs of
the Funds and may have an impact on the amount of taxable distributions to
shareholders.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Funds acquire a security and
simultaneously resell 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 market interest rate earned by the Funds 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. Neither Fund will enter into a
repurchase agreement which will cause more than 10% of its assets to be invested
in repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Funds' exposure to risk,
each Fund has adopted certain limitations which, together with its investment
objective, are considered fundamental policies which may not be changed without
shareholder approval. Each Fund will not: (1) 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 either Fund's total assets, or (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities, in amounts
not exceeding 15% of either Fund's total assets, and may pledge its assets to
secure all such borrowings; (2) invest more than 10% of a Fund's assets in other
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; (3) write, acquire or sell puts,
calls or combinations thereof, or purchase or sell commodities, commodities
contracts, futures contracts or related options; and (4) invest more than 5% of
its total assets in the securities of any one issuer. Other fundamental
investment limitations are listed in the Statement of Additional Information.
11
<PAGE>
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 Funds at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Funds. 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 a Fund's net asset value next determined after your order is received
by the Funds in proper order as indicated herein.
The minimum initial investment in the Bond Fund is $500,000.
The minimum initial investment in the Short Term Fund is $100,000.
The Funds 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 Funds are required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Funds within 60 days.
Investors should be aware that the Funds' account application contains
provisions in favor of the Funds, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
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
Funds or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
appropriate Fund, and mail it to:
The Tattersall Bond Funds
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 Funds, at
1-800-443-4249, before wiring funds, to advise the Funds 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:
12
<PAGE>
Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For either: The Tattersall Bond Fund or
The Tattersall Short Term Bond Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Funds
receive 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 Funds 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 Funds at 1-800-443-4249 to alert the Funds that
your wire is to be sent. Follow the wire instructions above to send your wire.
When calling for any reason, please have your account number ready, if known.
Mail orders should include, when possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, be sure to identify
your account in your letter.
EXCHANGE PRIVILEGE. You may use proceeds from the redemption of shares of either
Fund to purchase Institutional Shares of the other Fund offering shares for sale
in your state of residence. There is no charge for this exchange privilege.
Before making an exchange, you should read the portion of the Prospectus
relating to the Fund into which the shares are to be exchanged. The shares of
the Fund to be acquired will be purchased at the net asset value next determined
after acceptance of the exchange request in writing by the Administrator. The
exchange of shares of one Fund for shares of the other Fund is treated, for
federal income tax purposes, as a sale on which you may realize taxable gain or
loss. To prevent the abuse of the exchange privilege to the disadvantage of
other shareholders, each Fund reserves the right to terminate or modify the
exchange offer upon 60 days' notice to shareholders.
EMPLOYEES AND AFFILIATES OF THE FUNDS. The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Funds or
certain parties related thereto. The minimum initial investment for such
accounts is $5,000. 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 Funds may be redeemed on each day that the Funds are open for
business by sending a written request to the Funds. The Funds are 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 Funds' 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.
13
<PAGE>
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $100,000 (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 $100,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Funds, at 1-800-443-4249, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Tattersall
Bond Funds, 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 Bond Fund
or the Short Term Fund, 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, a 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 Funds 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 Funds to dispose of securities owned by them, or
to fairly determine the value of their 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 Funds
may not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Funds. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Funds. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Funds from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a redemption in an amount over $25,000, or a change in registration
or standing instructions for your account. Signature guarantees are required for
(1) requests to redeem shares having a value of greater than $25,000, (2) change
of registration requests, and (3) 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.
14
<PAGE>
HOW NET ASSET VALUE IS DETERMINED
================================================================================
The net asset value of each 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). 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.
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 exchange will be valued based upon the closing price on the valuation
date on the principal exchange where the security is traded. It is expected that
fixed income securities will ordinarily be traded in the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service. The prices provided by the pricing service are determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities and developments related
to specific securities. The Trustees will satisfy themselves that such pricing
services consider all appropriate factors relevant to the value of such
securities in determining their fair value. Securities and other assets for
which no quotations are readily available will be valued in good faith at fair
value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUNDS
================================================================================
The Funds are 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 Funds 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 Funds and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees,
Tattersall Advisory Group, Inc. (the "Advisor") provides the Funds with a
continuous program of supervision of each Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to Investment Advisory Agreements with the Trust. The
Advisor is also responsible for the selection of broker-dealers through which
the Funds execute portfolio transactions, subject to brokerage policies
established by the Trustees, and provides certain executive personnel to the
Funds.
The Advisor is a Virginia corporation controlled by Fred T. Tattersall. Prior to
February 28, 1997, the investment advisor to each Fund was Lowe, Brockenbrough &
Tattersall, Inc. ("LB&T"), of which Mr. Tattersall and Austin Brockenbrough III
were the controlling shareholders. On February 28, 1997, LB&T was reorganized by
means of a corporate restructuring into two separate legal entities: LB&T, owned
by Mr. Brockenbrough, and the Advisor, owned by Mr. Tattersall. The Advisor
manages the fixed-income accounts (including the Funds) formerly managed by
LB&T. In addition to acting as Advisor to the Funds, the Advisor provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals.
Both the Bond Fund and the Short Term Fund are managed on a day to day basis by
a committee comprised of the Advisor's fixed income portfolio management
professionals, with each portfolio professional responsible for designated
specific sectors of the fixed income market. Prior to February 28, 1997, the
Funds were managed by the same group of professionals, but such professionals
were employed by LB&T.
15
<PAGE>
Compensation of the Advisor is at the annual rate of 0.375% of each Fund's
average daily net assets. For the fiscal year ended March 31, 1998, the Advisor
received $310,227 in investment advisory fees from the Bond Fund (net of fee
waivers), which represented 0.36% of the Bond Fund's average daily net assets.
For the fiscal year ended March 31, 1998, the Advisor waived its entire
investment advisory fee from the Short Term Fund and reimbursed the Fund for
$6,909 of other operating expenses.
The Advisor currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of Institutional Shares
of each Fund to 0.50% 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 Institutional Shares of each Fund may
therefore exceed 0.50% of its average daily net assets.
The Advisor's address is 6802 Paragon Place, Suite 200, Richmond, Virginia
23230.
ADMINISTRATOR. The Funds have retained Countrywide Fund Services, Inc. (the
"Administrator"), P.O. Box 5354, Cincinnati, Ohio 45201, to provide
administrative, pricing, accounting, dividend disbursing, shareholder servicing
and transfer agent services. The Administrator is a wholly-owned indirect
subsidiary of Countrywide Credit Industries, Inc., a New York Stock Exchange
listed company principally engaged in the business of residential mortgage
lending. 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.
Each Fund pays the Administrator a base fee for these services at the annual
rate of 0.075% of the average value of its daily net assets up to $200 million
and 0.05% of such assets in excess of $200 million (subject to a minimum fee of
$2,000 per month with respect to each Fund) plus a surcharge of $1,000 per
month. The Administrator also charges the Funds for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses.
CUSTODIAN. The Custodian of the Funds' assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Funds pay 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, fees of the Funds' Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Funds' shareholder servicing
operations, fees and expenses of qualifying and registering the Funds' 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 Funds are also liable for
any nonrecurring expenses that may arise such as litigation to which the Funds
may be a party. The Funds may be obligated to indemnify the Trustees and
officers with respect to such litigation. All expenses of a Fund are accrued
daily on the books of such 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. For the fiscal year ended March
31, 1998, the expense ratio of Institutional Shares of each Fund was 0.50% of
its average daily net assets after expense reimbursements.
BROKERAGE. The Funds have adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Funds. 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 Funds. Research services obtained
through the Funds' brokerage transactions may be used by the Advisor for its
other clients; conversely, the Funds may benefit
16
<PAGE>
from research services obtained through the brokerage transactions of the
Advisor's other clients. The Statement of Additional Information contains more
information about the management and brokerage practices of the Funds. It is
anticipated that most securities transactions of the Funds will be handled on a
principal, rather than agency, basis. Fixed income securities are normally
traded on a net basis (without commission) through broker-dealers and banks
acting for their own account. Such firms attempt to profit from buying at the
bid price and selling at the higher asked price of the market, the difference
being referred to as the spread.
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 Funds in general
and, particularly, with respect to dividends and distributions and other
matters. Shareholders should be aware that dividends from the Funds 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.
Each Fund intends to remain qualified 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 Funds but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed to
them. The Funds intend 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. Each Fund may make a supplemental distribution of
capital gains at the end of its fiscal year. The nature and amount of all
dividends and distributions will be identified separately when tax information
is distributed by the Funds at the end of each year. The Funds intend to
withhold 30% on taxable dividends and any other payments that are subject to
such withholding and are neither citizens nor residents of the U.S.
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 for either Fund. Current
practice of the Funds, 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 Funds unless the shareholder requests in writing to
receive dividends and/or capital gains distributions in cash. That request must
be received by the Funds prior to the record date to be effective as to the next
dividend. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or if received in additional shares of the Funds.
TAX STATUS OF THE FUNDS. If a 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 Funds, see "Additional
Tax Information" in the Statement of Additional Information.
PRINCIPAL SHAREHOLDERS. Rockingham Health Care, Inc., 235 Cantrell Avenue,
Harrisonburg, Virginia, owned of record 36.6% of the Short Term Fund's
outstanding shares as of July 2, 1998 and may therefore be deemed to control the
Fund.
17
<PAGE>
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Bond Fund and the Short Term Fund described in this
Prospectus: 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; shares of The Jamestown Balanced Fund, The
Jamestown Equity Fund, The Jamestown International Equity Fund and The Jamestown
Tax Exempt Virginia Fund, which are managed by Lowe, Brockenbrough & Company,
Inc. of Richmond, Virginia; and shares of The Davenport Equity Fund, which is
managed by Davenport & Company LLC of Richmond, Virginia. The Trustees are
permitted to create additional series 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 Funds shall be entitled to
vote thereon. Examples of matters which affect only a particular Fund could be a
proposed change in the fundamental investment objectives or policies of that
Fund or a proposed change in the investment advisory agreement for a particular
Fund. Each class of shares of the Funds shall vote separately on matters
relating to its own distribution arrangements. The shares of the Funds 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 that the Trustees may 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; (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. 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 Funds 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 each Fund may advertise its
total return. Each Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance. Total return and yield are computed separately for Service Group
and Institutional Shares. The yield of Institutional Shares is expected to be
higher than the yield of Service Group Shares due to the distribution fees
imposed on Service Group Shares.
18
<PAGE>
The "total return" of a 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 Funds 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.
The "yield" of a 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 Funds all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated.
19
<PAGE>
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20
<PAGE>
THE TATTERSALL BOND FUNDS
Institutional Shares
Send completed application to:
THE TATTERSALL BOND FUNDS
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
================================================================================
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(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: $500,000 for Bond Fund; $100,000
for Short Term Bond Fund)
o Enclosed is a check payable to the applicable Fund for $__________ (Please
indicate Fund below)
o Tattersall Bond Fund (82) o Tattersall Short Term Bond Fund (83)
o Funds were wired to Star Bank 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 FUNDS 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 Funds. The wire
should be routed as follows:
Star Bank, N.A.
ABA #042000013
For credit Williamsburg Investment Trust #485777056
For The Tattersall Bond Fund or The Tattersall Short Term Bond Fund
For (shareholder name and Social Security or Taxpayer ID Number)
21
<PAGE>
DIVIDEND AND DISTRIBUTION INSTRUCTIONS
o Reinvest all dividends and capital gains distributions
o Reinvest all capital gain distributions; dividends to be paid in cash
o Pay all dividends and capital gain distributions in cash
o By Check o By ACH to my bank checking or savings account.
PLEASE ATTACH A VOIDED CHECK.
================================================================================
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.
o New Application o 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 TATTERSALL BOND FUNDS for the Registered Owner and to execute
and deliver any instrument necessary to effectuate the authority hereby
conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE TATTERSALL BOND FUNDS, or any agent of the Funds may, without inquiry, rely
upon the instruction of any person(s) purporting to be an authorized person
named above, or in any Amendment received by the Funds or their agent. The Funds
and their Agent shall not be liable for any claims, expenses or losses resulting
from having acted upon any instruction reasonably believed to be genuine.
================================================================================
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
o Please mail redemption proceeds to the name and address of record
o Please wire redemptions to the commercial bank account indicated below
(subject to a minimum wire transfer of $5,000)
Name as it appears on the account ______________________________________________
Commercial bank account # ______________________________________________________
ABA Routing # __________________________________________________________________
City, State and Zip in which bank is located ___________________________________
================================================================================
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Funds and affirm that I have received a current prospectus and
understand the investment objectives and policies stated therein. The investor
hereby ratifies any instructions given pursuant to this Application and for
himself and his successors and assigns does hereby release Countrywide Fund
Services, Inc., Williamsburg Investment Trust, Tattersall Advisory Group, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The 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.
The Internal Revenue Service does not require my consent to any provision of
this document other than the certifications required to avoid backup
withholding. (Check here if you are subject to backup withholding) [ ].
____________________________________ ______________________________________
APPLICANT DATE JOINT APPLICANT DATE
____________________________________ ______________________________________
OTHER AUTHORIZED SIGNATORY DATE OTHER AUTHORIZED SIGNATORY DATE
22
<PAGE>
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23
<PAGE>
THE TATTERSALL BOND FUNDS
INVESTMENT ADVISOR
Tattersall Advisory Group, Inc.
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
OFFICERS
Fred T. Tattersall, President
Craig D. Truitt, Vice President
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 Funds. This Prospectus does not constitute an offer by the Funds to sell
shares in any State to any person to whom it is unlawful for the Funds to make
such offer in such State.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE TATTERSALL BOND FUNDS
The Tattersall Bond Fund
The Tattersall Short Term Bond Fund
August 1, 1998
Revised December 31, 1998
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES.......................................... 2
DESCRIPTION OF BOND RATINGS................................................. 5
INVESTMENT LIMITATIONS...................................................... 8
TRUSTEES AND OFFICERS....................................................... 10
INVESTMENT ADVISOR.......................................................... 15
ADMINISTRATOR............................................................... 16
OTHER SERVICES.............................................................. 16
BROKERAGE................................................................... 17
SPECIAL SHAREHOLDER SERVICES................................................ 18
PLAN OF DISTRIBUTION........................................................ 19
PURCHASE OF SHARES.......................................................... 20
REDEMPTION OF SHARES........................................................ 21
NET ASSET VALUE DETERMINATION............................................... 22
ALLOCATION OF TRUST EXPENSES................................................ 22
ADDITIONAL TAX INFORMATION.................................................. 22
CAPITAL SHARES AND VOTING................................................... 24
CALCULATION OF PERFORMANCE DATA............................................. 25
FINANCIAL STATEMENTS AND REPORTS............................................ 27
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Tattersall Bond Funds (the
"Funds") dated August 1, 1998, as revised December 31, 1998. The Prospectus may
be obtained from the Funds, at the address and phone number shown above, at no
charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both The Tattersall Bond Fund (the
"Bond Fund") and The Tattersall Short Term Bond Fund (the "Short Term Fund")
unless otherwise noted.
The investment objectives and policies of the Funds are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time a
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Funds' risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Funds hold a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Advisor will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Funds' custodian either directly or through a securities depository.
- 2 -
<PAGE>
SECURITIES OF UNSEASONED COMPANIES. The securities of unseasoned companies
(those in business less than three years, including predecessors and, in the
case of bonds, guarantors) may have a limited trading market, which may
adversely affect disposition. If other investors attempt to dispose of such
holdings when the Funds desire to do so, the Funds could receive lower prices
than might otherwise be obtained. Because of the increased risk over larger,
better known companies, each Fund limits its investments in the securities of
unseasoned issuers to no more than 5% of its total assets.
U.S. GOVERNMENT SECURITIES. Each Fund may invest in debt obligations which are
issued or guaranteed by the U.S. Government, its agencies and instrumentalities
("U.S. Government Securities") as described herein. U.S. Government Securities
include the following securities: (1) U.S. Treasury obligations of various
interest rates, maturities and issue dates, such as U.S. Treasury bills (mature
in one year or less), U.S. Treasury notes (mature in one to seven years), and
U.S. Treasury bonds (mature in more than seven years), the payments of principal
and interest of which are all backed by the full faith and credit of the U.S.
Government; (2) obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, some of which are backed by the full faith and credit of the
U.S. Government, e.g., obligations of the Government National Mortgage
Association ("GNMA"), the Farmers Home Administration and the Export Import
Bank; some of which do not carry the full faith and credit of the U.S.
Government but which are supported by the right of the issuer to borrow from the
U.S. Government, e.g., obligations of the Tennessee Valley Authority, the U.S.
Postal Service, the Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan Mortgage Corporation ("FHLMC"); and some of which are backed
only by the credit of the issuer itself, e.g., obligations of the Student Loan
Marketing Association, the Federal Home Loan Banks and the Federal Farm Credit
Bank; and (3) any of the foregoing purchased subject to repurchase agreements as
described herein. The Funds do not intend to invest in "zero coupon" Treasury
securities. The guarantee of the U.S. Government does not extend to the yield or
value of the Funds' shares.
Obligations of GNMA, FNMA and FHLMC may include direct pass-through
"Certificates," representing undivided ownership interests in pools of
mortgages. Such Certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the U.S. Government or the issuing
agency. Mortgage Certificates are subject to more rapid prepayment than their
stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates and, as a result, the
proceeds from such prepayments may be reinvested in instruments which have lower
yields. To the extent such securities were purchased at a premium, such
prepayments could result in capital losses. The U.S. Government does not
guarantee premiums and market value of U.S. Government Securities.
- 3 -
<PAGE>
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Funds. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Funds acquire a Bankers' Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Bankers' Acceptance, therefore, carries the full faith
and credit of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an unsecured
interest-bearing debt obligation of a bank. CDs acquired by the Funds would
generally be in amounts of $100,000 or more. COMMERCIAL PAPER is an unsecured,
short-term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Funds will
invest in Commercial Paper only if it is rated in the highest rating category by
any nationally recognized statistical rating organization ("NRSRO") or, if not
rated, the issuer must have an outstanding unsecured debt issue rated in the
three highest categories by any NRSRO or, if not so rated, be of equivalent
quality in the Advisor's assessment. Commercial Paper may include Master Notes
of the same quality. MASTER NOTES are unsecured obligations which are redeemable
upon demand of the holder and which permit the investment of fluctuating amounts
at varying rates of interest. Master Notes are acquired by the Funds only
through the Master Note program of the Funds' custodian, acting as administrator
thereof. The Advisor will monitor, on a continuous basis, the earnings power,
cash flow and other liquidity ratios of the issuer of a Master Note held by the
Funds.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Funds may purchase securities
on a when-issued basis or for settlement at a future date if the Funds hold
sufficient assets to meet the purchase price. In such purchase transactions the
Funds will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Funds will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
- 4 -
<PAGE>
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Funds would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Funds may sell such a security prior to
the settlement date if the Advisor felt such action was appropriate. In such a
case, the Funds could incur a short-term gain or loss.
RESTRICTED SECURITIES. Each Fund may purchase securities that are not registered
("restricted securities") under the 1933 Act, but can be offered and sold to
"qualified institutional buyers" under Rule 144A of the 1933 Act. However, a
Fund will not invest more than 10% of its assets in illiquid investments, which
includes securities that are not readily marketable and restricted securities,
unless the Board of Trustees determines, based upon a continuing review of the
trading markets for the specific restricted security, that such restricted
securities are liquid. The Board of Trustees may adopt guidelines and delegate
to the Advisor the daily function of determining and monitoring liquidity of
restricted securities. It is not possible to predict with accuracy how the
markets for certain restricted securities will develop. Investing in restricted
securities could have the effect of increasing the level of a Fund's illiquidity
to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities. Each Fund currently intends to
limit its investments in restricted securities to no more than 5% of its net
assets.
DESCRIPTION OF BOND RATINGS
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Advisor believes that the quality of fixed-income securities in which the Funds
may invest should be continuously reviewed and that individual analysts give
different weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one NRSRO, each
rating is evaluated independently. Ratings are based on current information
furnished by the issuer or obtained by the NRSROs from other sources that they
consider reliable. Ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of such information, or for other reasons.
- 5 -
<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 instances
they differ from AAA issues only in small degree.
- 6 -
<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.
- 7 -
<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 Funds have adopted the following investment limitations, in addition to
those described in the Prospectus, which cannot be changed without approval by
holders of a majority of the outstanding voting shares of the Funds. A
"majority" for this purpose, means the lesser of (i) 67% of a Fund's outstanding
shares represented in person or by proxy at a meeting at which more than 50% of
its outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, each Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one issuer or acquire more than 10% of the outstanding voting
securities of any one issuer (except that securities of the U.S.
Government, its agencies or instrumentalities are not subject to these
limitations);
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Advisor who own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5% of the
outstanding securities of such issuer;
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Funds
may invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things, and the Funds may
invest in certain mortgage backed securities as described in the Prospectus
under "Investment Objectives, Investment Policies and Risk Considerations";
- 8 -
<PAGE>
(6) Underwrite securities issued by others, except to the extent a Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Funds may obtain such short-term
credits as may be necessary for the clearance of transactions);
(8) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent the Fund
contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);
(9) Participate on a joint or joint and several basis in any trading account in
securities;
(10) Purchase real estate or interests in real estate, except that securities in
which the Funds invest may themselves have investment in real estate or
interests in real estate (the Funds do invest in securities composed of
mortgages against real estate);
(11) Invest more than 10% of the value of its net assets in the aggregate in
illiquid securities (potentially including repurchase agreements with a
maturity of greater than 7 days, Interest Only or Principal Only
securities, and mortgage backed strips which may not be readily
marketable); or
(12) Write, purchase or sell puts, calls or combinations thereof, or purchase or
sell commodities, commodities contracts, futures contracts or related
options, or purchase, sell or write warrants.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation.
While the Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
- 9 -
<PAGE>
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ -------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
- 10 -
<PAGE>
Richard L. Morrill (age 59) Chancellor, $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.,
President Richmond, Virginia
The Tattersall Bond Fund
The Tattersall Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
- 11 -
<PAGE>
Charles M. Caravati III (age 32) Portfolio Manager of
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
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 36) Vice President of Countrywide Fund Services,
Treasurer Inc. (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust) and CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer); Treasurer of Countrywide
Investment Trust, Countrywide Tax-Free Trust and
Countrywide Strategic Trust (registered
investment companies), Cincinnati, Ohio
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
- 12 -
<PAGE>
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc., CW Fund
312 Walnut Street, 21st Floor Distributors, Inc., Countrywide Investments, Inc. and
Cincinnati, Ohio Countrywide Financial Services, Inc.; Secretary of
45202 Countrywide Investment Trust, Countrywide Tax-Free Trust and
Countrywide Strategic Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Tattersall Bond Fund Richmond, Virginia
The Tattersall Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
- -----------------------------
</TABLE>
**Indicates that Trustee is an Interested Person for purposes of the 1940
Act. Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
- 13 -
<PAGE>
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will 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.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Bond Fund
and 28.2% of the then outstanding shares of the Short Term Fund. On the same
date, Rockingham Health Care, Inc., 235 Cantrell Avenue, Harrisonburg, Virginia
22801, owned of record 36.6% of the then outstanding shares of the Short Term
Fund and may therefore be deemed to control the Short Term Fund. On the same
date, Rockingham Health Care, Inc. owned of record 14.4% of the then outstanding
shares of the Bond Fund; Rockingham Memorial Hospital Retirement Plan, 235
Cantrell Avenue, Harrisonburg, Virginia 22801, owned of record 8.7% of the then
outstanding shares of the Bond Fund; Halifax Regional Hospital, 2204 Wilborn
Avenue, South Boston, Virginia 24592, owned of record 10.0% of the then
outstanding shares of the Bond Fund; First National Bank of Maryland as trustee
for Hourly Employees Norshipco Pension Plans, P.O. Box 1596, Baltimore, Maryland
21203, owned of record 5.1% of the then outstanding shares of the Bond Fund;
Calvert Memorial Hospital, 100 Hospital Road, Prince Frederick, Maryland 20678,
owned of record 8.2% of the then outstanding shares of the Bond Fund; Virginia
International Terminals, Inc. Pension Plan, P.O. Box 1387, Norfolk, Virginia
23501, owned of record 9.3% of the then outstanding shares of the Bond Fund;
Portland Museum of Art, Seven Congress Square, Portland, Maine 04101, owned of
record 5.8% of the then outstanding shares of the Bond Fund; Lowe, Brockenbrough
& Tattersall Inc., together with its Money Purchase Pension Plan, 6620 West
Broad Street, Richmond, Virginia 23230, owned of record 16.6% of the then
outstanding shares of the Short Term Fund; the Tattersall Advisory Group, Inc.
Money Purchase Pension Plan, 6620 West Broad Street, Richmond, Virginia 23230,
owned of record 11.6% of the then outstanding shares of the Short Term Fund; the
McKay-Dee Foundation, 3939 Harrison Boulevard, Ogden, Utah 84403, owned of
record 8.2% of the then outstanding shares of the Short Term Fund; and Centura
Investment Management & Trust Services, P.O. Box 1220, Rocky Mount, North
Carolina 27802, owned of record 6.5% of the then outstanding shares of the Short
Term Fund.
- 14 -
<PAGE>
INVESTMENT ADVISOR
Tattersall Advisory Group, Inc. (the "Advisor") supervises each Fund's
investments pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") described in the Prospectus. The Advisory Agreement is effective
until February 28, 1999 and will be renewed thereafter for one year periods only
so long as such renewal and continuance is specifically approved at least
annually by the Board of Trustees or by vote of a majority of the Funds'
outstanding voting securities, provided the continuance is also approved by a
majority of the Trustees who are not "interested persons" of the Trust or the
Advisor by vote cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement is terminable without penalty on sixty
days notice by the Board of Trustees of the Trust or by the Advisor. The
Advisory Agreement provides that it will terminate automatically in the event of
its assignment.
The Advisor is a Virginia corporation controlled by its majority shareholder,
Fred T. Tattersall. Prior to February 28, 1997, the investment advisor to each
Fund was Lowe, Brockenbrough & Tattersall, Inc. ("LB&T"), of which Mr.
Tattersall and Austin Brockenbrough III were the controlling shareholders. On
February 28, 1997, LB&T was reorganized by means of a corporate restructuring
into two separate legal entities: LB&T, owned by Mr. Brockenbrough, and the
Advisor, principally owned by Mr. Tattersall. The Advisor manages the
fixed-income accounts formerly managed by LB&T. In addition to acting as Advisor
to the Funds, the Advisor provides investment advice to corporations, trusts,
pension and profit sharing plans, other business and institutional accounts and
individuals.
Compensation of the Advisor, with respect to each Fund, is at the annual rate of
0.375% of such Fund's average daily net assets. For the fiscal years ended March
31, 1998, 1997 and 1996, the Advisor and/or LB&T received investment advisory
fees of $310,227, $289,094 and $305,247, respectively, from the Bond Fund. For
the fiscal years ended March 31, 1998 and 1997, the Advisor and/or LB&T each
waived its entire investment advisory fee from the Short Term Fund and
reimbursed the Fund for $6,909 and $6,864, respectively, of other operating
expenses. For the fiscal year ended March 31, 1996, LB&T received investment
advisory fees of $3,786 (which was net of voluntary fee waivers of $43,635) from
the Short Term Fund.
The Advisor provides a continuous investment program for the Funds, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Funds. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Funds, and
- 15 -
<PAGE>
does so in accordance with the investment objectives and policies of the Funds
as described herein and in the Prospectus. The Advisor places all securities
orders for the Funds, determining with which broker, dealer, or issuer to place
the orders.
The Advisor must adhere to the brokerage policies of the Funds in placing all
orders, the substance of which policies are that the Advisor must seek at all
times the most favorable price and execution for all securities brokerage
transactions.
The Advisor also provides, at its own expense, certain Executive Officers to the
Trust.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Funds and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Funds, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, each Fund pays the
Administrator a base fee at the annual rate of 0.075% of the average value of
its daily net assets up to $200,000,000 and 0.05% of such assets in excess of
$200,000,000 (subject to a minimum fee of $2,000 per month for each Fund) plus a
surcharge of $1,000 per month. In addition, the Funds pay out-of-pocket
expenses, including but not limited to, postage, envelopes, checks, drafts,
forms, reports, record storage and communication lines.
For the fiscal years ended March 31, 1998, 1997 and 1996, the Administrator
received fees of $67,341, $57,859 and $61,029, respectively, from the Bond Fund
and $24,000, $24,000 and $24,000, respectively, from the Short Term Fund.
OTHER SERVICES
The firm of Tait, Weller & Baker, Two Penn Center Plaza, Philadelphia,
Pennsylvania 19102, has been retained by the Board of Trustees to perform an
independent audit of the books and records of the Trust, to review the Funds'
federal and state tax returns and to consult with the Trust as to matters of
accounting and federal and state income taxation.
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The Custodian of the Funds' assets is Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Funds
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Funds.
BROKERAGE
It is the Funds' practice to seek the best price and execution for all portfolio
securities transactions. The Advisor (subject to the general supervision of the
Board of Trustees) directs the execution of the Funds' portfolio transactions.
The Trust has adopted a policy which prohibits the Advisor from effecting Fund
portfolio transactions with broker-dealers which may be interested persons of
either Fund, the Trust, any Trustee, officer or director of the Trust or its
investment advisors or any interested person of such persons.
The Funds' portfolio transactions will normally be principal transactions
executed in over-the-counter markets and will be executed on a "net" basis,
which may include a dealer markup. However, the Bond Fund typically transacts in
shares of closed-end investment companies on an agency basis, and pays
commissions in connection with these transactions.
For the fiscal years ended March 31, 1998, 1997 and 1996, the total amount of
brokerage commissions paid by the Bond Fund was $14,820, $25,248 and $126,787,
respectively. No brokerage commissions were paid by the Short Term Fund for the
last three fiscal years.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of either Fund's brokerage commissions to persons or firms
providing the Advisor with research services, which may typically include, but
are not limited to, investment recommendations, financial, economic, political,
fundamental and technical market and interest rate data, and other statistical
or research services. Much of the information so obtained may also be used by
the Advisor for the benefit of the other clients it may have. Conversely, the
Funds may benefit from such transactions effected for the benefit of other
clients. In all cases, the Advisor is obligated to effect transactions for the
Funds based upon obtaining the most favorable price and execution. Factors
considered by the Advisor in determining whether the Funds will receive the most
favorable price and execution include, among other things: the size of the
order, the broker's ability to effect and settle the transaction promptly and
efficiently and the Advisor's perception of the broker's reliability, integrity
and financial condition.
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<PAGE>
In an effort to reduce the total operating expenses of the Bond Fund, a portion
of the Fund's custodian fees have been paid through an arrangement with a third
party broker-dealer who is compensated through security trades. Expenses
reimbursed through the directed brokerage arrangement for the year ended March
31, 1998 were $9,678.
As of March 31, 1998, the Bond Fund held securities issued by Lehman Brothers
Holdings (having a market value of $929,227). During the fiscal year ended March
31, 1998, the Short Term Fund acquired securities issued by Merill Lynch &
Company, Inc. (having a market value of $392,707 as of March 31, 1998). Lehman
Brothers Holdings and Merrill Lynch & Company, Inc. are the parents of two of
the Trust's "regular broker-dealers" as defined in the 1940 Act.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Funds offer the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Funds, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
PURCHASES IN KIND. The Funds may accept securities in lieu of cash in payment
for the purchase of shares of the Funds. The acceptance of such securities is at
the sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Funds, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Funds. Securities delivered in payment of
redemptions would be valued at the same
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<PAGE>
value assigned to them in computing the net asset value per share. Shareholders
receiving them would incur brokerage costs when these securities are sold. An
irrevocable election may be filed under Rule 18f-1 of the 1940 Act, wherein each
Fund commits itself to pay redemptions in cash, rather than in kind, to any
shareholder of record of the Funds who redeems during any ninety day period, the
lesser of (a) $250,000 or (b) one percent (1%) of a Fund's net assets at the
beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Funds at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (see the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Funds.
PLAN OF DISTRIBUTION
As described in the Prospectus, Service Group Shares of the Fund have adopted a
plan of distribution (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940 which permits Service Group Shares to pay for expenses
incurred in the distribution and promotion of the Funds' Service Group Shares,
including but not limited to, the printing of prospectuses, statements of
additional information and reports used for sales purposes, advertisements,
expenses of preparation and printing of sales literature, promotion, marketing
and sales expenses, and other distribution related expenses, including any
distribution fees paid to securities dealers or other firms who have executed a
distribution or service agreement with the Advisor. The Plan expressly limits
payment of distribution expenses listed above in any fiscal year to a maximum of
.15% of the average daily net assets of Service Group Shares of the Fund.
Unreimbursed expenses will not be carried over from year to year.
For the fiscal year ended March 31, 1998, Service Group Shares of the Bond Fund
incurred distribution expenses of $2,672, which amount was paid to financial
intermediaries for the retention of Service Group Shares.
Agreements implementing the Plan (the "Implementation Agreements"), including
agreements with financial consultants and other intermediaries wherein such
financial consultants and other intermediaries agree for a fee to act as agents
for the sale of the Fund's Service Group Shares, are in writing and have been
approved by the Board of Trustees. All payments made pursuant to the Plan are
made in accordance with written agreements.
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<PAGE>
The continuance of the Plan and the Implementation Agreements must be
specifically approved at least annually by a vote of the Trustees who are not
interested persons of the Trust and have no direct or indirect financial
interest in the Plan or any Implementation Agreement (the "Independent
Trustees") at a meeting called for the purpose of voting on such continuance.
The Plan may be terminated at any time by a vote of the majority of the
Independent Trustees or by a vote of the holders of a majority of the
outstanding Service Group Shares of the Fund. In the event the Plan is
terminated in accordance with its terms, Service Group Shares will not be
required to make any payments for expenses incurred by the Advisor after the
termination date. Each Implementation Agreement terminates automatically in the
event of its assignment and may be terminated at any time by a vote of a
majority of the Independent Trustees or by a vote of the holders of a majority
of the outstanding Service Group Shares on not more than 60 days' written notice
to any other party to the Implementation Agreement. The Plan may not be amended
to increase materially the amount to be spent for distribution without
shareholder approval. All material amendments to the Plan must be approved by a
vote of the Independent Trustees.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a reasonable likelihood that the Plan will benefit the Funds and the holders
of their Service Group Shares. The Board of Trustees believes that the
expenditure of assets of Service Group Shares for distribution expenses under
the Plan should assist in the growth of such shares which will benefit the Funds
and the holders of their Service Group Shares through increased economies of
scale, greater investment flexibility, greater portfolio diversification and
less chance of disruption of planned investment strategies. The Plan will be
renewed only if the Trustees make a similar determination for each subsequent
year of the Plan. There can be no assurance that the benefits anticipated from
the expenditure of Service Group Shares' assets for distribution will be
realized. While the Plan is in effect, all amounts spent by Service Group Shares
pursuant to the Plan and the purposes for which such expenditures were made must
be reported quarterly to the Board of Trustees for its review. The selection and
nomination of those Trustees who are not interested persons of the Trust are
committed to the discretion of the Independent Trustees during such period.
PURCHASE OF SHARES
The purchase price of shares of each Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m., Eastern time
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business
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<PAGE>
Day. An order to purchase shares is not binding on the Funds until confirmed in
writing (or unless other arrangements have been made with the Funds, for example
in the case of orders utilizing wire transfer of funds) and payment has been
received.
Each Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUNDS. The Funds have adopted initial investment
minimums for the purpose of reducing the cost to the Funds (and consequently to
the shareholders) of communicating with and servicing their shareholders.
However, a reduced minimum initial investment requirement of $5,000 applies to
Trustees, officers and employees of the Funds, the Advisor and certain parties
related thereto, including clients of the Advisor or any sponsor, officer,
committee member thereof, or the immediate family of any of them. In addition,
accounts having the same mailing address may be aggregated for purposes of the
minimum investment if they consent in writing to share a single mailing of
shareholder reports, proxy statements (but each such shareholder would receive
his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
Each Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Funds for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Funds.
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<PAGE>
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Funds, and they have
adopted procedures to do so, as follows. The net asset value of each Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.,
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the Trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Funds. General Trust expenses are allocated among
the series, or funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, each Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, each Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities' loans, gains from the disposition of stock or securities, and
certain other income.
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<PAGE>
While the above requirements are aimed at qualification of the Funds as
regulated investment companies under Subchapter M of the Code, the Funds also
intend to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Funds remain qualified under Subchapter M,
they will not be subject to federal income tax to the extent they distribute
their taxable net investment income and net realized capital gains. A
nondeductible 4% federal excise tax will be imposed on each Fund to the extent
it does not distribute at least 98% of its ordinary taxable income for a
calendar year, plus 98% of its capital gain net taxable income for the one year
period ending each October 31, plus certain undistributed amounts from prior
years. While each Fund intends to distribute its taxable income and capital
gains in a manner so as to avoid imposition of the federal excise and income
taxes, there can be no assurance that the Funds indeed will make sufficient
distributions to avoid entirely imposition of federal excise or income taxes.
As of March 31, 1998, the Short Term Fund had capital loss carryforwards for
federal income tax purposes of $586,098, which expire on March 31, 2005. In
addition, the Short Term Fund had net realized capital losses of $5,918 during
the period from November 1, 1997 through March 31, 1998, which are treated for
federal income tax purposes as arising during the Fund's fiscal year ending
March 31, 1999. These capital loss carryforwards and "post-October" losses may
be utilized in future years to offset net realized gains prior to distributing
such gains to shareholders.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUNDS' DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the
Funds derived from net investment income or net short-term capital gains are
taxable to shareholders as ordinary income, whether received in cash or
reinvested in additional shares. Distributions, if any, of long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held. For information on "backup" withholding, see "How to Purchase
Shares" in the Prospectus.
Each Fund will send shareholders information each year on the tax status of
dividends and disbursements. A dividend or capital gains distribution paid
shortly after shares have been purchased, although in effect a return of
investment, is subject to federal income taxation. Dividends from net investment
income, along with capital gains, will be taxable to shareholders, whether
received in cash or shares and no matter how long you have held
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<PAGE>
Fund shares, even if they reduce the net asset value of shares below your cost
and thus in effect result in a return of part of your investment.
CAPITAL SHARES AND VOTING
Shares of the Funds, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not less
than ten percent (10%) of the shares then outstanding may require the Trustees
to call such a meeting and the Trustees are obligated to provide certain
assistance to shareholders desiring to communicate with other shareholders in
such regard (e.g., providing access to shareholder lists, etc.). In case a
vacancy or an anticipated vacancy shall for any reason exist, the vacancy shall
be filled by the affirmative vote of a majority of the remaining Trustees,
subject to the provisions of Section 16(a) of the 1940 Act. The Trust does not
expect to have an annual meeting of shareholders.
Both Service Group Shares and Institutional Shares of a Fund represent an
interest in the same assets of the Fund, have the same rights and are identical
in all material respects except that (i) Service Group Shares bear the expenses
of distribution fee; (ii) certain class specific expenses will be borne solely
by the class to which such expenses are attributable, including transfer agent
fees attributable to a specific class of shares, printing and postage expenses
related to preparing and distributing materials to current shareholders of a
specific class, registration fees incurred by a specific class of shares, the
expenses of administrative personnel and services required to support the
shareholders of a specific class, litigation or other legal expenses relating to
a class of shares, Trustees' fees or
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<PAGE>
expenses incurred as a result of issues relating to a specific class of shares
and accounting fees and expenses relating to a specific class of shares; and
(iii) each class has exclusive voting rights with respect to matters affecting
only that class. The Board of Trustees may classify and reclassify shares of the
Funds into additional classes of shares at a future date.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, each Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Funds for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of a Fund ("T") is computed by using the redeemable value at the end of a
specified period of time ("ERV") of a hypothetical initial investment of $1,000
("P") over a period of time ("n") according to the formula P(l+T)n=ERV. The
average annual total return quotations for Institutional Shares of the Bond Fund
for the one year period ended March 31, 1998, for the five year period ended
March 31, 1998 and for the period since inception (December 13, 1990) to March
31, 1998 are 12.06%, 7.03% and 8.05%, respectively. The average annual total
return quotations for the Short Term Fund for the one year period ended March
31, 1998, for the five year period ended March 31, 1998 and for the period since
inception (January 21, 1992) to March 31, 1998 are 5.76%, 5.08% and 5.16%,
respectively.
In addition, each Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, each Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
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<PAGE>
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The yields of the Bond Fund's Institutional Shares and Service Group
Shares for the 30 days ended March 31, 1998 were 5.78% and 5.63%, respectively.
The yield of the Short Term Fund for the 30 days ended March 31, 1998 was 5.28%.
The Funds' performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Bond Fund may compare its performance to the
Lehman Brothers Government/Corporate Index and the Lehman Brothers Aggregate
Index, which are generally considered to be representative of the performance of
taxable bonds, and the Short Term Fund may compare its performance to the
Merrill Lynch 1-3 Year Treasury Index. Comparative performance may also be
expressed by reference to a ranking prepared by a mutual fund monitoring
service, such as Lipper Analytical Services, Inc. or Morningstar, Inc., or by
one or more newspapers, newsletters or financial periodicals. Performance
comparisons may be useful to investors who wish to compare the Funds' past
performance to that of other mutual funds and investment products. Of course,
past performance is not a guarantee of future results.
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.
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<PAGE>
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of the Funds' performance before investing. Of course, when
comparing the Funds' performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Funds may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Funds based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Funds may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Funds may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Funds may also depict the historical performance
of the securities in which the Funds may invest over periods reflecting a
variety of market or economic conditions either alone or in comparison with
alternative investments, performance indices of those investments, or economic
indicators. The Funds may also include in advertisements and in materials
furnished to present and prospective shareholders statements or illustrations
relating to the appropriateness of types of securities and/or mutual funds that
may be employed to meet specific financial goals, such as saving for retirement,
children's education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Funds will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Funds as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
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<PAGE>
THE JAMESTOWN BOND FUND
-----------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
------------------ -------------
Tattersall Advisory Group, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN BOND FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1998
PERFORMANCE OF THE JAMESTOWN BOND FUND
FISCAL YEAR ENDED MARCH 31, 1998
There is something about the beginning of a year that encourages thoughts of a
slowdown. It could be that after the normal Christmas retail frenzy, consumers
are expected to be "spent out." Or it could be that during the inclement weather
of the winter months, consumers are supposed to stay at home. Not only did they
not stay at home, but they were out buying homes! During the so-called slow
months, housing activity soared in response to the unbeatable combination of
unusually mild weather and low interest rates. Consumer and business spending
more than offset the Asian-induced weakness from the trade sector so that the
economy is on track to turn in a 1st quarter performance that will most likely
exceed the 3% level. Activity in Europe was also brisk, with inflation as
elusive there as it is in the U.S. Interest rates fell for all G-7 countries
with rates in Japan and the U.S. falling the least. With interest rates
basically unchanged for the first quarter of 1998, the bond market's performance
was dominated by coupon return. The Jamestown Bond Fund's Institutional Shares
provided a return of 12.06% for the fiscal year ended March 31, 1998, and the
Service Group Shares provided a return of 8.55% for the period from October 2,
1998 through March 31, 1998. For the year ended March 31, 1998, the Lehman
Aggregate Index returned 11.99% while the Lehman Government/Corporate Index
returned 12.39%.
With no clear trend in the direction of rates, duration strategy for us or for
any manager was a non-event as sectors saw all of the action. Battered by huge
new issuance and Asian credit concerns, corporates started the year with
historically attractive yield spreads versus Treasuries, reached a peak in late
January, before narrowing again with the help of decent earnings reports and a
strong stock market. Our strategy was to be overweighted in corporates relative
to the Index. We were also overweighted in mortgages. This sector was initially
hurt by the acceleration in prepayment speeds, an event for which we had
prepared the portfolio, but began to outperform as low interest rate volatility
helped to calm investors' concerns. The asset-backed market outperformed
Treasuries, which was quite an accomplishment considering the huge amount of new
issues the market was forced to digest during the quarter. Closed-end funds
basically held their own.
<PAGE>
LOOKING AHEAD
We expect the market to establish a trend before this year ends, and that trend
will most likely be to lower rates. Between now and then, however, the market
will stay on edge purely from inflation worries associated with a strong
economy. The Federal Reserve should remain firmly on hold. The risk to bond
holders is that domestic demand remains too strong and the effect of the Asian
slowdown too weak for the Federal Reserve to pursue price stability with
unchanged interest rates. The latest unemployment report should help to mitigate
this risk, and we expect to extend the duration if more weakness materializes.
As opposed to this time last year when we were frustrated by the lack of
opportunity in sectors, we are energized by what we see this year. Having
claimed victory in the first quarter with long industrials and REITS, we start
the second quarter equally weighted in corporates versus the Index. We will
watch carefully the trend of corporate earnings, realizing that the stock
market, and thus, corporate spreads are vulnerable to negative surprises. We are
currently overweighted in the mortgage sector with an emphasis on those
securities that are protected from prepayments. This strategy has worked well
since the end of last year, and we expect it to continue to work well with call
protection priced as cheaply as it is. Asset-backed securities provide another
cheap source of prepayment protection and we plan to remain overweighted in this
sector as well. Finally, we expect closed-end funds to continue to provide a
steady source of outperformance as prices converge to net asset values.
Although interest rates are essentially unchanged so far this year, there
certainly have been opportunities to outperform the bond market. We not only
expect these opportunities to continue, but we intend to fully participate in
all of them.
<PAGE>
THE JAMESTOWN BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown Bond
Fund, the Lehman Government/Corporate Index, the Lehman Aggregate Index and the
Consumer Price Index.
LINE CHART:
LEHMAN GOVERNMENT/ THE JAMESTOWN BOND FUND:
CORPORATE INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
12/31/90 10,000 12/31/90 10,000
03/31/91 2.52% 10,252 03/31/91 1.63% 10,163
06/30/91 1.78% 10,434 06/30/91 1.39% 10,305
09/30/91 4.77% 10,932 09/30/91 5.02% 10,822
12/31/91 5.33% 11,515 12/31/91 5.18% 11,382
03/31/92 -1.50% 11,342 03/31/92 -1.49% 11,213
06/30/92 4.06% 11,803 06/30/92 3.35% 11,588
09/30/92 4.88% 12,379 09/30/92 3.83% 12,033
12/31/92 0.07% 12,387 12/31/92 0.27% 12,065
03/31/93 4.66% 12,965 03/31/93 3.81% 12,524
06/30/93 3.01% 13,355 06/30/93 2.26% 12,807
09/30/93 3.32% 13,798 09/30/93 2.22% 13,091
12/31/93 -0.29% 13,758 12/31/93 0.25% 13,124
03/31/94 -3.15% 13,325 03/31/94 -2.55% 12,789
06/30/94 -1.24% 13,160 06/30/94 -1.04% 12,656
09/30/94 0.50% 13,225 09/30/94 0.51% 12,719
12/31/94 0.37% 13,274 12/31/94 0.26% 12,752
03/31/95 4.98% 13,935 03/31/95 4.87% 13,372
06/30/95 6.49% 14,840 06/30/95 5.87% 14,157
09/30/95 1.91% 15,123 09/30/95 2.45% 14,505
12/31/95 4.66% 15,828 12/31/95 4.49% 15,156
03/31/96 -2.34% 15,458 03/31/96 -1.86% 14,874
06/30/96 0.47% 15,530 06/30/96 0.82% 14,996
09/30/96 1.76% 15,804 09/30/96 1.84% 15,272
12/31/96 3.06% 16,287 12/31/96 3.29% 15,775
03/31/97 -0.86% 16,147 03/31/97 -0.50% 15,696
06/30/97 3.64% 16,735 06/30/97 3.75% 16,285
09/30/97 3.50% 17,321 09/30/97 3.15% 16,798
12/31/97 3.21% 17,876 12/31/97 3.10% 17,318
03/31/98 1.52% 18,148 03/31/98 1.56% 17,589
LEHMAN AGGREGATE INDEX: CONSUMER PRICE INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
12/31/90 10,000 12/31/90 10,000
03/31/91 2.81% 10,281 03/31/91 0.90% 10,090
06/30/91 1.62% 10,448 06/30/91 0.40% 10,130
09/30/91 5.68% 11,041 09/30/91 0.60% 10,191
12/31/91 5.07% 11,601 12/31/91 0.90% 10,283
03/31/92 -1.27% 11,453 03/31/92 0.70% 10,355
06/30/92 4.04% 11,916 06/30/92 0.80% 10,438
09/30/92 4.30% 12,429 09/30/92 0.70% 10,511
12/31/92 0.26% 12,461 12/31/92 0.80% 10,595
03/31/93 4.14% 12,977 03/31/93 0.90% 10,690
06/30/93 2.66% 13,322 06/30/93 0.60% 10,754
09/30/93 2.61% 13,670 09/30/93 0.40% 10,797
12/31/93 0.05% 13,676 12/31/93 0.70% 10,873
03/31/94 -2.87% 13,284 03/31/94 0.50% 10,927
06/30/94 -1.03% 13,147 06/30/94 0.60% 10,993
09/30/94 0.61% 13,227 09/30/94 0.90% 11,092
12/31/94 0.38% 13,278 12/31/94 0.60% 11,158
03/31/95 5.04% 13,947 03/31/95 0.80% 11,248
06/30/95 6.09% 14,796 06/30/95 0.90% 11,349
09/30/95 1.96% 15,086 09/30/95 0.40% 11,395
12/31/95 4.26% 15,729 12/31/95 0.50% 11,452
03/31/96 -1.77% 15,450 03/31/96 0.80% 11,544
06/30/96 0.57% 15,538 06/30/96 1.10% 11,671
09/30/96 1.85% 15,826 09/30/96 0.44% 11,723
12/31/96 3.00% 16,301 12/31/96 0.82% 11,819
03/31/97 -0.56% 16,209 03/31/97 0.69% 11,901
06/30/97 3.67% 16,804 06/30/97 0.19% 11,924
09/30/97 3.32% 17,362 09/30/97 0.44% 11,976
12/31/97 2.94% 17,873 12/31/97 0.62% 12,050
03/31/98 1.56% 18,151 03/31/98 0.12% 12,064
The Jametown Bond Fund Average Annual Total Returns
1 Year 5 Years Since Inception*
12.06% 7.03% 8.05%
*The chart above represents the performance of Institution shares only, which
will vary from the performance of Service Group Shares based on the difference
in fees paid by shareholders in the different classes. The Fund commenced
operations on December 13, 1990, and the initial public offering of Service
Group Shares commenced on October 2, 1997.
Past performance is not predictive of future performance.
<PAGE>
THE JAMESTOWN BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 91,630,430
==============
At value (Note 1) $ 93,694,603
Investments in repurchase agreements (Note 1) 6,753,000
Cash 9,739
Receivable for securities sold 3,192,094
Interest receivable 1,027,791
Other assets 1,985
--------------
TOTAL ASSETS 104,679,212
--------------
LIABILITIES
Dividends payable 45,034
Payable for securities purchased 5,283,937
Accrued advisory fees (Note 3) 14,308
Accrued administration fees (Note 3) 5,980
Accrued distribution expenses (Note 3) 1,291
Other accrued expenses 9,962
--------------
TOTAL LIABILITIES 5,360,512
--------------
NET ASSETS $ 99,318,700
==============
Net assets consist of:
Paid-in capital $ 96,949,176
Accumulated net realized gains from security transactions 297,227
Undistributed net investment income 8,124
Net unrealized appreciation on investments 2,064,173
--------------
Net assets $ 99,318,700
==============
PRICING OF INSTITUTIONAL SHARES
Net assets attributable to Institutional Shares $ 96,250,111
==============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 8,886,698
==============
Net asset value, offering price and redemption price per share (Note 1) $ 10.83
==============
PRICING OF SERVICE GROUP SHARES
Net assets applicable to Service Group Shares $ 3,068,589
==============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 283,310
==============
Net asset value, offering price and redemption price per share (Note 1) $ 10.83
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1998
<S> <C>
INVESTMENT INCOME
Interest $ 5,328,394
Dividends 383,282
--------------
TOTAL INVESTMENT INCOME 5,711,676
--------------
EXPENSES
Investment advisory fees (Note 3) 326,338
Administration fees (Note 3) 67,341
Custodian fees 16,026
Professional fees 15,996
Pricing costs 10,442
Registration fees 8,212
Trustees' fees and expenses 5,405
Insurance expense 4,675
Printing of shareholder reports 2,917
Distribution expenses, Service Group Shares (Note 3) 2,672
Other expenses 3,555
--------------
TOTAL EXPENSES 463,579
Fees waived by the Adviser (Note 3) (16,111)
Expenses reimbursed through a directed brokerage arrangement (Note 4) (9,678)
--------------
NET EXPENSES 437,790
--------------
NET INVESTMENT INCOME 5,273,886
--------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 1,826,210
Net change in unrealized appreciation/depreciation on investments 2,574,722
--------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 4,400,932
--------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,674,818
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 5,273,886 $ 5,005,951
Net realized gains (losses) from security transactions 1,826,210 (391,414)
Net change in unrealized appreciation/depreciation
on investments 2,574,722 (405,910)
-------------- --------------
Net increase in net assets from operations 9,674,818 4,208,627
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Institutional Shares (5,189,396) (5,104,234)
From net investment income, Service Group Shares (99,842) --
-------------- --------------
Decrease in net assets from distributions from shareholders (5,289,238) (5,104,234)
-------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
INSTITUTIONAL SHARES
Proceeds from shares sold 15,597,164 9,262,915
Net asset value of shares issued in reinvestment
of distributions to shareholders 5,049,237 4,238,186
Payments for shares redeemed (5,227,155) (10,880,119)
-------------- --------------
Net increase in net assets from Institutional Shares transactions 15,419,246 2,620,982
-------------- --------------
SERVICE GROUP SHARES
Proceeds from shares sold 4,316,277 --
Net asset value of shares issued in reinvestment
of distributions to shareholders 99,842 --
Payments for shares redeemed (1,401,739) --
-------------- --------------
Net increase in net assets from Service Group Shares transactions 3,014,380 --
-------------- --------------
TOTAL INCREASE IN NET ASSETS 22,819,206 1,725,375
NET ASSETS:
Beginning of year 76,499,494 74,774,119
-------------- --------------
End of year - (including undistributed net investment
income of $8,124 and $23,476, respectively) $ 99,318,700 $ 76,499,494
============== ==============
Capital share activity:
Institutional Shares
Sold 1,446,450 892,247
Reinvested 472,113 409,635
Redeemed (486,114) (1,043,163)
-------------- --------------
Net increase in shares outstanding 1,432,449 258,719
Shares outstanding, beginning of year 7,454,249 7,195,530
-------------- --------------
Shares outstanding, end of year 8,886,698 7,454,249
============== ==============
Service Group Shares
Sold 402,367 --
Reinvested 9,229 --
Redeemed (128,286) --
-------------- --------------
Net increase in shares outstanding 283,310 --
Shares outstanding, beginning of year -- --
-------------- --------------
Shares outstanding, end of year 283,310 --
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND - Institutional Shares
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
<CAPTION>
Years Ended March 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $10.26 $10.39 $9.97 $10.15 $10.82
------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.58 0.68 0.70 0.62 0.55
Net realized and unrealized gains (losses) on investments 0.63 (0.12) 0.41 (0.18) (0.30)
------ ------ ------ ------ ------
Total from investment operations 1.21 0.56 1.11 0.44 0.25
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (0.64) (0.69) (0.69) (0.62) (0.55)
Distributions from net realized gains -- -- -- -- (0.19)
Distributions in excess of net realized gains -- -- -- -- (0.18)
------ ------ ------ ------ ------
Total distributions (0.64) (0.69) (0.69) (0.62) (0.92)
------ ------ ------ ------ ------
Net asset value at end of year $10.83 $10.26 $10.39 $9.97 $10.15
====== ====== ====== ====== ======
Total return 12.06% 5.52% 11.23% 4.56% 2.12%
====== ====== ====== ====== ======
Net assets at end of year (000's) $96,250 $76,499 $74,774 $72,029 $64,029
======= ======= ======= ======= =======
Ratio of gross expenses to average net assets 0.53% 0.53% 0.56% 0.57% 0.60%
Ratio of net expenses to average net assets (a) 0.50% 0.50% 0.53% 0.53% 0.60%
Ratio of net investment income to average net assets 6.06% 6.48% 6.54% 6.28% 5.03%
Portfolio turnover rate 235% 207% 268% 381% 381%
(a) Ratios were determined based on net expenses after reimbursements through
a directed brokerage arrangement for periods after March 31, 1994 (Note 4) and
investment advisory fees waived for the year ended March 31, 1998 (Note 3).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND - Service Group Shares
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout the Period
<CAPTION>
Period
Ended
March 31,
1998 (a)
<S> <C>
Net asset value at beginning of period $10.69
------
Income from investment operations:
Net investment income 0.37
Net realized and unrealized gains on investments 0.08
------
Total from investment operations 0.45
------
Less distributions:
Dividends from net investment income (0.31)
------
Net asset value at end of period $10.83
======
Total return 8.55%(c)
======
Net assets at end of period (000's) $3,069
======
Ratio of gross expenses to average net assets 0.68%(c)
Ratio of net expenses to average net assets (b) 0.65%(c)
Ratio of net investment income to average net assets 5.96%(c)
Portfolio turnover rate 235%
(a) Represents the period from the initial public offering of Service Group
Shares (October 2, 1997) through March 31, 1998.
(b) Ratios were determined based on net expenses after reimbursements through
a directed brokerage arrangement (Note 4) and investment advisory fees waived
for the year ended March 31, 1998 (Note 3).
(c) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
Par Value Value
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 20.9%
U.S. Treasury Bonds - 9.9%
$ 7,535,000 8.50%, due 02/15/2020 $ 9,789,623
---------------
U.S. Treasury Notes - 8.6%
8,380,000 6.50%, due 05/31/2001 8,582,964
---------------
U.S. Treasury Inflation-Protection Notes - 2.4%
1,600,000 3.625%, due 07/15/2002 1,598,288
760,000 3.375%, due 01/15/2007 751,557
---------------
2,349,845
---------------
Total U.S. Treasury Obligations (Cost $19,648,349) $ 20,722,432
---------------
MORTGAGE-BACKED SECURITIES - 36.2%
Federal Home Loan Mortgage Corporation - 6.0%
$ 975,000 Pool #1472, 6.75%, due 05/15/2006 $ 986,573
1,118,285 Pool #1561-ZB, 6.00%, due 08/15/2006 1,118,285
825,000 Pool #1197-H, 6.75%, due 02/15/2007 839,437
1,000,000 Pool #1221-I, 7.00%, due 03/15/2007 1,018,750
825,000 Pool #1655-HB, 6.50%, due 10/15/2008 831,955
1,246,864 Pool #C80393, 6.00%, due 03/15/2026 1,205,406
---------------
6,000,406
---------------
Federal National Mortgage Association - 9.7%
817,497 Pool #313443, 6.775%, due 04/01/2004 839,467
1,191,744 Pool #375139, 7.13% due 05/01/2004 1,245,744
1,467,421 Pool #375299, 6.81%, due 08/01/2004 1,512,361
601,498 Pool #73061, 8.66%, due 01/01/2005 667,005
626,778 Pool #73126, 7.00%, due 07/01/2005 649,687
603,222 Series #92-61-ZB, 7.50%, due 05/25/2007 640,923
765,000 Series #92-179-H, 7.00%, due 09/01/2007 785,081
548,352 Pool #375538, 6.70%, due 11/01/2007 564,631
750,000 Series #98-M3, 6.45%, due 01/01/2011 747,422
1,100,000 Series #97-M3, 7.20%, adjustable rate, due 08/17/2018 1,162,219
746,312 Series #G92-44-Z, 8.00%, due 07/25/2022 811,846
---------------
9,626,386
---------------
<CAPTION>
Par Value Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES - Continued
Government National Mortgage Association - 11.1%
$ 80,114 Pool #223997, 8.85%, due 05/15/2018 $ 86,382
607,105 Pool #224002, 8.85%, due 07/15/2018 654,599
398,317 Pool #333658, 7.50%, due 01/15/2023 409,402
859,923 Pool #342526, 7.50%, due 02/15/2023 883,855
995,361 Pool #349314, 7.50%, due 02/15/2023 1,023,062
733,877 Pool #352143, 7.50%, due 07/15/2023 754,300
726,327 Pool #346772, 7.50%, due 09/15/2023 746,540
755,992 Pool #372822, 7.50%, due 11/15/2023 777,032
999,619 Pool #359451, 7.50%, due 12/15/2023 1,027,438
415,962 Pool #354831, 7.50%, due 06/15/2024 427,018
860,611 Pool #8459, 7.00%, adjustable rate, due 07/20/2024 882,393
604,064 Pool #28484, 7.00%, adjustable rate, due 08/20/2024 619,262
519,837 Pool #8482, 7.00%, adjustable rate, due 08/20/2024 532,916
739,638 Pool #8542, 7.00%, adjustable rate, due 11/20/2024 757,323
486,214 Pool #441273, 8.00%, due 10/15/2026 503,460
900,000 TBA, 8.00%, due 04/15/2028 932,062
---------------
11,017,044
---------------
Student Loan Marketing Association - 3.3%
499,735 Series #96-2-A1, 5.678%, adjustable rate, due 10/25/2004 498,174
2,468,492 Series #97-2-A1, 5.704%, adjustable rate, due 10/25/2005 2,460,778
331,516 Series #97-3-A1, 5.884%, adjustable rate, due 04/25/2006 330,791
---------------
3,289,743
---------------
Other Mortgage-Backed Securities - 6.1%
Deutsche Mortgage and Asset Receiving Corporation #98-C1-A2,
1,915,000 6.538%, due 06/01/2031 1,928,764
First Union-Lehman Brothers Commercial Mortgage Trust #97-C2-A1,
825,869 6.479%, due 03/01/2004 832,579
LB Commercial Conduit Mortgage Trust #98-C1-A3,
975,000 6.48%, due 02/01/2030 978,656
Lehman Brothers Mortgage Trust #91-2-A1,
380,286 8.00%, due 03/20/1999 383,257
Morgan Stanley Capital I #98-WF1-A2,
1,065,000 6.55%, due 12/15/2007 1,076,482
Resolution Funding Mortgage Security I #94-S12-A2,
800,000 6.50%, due 04/25/2009 801,248
---------------
6,000,986
---------------
Total Mortgage-Backed Securities (Cost $35,765,832) $ 35,934,565
---------------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
ASSET-BACKED SECURITIES - 5.6%
Bank America Manufactured Housing Contract #96-1-A6,
$ 650,000 8.00%, due 10/10/2026 $ 696,995
CIT RV Trust #95-B-A1,
242,235 6.50%, due 04/15/2011 243,824
CIT RV Trust #96-A-A1,
613,215 5.40%, due 12/15/2011 607,273
Fleetwood Credit Corporation Grantor Trust #94-A-A,
461,658 4.70%, due 07/15/2009 453,432
Fleetwood Credit Corporation Grantor Trust #96-A-A,
455,884 6.75%, due 10/15/2011 459,586
Green Tree Financial Corporation, #97-2-A6,
775,000 7.24%, due 06/15/2028 800,908
Green Tree Financial Corporation, #97-2-A7,
700,000 7.62%, due 04/15/2028 726,467
Green Tree Financial Corporation, #98-A,
1,550,000 6.18%, due 04/01/2018 1,546,590
--------------
Total Asset-Backed Securities (Cost $5,459,617) $ 5,535,075
--------------
CORPORATE BONDS - 24.4%
Allmerica Financial Corporation,
$ 390,000 7.625%, due 10/15/2025 $ 411,575
Associates Corporation,
700,000 5.75%, due 10/15/2003 684,775
Avalon Properties, Inc.,
485,000 6.625%, due 01/15/2005 479,573
Baltimore Gas & Electric Corporation,
1,000,000 8.90%, due 07/01/1998 1,007,470
Bank of New York,
610,000 6.50%, due 12/01/2003 617,265
Beneficial Corporation Medium Term Notes,
800,000 6.33%, due 10/09/2001 801,952
BRE Properties, Inc.,
425,000 7.125%, due 02/15/2013 422,450
Chrysler Corporation,
340,000 7.45%, due 03/01/2027 364,970
Coca-Cola Enterprises,
440,000 6.75%, due 01/15/2038 434,500
Dayton Hudson Corporation,
370,000 6.75%, due 01/01/2028 363,862
Dominion Capital Trust,
310,000 7.83%, due 12/01/2027 316,808
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
CORPORATE BONDS - Continued
Duke Realty Limited Partnership,
$ 470,000 7.05%, due 03/01/2016 $ 473,351
Equity Residential Properties Trust,
875,000 6.55%, due 11/15/2001 877,153
Firstar Bank Milwaukee,
2,450,000 6.25%, due 12/01/2002 2,461,638
Ford Motor Company,
275,000 8.875%, due 01/15/2022 336,465
Ford Motor Credit Medium Term Notes,
950,000 7.45%, due 04/13/2000 975,498
General Motors,
235,000 8.80%, due 03/01/2021 286,265
General Motors Acceptance Corporation Medium Term Notes,
1,400,000 6.80%, due 04/17/2001 1,425,886
IBM Corporation,
420,000 6.50%, due 01/15/2028 411,247
International Lease Finance Medium Term Notes,
1,315,000 6.42%, due 09/11/2000 1,325,112
JDN Realty Corporation,
375,000 6.95%, due 08/01/2007 372,011
JP Realty, Inc.,
485,000 7.29%, due 03/11/2008 487,692
Lehman Brothers Holdings,
925,000 6.40%, due 12/27/1999 929,227
May Department Stores Company,
275,000 7.45%, due 09/15/2011 299,107
Mellon Financial Company,
915,000 7.625%, due 11/15/1999 935,505
Morgan Stanley Group,
500,000 6.09%, due 03/09/2011 499,975
National City Corporation,
900,000 7.20%, due 05/15/2005 942,444
Norfolk Southern Corporation,
370,000 7.80%, due 05/15/2027 413,960
Norwest Financial, Inc.,
450,000 6.05%, due 11/19/1999 451,138
SBC Communications, Inc.,
600,000 6.625%, due 11/01/2009 614,034
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
CORPORATE BONDS - Continued
Sears Roebuck & Company,
$ 750,000 6.86%, due 07/03/2001 $ 765,525
750,000 6.99%, due 09/30/2002 770,947
Spieker Properties LP,
370,000 6.75%, due 01/15/2008 364,361
Suntrust Bank,
340,000 6.125%, due 02/15/2004 337,175
Textron, Inc.,
510,000 6.625%, due 11/15/2007 518,399
TRW Inc.,
425,000 6.25%, due 01/15/2010 411,816
Union Camp Corporation,
325,000 6.50%, due 11/15/2007 326,905
United Parcel Service of America, Inc.,
300,000 8.375%, due 04/01/2030 368,007
--------------
Total Corporate Bonds (Cost $24,078,849) $ 24,286,043
--------------
Shares
CLOSED-END MUTUAL FUNDS - 7.2%
37,400 Blackrock 1999 Term Trust, Inc. $ 352,963
180,600 Blackrock 2001 Term Trust, Inc. 1,568,963
1,200 Blackrock Broad Investment Grade 2009 Term Trust, Inc. 15,225
53,900 Blackrock Investment Quality Term Trust, Inc. 454,781
10,000 Blackrock North American Government Income Trust 106,250
125,300 Blackrock Strategic Term Trust, Inc. 1,080,713
12,000 Dean Witter Government Income Trust 103,500
7,400 Excelsior Income Shares, Inc. 126,262
202,200 Hyperion 1999 Term Trust, Inc. 1,415,400
201,000 Hyperion 2002 Term Trust, Inc. 1,608,000
4,100 Hyperion 2005 Investment Grade Opportunity Term Trust, Inc. 34,337
16,400 Income Opportunities Fund, Inc. - 1999 156,825
28,900 MFS Government Markets Income Trust 193,269
--------------
Total Closed-End Funds (Cost $6,677,783) $ 7,216,488
--------------
Total Investments at Value (Cost $91,630,430) - 94.3% $ 93,694,603
--------------
<PAGE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (a) - 6.8%
Star Bank, N.A., 5.25%, dated 03/31/1998, due 04/01/1998
$ 6,753,000 repurchase proceeds $6,753,985 (Cost $6,753,000) $ 6,753,000
---------------
Total Investments and Repurchase Agreements
at Value - 101.1% $ 100,447,603
Liabilities in Excess of Other Assets - (1.1)% (1,128,903)
---------------
Net Assets - 100.0% $ 99,318,700
===============
(a) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA
II, Pool #8421, 7.375%, due 05/20/24; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/22; and $1,120,000 GNMA II, Pool #8359, 7.00% due 01/20/24. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985. The
Fund's pro-rata interest in the collateral at March 31, 1998 was $6,947,756.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN BOND FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Bond Fund (the Fund) is a no-load, diversified series of the
Williamsburg Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Trust was organized as a Massachusetts business trust on July 18, 1988. The Fund
began operations on December 13, 1990.
The Fund offers two classes of shares: Service Group Shares, sold subjuect to a
12b-1 fee up to 0.15% of average daily net assets, and Institutional Shares,
sold without a 12b-1 fee. Each Service Group and Institutional Share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except thta (i) Service Group Shares bear the expenses of the
distribution fees, which will cause Service Group Shares to have a higher
expense ratio and to pay lower dividends than Institutional Shares; (ii) certain
class specific expenses will be borne solely by the class to which such expenses
are attributable; and (iii) each class has exclusive voting rights with respect
to matters affecting only that class.
The Fund's investment objective is to maximize total return, consisting of
current income and capital appreciation (both realized and unrealized),
consistent with the preservation of capital through active management of
investment grade fixed income securities.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national exchange are valued
based upon the closing price on the principal exchange where the security is
traded. It is expected that fixed income securities of the Fund will ordinarily
be traded on the over-the-counter market. When market quotations are not readily
available, securities may be valued on the basis of prices provided by an
independent pricing service. If a pricing service cannot provide a valuation,
securities will be valued in good faith at fair market value using methods
consistent with those determined by the Board of Trustees.
Repurchase agreements -- The Fund generally enters into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market. At the time the Fund enters
into the joint repurchase agreement, the seller agrees that the value of the
underlying securities, including accrued interest, will at all times be equal to
or exceed the face amount of the repurchase agreement. In addition, the Fund
actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each class of shares of the
Fund is calculated daily by dividing the total value of the Fund's assets
attributable to that class, less liabilities attributable to that class, by the
number of shares of that class outstanding. The offering price and redemption
price per share of each class of shares of the Fund is equal to the net asset
value per share.
<PAGE>
Investment income and distributions to shareholders -- Dividend income is
recorded on the ex-dividend date. Interest income is accrued as earned.
Discounts and premiums on securities purchased are amortized in accordance with
income tax regulations. Dividends arising from net investment income are
declared and paid quarterly to shareholders of the Fund. Net realized short-term
capital gains, if any, may be distributed throughout the year and net realized
long-term capital gains, if any, are distributed at least once each year. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles.
Allocations between classes -- Investment income earned, realized capital gains
and losses, and unrealized appreciation and depreciation for the Fund are
allocated daily to each class of shares based upon its proportionate share of
total net assets of the Fund. Class specific expenses are charged directly to
the class incurring the expense. Common expenses which are not attributable to a
specific class are allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund.
Security transactions -- Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
Securities traded on a "to-be-announced" basis -- The Fund occasionally trades
securities on a "to-be-announced" (TBA) basis. In a TBA transaction, the Fund
has committed to purchase securities for which all specific information is not
yet known at the time of the trade, particularly the face amount in
mortgage-backed securities transactions. Securities purchased on a TBA basis are
not settled until they are delivered to the Fund, normally 15 to 45 days later.
These transactions are subject to market fluctuations and their current value is
determined in the same manner as for other portfolio securities.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting priciples requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
<PAGE>
The following information is based upon the Federal income tax cost of
portfolio investments of $91,682,263 as of March 31, 1998:
Gross unrealized appreciation....................................$ 2,271,814
Gross unrealized depreciation.......................................(259,474)
----------
Net unrealized appreciation......................................$ 2,012,340
===========
The difference between the Federal income tax cost of portfolio investments and
financial statement cost is due to certain timing differences in the recognition
of capital losses under generally accepted accounting principles and income tax
regulations.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $204,131,539 and $194,635,139, respectively.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Tattersall Advisory Group, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .375% of its
average daily net assets. The Adviser currently intends to limit the total
operating expenses of the Institutional Shares of the Fund to .50% of its
average daily net assets, and to limit the total operating expenses of the
Service Group Shares of the Fund to .65% of its average daily net assets;
accordingly, the Adviser waived $16,111 of its investment advisory fee for the
year ended March 31, 1998. Certain trustees and officers of the Trust are also
officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .075% of its average daily net assets up to $200
million and .05% of such net assets in excess of $200 million, subject to a
$2,000 minimum monthly fee, plus a surcharge of $1,000 per month. In addition,
the Fund pays out-of-pocket expenses including, but not limited to, postage,
supplies and cost of pricing the Fund's portfolio securities. Certain officers
of the Trust are also officers of CFS.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the Plan) with respect to Service
Group Shares pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that
the Fund may incur certain costs related to the distribution of Service Group
Shares, not to exceed 0.15% of average daily net assets applicable to Service
Group Shares. For the period ended March 31, 1998, Service Group Shares incurred
$2,672 of distribution expenses under the Plan.
<PAGE>
4. DIRECTED BROKERAGE ARRANGEMENT
In order to reduce the total operating expenses of the Fund, a portion of the
Fund's custodian fees have been paid through an arrangement with a third-party
broker-dealer who is compensated through security trades. Expenses reimbursed
through the directed brokerage arrangement totaled $9,678 for the year ended
March 31, 1998.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Bond Fund (a series of The Williamsburg Investment Trust),
including the portfolio of investments, as of March 31, 1998, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Bond Fund as of March 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
----------------------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
------------------ -------------
Tattersall Advisory Group, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
MANAGEMENT AND DISCUSSION AND ANALYSIS
March 31, 1998
PERFORMANCE OF THE JAMESTOWN SHORT TERM BOND FUND
FISCAL YEAR ENDED MARCH 31, 1998
There is something about the beginning of a year that encourages thoughts of a
slowdown. It could be that after the normal Christmas retail frenzy, consumers
are expected to be "spent out." Or it could be that during the inclement weather
of the winter months, consumers are supposed to stay at home. Not only did they
not stay at home, but they were out buying homes! During the so-called slow
months, housing activity soared in response to the unbeatable combination of
unusually mild weather and low interest rates. Consumer and business spending
more than offset the Asian-induced weakness from the trade sector so that the
economy is on track to turn in a 1st quarter performance that will most likely
exceed the 3% level. Activity in Europe was also brisk, with inflation as
elusive there as it is in the U.S. Interest rates fell for all G-7 countries
with rates in Japan and the U.S. falling the least. With short term interest
rates falling slightly for the quarter of 1998, the bond market's performance
was dominated by coupon return. The Jamestown Short Term Bond Fund provided a
return of 5.76% for the fiscal year ended March 31, 1998. The 3-Month Treasury
Bill Index returned 5.35%, while the Merrill Lynch 1-3 Year Treasury Index
returned 7.51% for the same period.
With no clear trend in the direction of rates, duration strategy for us or for
any manager was a non-event as sectors saw all of the action. Battered by huge
new issuance and Asian credit concerns, corporates started the year with
historically attractive yield spreads versus Treasuries, reached a peak in late
January, before narrowing again with the help of decent earnings reports and a
strong stock market. Our strategy was to be overweighted in shorter liquid
securities as well as corporates and mortgages. The latter sector was initially
hurt by the acceleration in prepayment speeds, an event for which we had
prepared the portfolio, but began to outperform as low interest rate volatility
helped to calm investors' concerns. The asset-backed market outperformed
Treasuries, which was quite an accomplishment considering the huge amount of new
issues the market was forced to digest during the quarter.
<PAGE>
LOOKING AHEAD
We expect the market to establish a trend before this year ends, and that trend
will most likely be to lower rates. Between now and then, however, the market
will stay on edge purely from inflation worries associated with a strong
economy. The Federal Reserve should remain firmly on hold. The risk to bond
holders is that domestic demand remains too strong and the effect of the Asian
slowdown too weak for the Federal Reserve to pursue price stability with
unchanged interest rates. The latest unemployment report should help to mitigate
this risk, and we expect to extend durations if more weakness materializes.
As opposed to this time last year when we were frustrated by the lack of
opportunity in sectors, we are energized by what we see this year. We start the
second quarter very liquid, with a moderate weighting in corporates. We will
watch carefully the trend of corporate earnings, realizing that the stock
market, and thus, corporate spreads are vulnerable to negative surprises. We are
currently looking to add to our mortgage position with an emphasis on those
securities that are protected from prepayments. This strategy has worked well
since the end of last year, and we expect it to continue to work well with call
protection priced as cheaply as it is. Asset-backed securities provide another
cheap source of prepayment protection and we plan to remain overweighted in this
sector as well. Finally, we expect closed-end funds to continue to provide a
steady source of outperformance as prices converge to net asset values.
Although interest rates are essentially unchanged so far this year, there
certainly have been opportunities to outperform the bond market. We not only
expect these opportunities to continue, but we intend to fully participate in
all of them.
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown
Short Term Bond Fund, the Merrill Lynch 1-3 Year Treasury Index, the 90-Day
Treasury Bill Index and the Consumer Price Index.
MERRILL LYNCH 1-3 YEAR TREASURY INDEX: THE JAMESTOWN SHORT TERM
BOND FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
01/31/92 10,000 01/31/92 10,000
03/31/92 0.31% 10,031 03/31/92 0.25% 10,025
06/30/92 2.88% 10,319 06/30/92 2.03% 10,229
09/30/92 2.98% 10,627 09/30/92 2.14% 10,448
12/31/92 0.18% 10,646 12/31/92 0.15% 10,463
03/31/93 2.21% 10,882 03/31/93 1.95% 10,667
06/30/93 1.08% 10,999 06/30/93 1.27% 10,803
09/30/93 1.44% 11,157 09/30/93 1.34% 10,947
12/31/93 0.59% 11,222 12/31/93 0.61% 11,015
03/31/94 -0.50% 11,166 03/31/94 -0.48% 10,962
06/30/94 0.08% 11,176 06/30/94 0.23% 10,987
09/30/94 0.99% 11,286 09/30/94 0.93% 11,090
12/31/94 0.00% 11,286 12/31/94 -0.05% 11,084
03/31/95 3.36% 11,665 03/31/95 3.38% 11,458
06/30/95 3.21% 12,039 06/30/95 3.01% 11,803
09/30/95 1.50% 12,220 09/30/95 1.33% 11,960
12/31/95 2.52% 12,528 12/31/95 2.62% 12,273
03/31/96 0.33% 12,570 03/31/96 0.25% 12,304
06/30/96 1.01% 12,696 06/30/96 0.77% 12,399
09/30/96 1.65% 12,906 09/30/96 1.56% 12,592
12/31/96 1.90% 13,151 12/31/96 1.56% 12,788
03/31/97 0.66% 13,239 03/31/97 1.04% 12,920
06/30/97 2.20% 13,530 06/30/97 1.56% 13,122
09/30/97 1.96% 13,795 09/30/97 1.46% 13,313
12/31/97 1.68% 14,027 12/31/97 1.35% 13,493
03/31/98 1.47% 14,233 03/31/98 1.27% 13,665
CONSUMER PRICE INDEX: 90-DAY TREASURY BILL INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
01/31/92 10,000 01/31/92 10,000
03/31/92 0.40% 10,040 03/31/92 0.64% 10,064
06/30/92 0.80% 10,120 06/30/92 1.10% 10,174
09/30/92 0.70% 10,191 09/30/92 1.01% 10,277
12/31/92 0.80% 10,273 12/31/92 0.77% 10,357
03/31/93 0.90% 10,365 03/31/93 0.78% 10,437
06/30/93 0.60% 10,427 06/30/93 0.77% 10,518
09/30/93 0.40% 10,469 09/30/93 0.82% 10,604
12/31/93 0.70% 10,542 12/31/93 0.78% 10,687
03/31/94 0.50% 10,595 03/31/94 0.77% 10,768
06/30/94 0.60% 10,659 06/30/94 0.96% 10,872
09/30/94 0.90% 10,755 09/30/94 1.08% 10,989
12/31/94 0.60% 10,819 12/31/94 1.33% 11,135
03/31/95 0.80% 10,906 03/31/95 1.50% 11,302
06/30/95 0.90% 11,004 06/30/95 1.50% 11,472
09/30/95 0.40% 11,048 09/30/95 1.42% 11,635
12/31/95 0.50% 11,104 12/31/95 1.47% 11,806
03/31/96 0.80% 11,193 03/31/96 1.23% 11,951
06/30/96 1.10% 11,316 06/30/96 1.29% 12,105
09/30/96 0.44% 11,366 09/30/96 1.38% 12,273
12/31/96 0.82% 11,460 12/31/96 1.30% 12,433
03/31/97 0.69% 11,539 03/31/97 1.28% 12,591
06/30/97 0.19% 11,561 06/30/97 1.36% 12,763
09/30/97 0.44% 11,611 09/30/97 1.34% 12,934
12/31/97 0.62% 11,683 12/31/97 1.25% 13,096
03/31/98 0.12% 11,697 03/31/98 1.30% 13,266
The Jamestown Short Term Bond Fund Average Annual Total Returns
1 Year 5 Years Since Inception*
5.76% 5.08% 5.16%
*Initial public offering of shares was January 21, 1992.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 8,930,770
============
At value (Note 1) $ 8,927,938
Investments in repurchase agreements (Note 1) 1,224,000
Cash 799
Principal paydowns receivable 6,681
Interest receivable 51,519
Due from Adviser (Note 3) 4,206
Other assets 251
------------
TOTAL ASSETS 10,215,394
------------
LIABILITIES
Accrued administration fees (Note 3) 2,000
Other accrued expenses 1,530
------------
TOTAL LIABILITIES 3,530
------------
NET ASSETS $ 10,211,864
============
Net assets consist of:
Paid-in capital $ 10,805,414
Accumulated net realized losses from security transactions (592,016)
Undistributed net investment income 1,298
Net unrealized depreciation on investments (2,832)
------------
Net assets $ 10,211,864
============
Shares of beneficial interest outstanding
(unlimited number of shares
authorized, no par value) 1,062,311
============
Net asset value, offering price and redemption price
per share (Note 1) $ 9.61
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1998
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest $ 616,998
---------
EXPENSES
Investment advisory fees (Note 3) 37,708
Administration fees (Note 3) 24,000
Professional fees 12,496
Trustees' fees and expenses 5,405
Pricing costs 4,809
Custodian fees 3,600
Postage and supplies 2,080
Printing of shareholder reports 1,859
Registration fees 1,464
Other expenses 1,474
---------
TOTAL EXPENSES 94,895
Fees waived and expenses reimbursed by the Adviser (Note 3) (44,617)
---------
NET EXPENSES 50,278
---------
NET INVESTMENT INCOME 566,720
---------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions (45,768)
Net change in unrealized appreciation/depreciation on investments 48,104
---------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 2,336
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 569,056
=========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 566,720 $ 581,834
Net realized losses from security transactions (45,768) (101,843)
Net change in unrealized appreciation/depreciation
on investments 48,104 (3,365)
------------- ------------
Net increase in net assets from operations 569,056 476,626
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (568,054) (582,861)
------------- ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 2,162,478 2,203,737
Net asset value of shares issued in reinvestment
of distributions to shareholders 568,054 582,861
Payments for shares redeemed (2,444,148) (2,181,641)
------------- ------------
Net increase in net assets from capital share transactions 286,384 604,957
------------- ------------
TOTAL INCREASE IN NET ASSETS 287,386 498,722
NET ASSETS:
Beginning of year 9,924,478 9,425,756
------------- ------------
End of year - (including undistributed net investment
income of $1,298 and $2,632, respectively) $ 10,211,864 $ 9,924,478
============= ============
Capital share activity:
Sold 223,127 226,810
Reinvested 59,049 60,494
Redeemed (252,774) (224,329)
------------- ------------
Net increase in shares outstanding 29,402 62,975
Shares outstanding, beginning of year 1,032,909 969,934
------------- ------------
Shares outstanding, end of year 1,062,311 1,032,909
============= ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
<CAPTION>
Years Ended March 31,
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
Net asset value at beginning of year $9.61 $9.72 $9.64 $9.82 $10.07
------- ------ ------ ------- -------
Income from investment operations:
Net investment income 0.54 0.58 0.62 0.60 0.51
Net realized and unrealized gains (losses)
on investments 0.00 (0.11) 0.08 (0.17) (0.23)
------- ------ ------ ------- -------
Total from investment operations 0.54 0.47 0.70 0.43 0.28
------- ------ ------ ------- -------
Less distributions:
Dividends from net investment income (0.54) (0.58) (0.62) (0.61) (0.51)
Distributions from net realized gains -- -- -- -- (0.02)
------- ------ ------ ------- -------
Total distributions (0.54) (0.58) (0.62) (0.61) (0.53)
------- ------ ------ ------- -------
Net asset value at end of year $9.61 $9.61 $9.72 $9.64 $9.82
======= ====== ====== ======= =======
Total return 5.76% 5.01% 7.38% 4.53% 2.76%
======= ====== ====== ======= =======
Net assets at end of year (000's) $10,212 $9,924 $9,426 $14,122 $18,715
======= ====== ====== ======= =======
Ratio of net expenses to average net assets (a) 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to average net assets 5.64% 5.96% 6.27% 6.04% 5.22%
Portfolio turnover rate 109% 62% 157% 144% 324%
(a) Absent investment advisory fees waived and expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been 0.95%,
0.94%, 0.85%, 0.85%, and 0.81% for the years ended March 31, 1998, 1997, 1996,
1995, and 1994, respectively (Note 3).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
Par Value Value
<S> <C> <C>
COMMERCIAL PAPER - 39.8%
$ 400,000 American Express Company, due 06/30/1998 $ 394,550
400,000 American General, due 07/07/1998 394,072
400,000 E. I. DuPont de Nemours & Company, due 08/13/1998 391,952
425,000 Household Finance, due 05/14/1998 422,269
400,000 John Deere Capital Corporation, due 06/24/1998 394,904
400,000 Merrill Lynch, due 07/30/1998 392,707
400,000 Procter & Gamble Company, due 04/09/1998 399,500
425,000 Prudential Funding Corporation, due 04/17/1998 423,950
425,000 Stanley Works Corporation, due 05/15/1998 422,179
425,000 Walt Disney Company, due 04/29/1998 423,235
---------------
Total Commercial Paper (Cost $4,059,318) $ 4,059,318
---------------
U.S. TREASURY AND AGENCY OBLIGATIONS - 6.4%
U.S. Treasury Notes - 0.6%
$ 50,000 5.125%, due 04/30/1998 $ 49,985
10,000 6.50%, due 05/31/2001 10,242
---------------
60,227
---------------
U.S. Treasury Inflation-Protection Notes - 1.9%
200,000 3.625%, due 07/15/2002 199,785
---------------
Federal National Mortgage Association - 3.9%
400,000 due 04/22/1998 398,704
---------------
Total U.S. Treasury and Agency Obligations (Cost $659,303) $ 658,716
---------------
MORTGAGE-BACKED SECURITIES - 16.9%
Federal Home Loan Mortgage Corporation - 1.3%
$ 100,024 Pool #1272-D, 7.50%, due 11/15/2005 $ 100,805
36,975 Pool #162-E, 7.00%, due 02/15/2020 36,905
---------------
137,710
---------------
Federal National Mortgage Association - 3.5%
141,909 Pool #124029, 8.00%, due 12/01/2002 144,256
210,000 Series #94-13-PE, 5.8%, due 12/25/2006 208,688
---------------
352,944
---------------
Government National Mortgage Association - 2.3%
231,221 Pool #8484, 7.00%, adjustable rate, due 08/20/2024 237,038
---------------
Student Loan Marketing Association - 4.3%
438,453 Series #97-2-A1, 5.704%, adjustable rate, due 10/25/2005 437,083
---------------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES - Continued
Other Mortgage-Backed Securities - 5.5%
Lehman Brothers Mortgage Trust #91-2-A1,
$ 241,512 8.00%, due 03/20/1999 $ 243,399
GE Capital Mortgage Services, Inc. #93-4A-A1,
88,720 6.45%, adjustable rate, due 03/25/2023 88,914
GE Capital Mortgage Services, Inc. #94-2-A4,
230,000 6.00%, due 01/25/2009 228,850
---------------
561,163
---------------
Total Mortgage-Backed Securities (Cost $1,724,470) $ 1,725,938
---------------
ASSET-BACKED SECURITIES - 6.9%
CIT RV Trust #96-A-A1,
$ 229,289 5.40%, due 12/15/2011 $ 227,068
Fleetwood Credit Corp. Grantor Trust #97-B-A,
237,075 6.40%, due 05/15/2013 237,815
Premier Auto Trust #95-1-A6,
238,346 8.05%, due 04/04/2000 240,281
---------------
Total Asset-Backed Securities (Cost $705,679) $ 705,164
---------------
CORPORATE BONDS - 17.4%
Caterpillar Financial, Inc.,
$ 400,000 5.81%, due 07/05/2000 $ 398,964
Enron Corporation,
290,000 6.45%, due 11/15/2001 291,119
International Bank Reconstruction and Development,
265,000 5.10%, due 09/15/1999 262,627
International Lease Finance Medium Term Notes,
245,000 6.55%, due 09/15/2000 247,600
Norwest Financial Corporation,
400,000 6.05%, due 11/19/1999 401,012
Xerox Corporation Medium Term Notes,
175,000 7.13%, due 04/30/1999 177,480
---------------
Total Corporate Bonds (Cost $1,782,000) $ 1,778,802
---------------
Total Investments at Value (Cost $8,930,770) - 87.4% $ 8,927,938
---------------
<PAGE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (a) - 12.0%
$ 1,224,000 Star Bank, N.A., 5.25%, dated 03/31/1998, due 04/01/1998
repurchase proceeds $1,224,179 (Cost $1,224,000) $ 1,224,000
---------------
Total Investments and Repurchase Agreements
at Value - 99.4% $ 10,151,938
Other Assets in Excess of Liabilities - 0.6% 59,926
---------------
Net Assets - 100.0% $ 10,211,864
===============
(a) Joint repurchase agreement is fully collaterized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/2024, $14,335,000 GNMA II; Pool #8932 , 7.00%, due
03/20/2022; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/2024. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985. The
Fund's pro-rata interest in the collateral at March 31, 1998 was $1,244,806.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Short Term Bond Fund (the Fund) is a no-load, diversified series
of the Williamsburg Investment Trust (the Trust), an open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Trust was organized as a Massachusetts business trust on July 18,
1988. The Fund began operations on January 21, 1992.
The Fund's investment objective is to maximize total return, consisting of
current income and capital appreciation (both realized and unrealized),
consistent with the preservation of capital through active management of high
quality short-term fixed income securities.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national exchange are valued
based upon the closing price on the principal exchange where the security is
traded. It is expected that securities of the Fund will ordinarily be traded on
the over-the-counter market. When market quotations are not readily available,
securities may be valued on the basis of prices provided by an independent
pricing service. If a pricing service cannot provide a valuation, securities
will be valued in good faith at fair market value using methods consistent with
those determined by the Board of Trustees.
Repurchase agreements -- The Fund generally enters into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market. At the time the Fund enters
into the joint repurchase agreement, the seller agrees that the value of the
underlying securities, including accrued interest, will at all times be equal to
or exceed the face amount of the repurchase agreement. In addition, the Fund
actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Discounts and premiums on securities purchased are amortized
in accordance with income tax regulations. Dividends arising from net investment
income are declared and paid quarterly to shareholders of the Fund. Net realized
short-term capital gains, if any, may be distributed throughout the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income distributions and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles.
Security transactions -- Security transactions are accounted for on trade
date. Cost of securities sold is determined on a specific identification basis.
<PAGE>
Securities traded on a "to-be-announced" basis -- The Fund occasionally trades
securities on a "to-be-announced" (TBA) basis. In a TBA transaction, the Fund
has committed to purchase securities for which all specific information is not
yet known at the time of the trade, particularly the face amount in
mortgage-backed securities transactions. Securities purchased on a TBA basis are
not settled until they are delivered to the Fund, normally 15 to 45 days later.
These transactions are subject to market fluctuations and their current value is
determined in the same manner as for other portfolio securities.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of $8,930,770 as of March 31, 1998:
Gross unrealized appreciation.......................................$ 12,111
Gross unrealized depreciation....................................... (14,943)
--------
Net unrealized depreciation.........................................$ (2,832)
=========
The difference between the Federal income tax cost of portfolio investments and
financial statement cost is due to certain timing differences in the recognition
of capital losses under generally accepted accounting principles and income tax
regulations. As if March 31, 1998, the Fund had capital loss carryforwards for
federal income tax purposes of $586,098 which expire on March 31, 2005. In
addition, the Fund had net realized capital losses of $5,918 during the period
from November 1, 1997 through March 31, 1998, which are treated for federal
income tax purposes as arising during the Fund's tax year ending March 31, 1999.
These capital loss carryforwards and "post-October" losses may be utilized in
the current and future years to offset net realized capital gains prior to
distributing such gains to shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $4,987,978 and $6,352,933, respectively.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Tattersall Advisory Group, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .375% of its
average daily net assets. The Adviser currently intends to limit the total
operating expenses of the Fund to .50% of its average daily net assets;
accordingly, the Adviser waived its entire investment advisory fee of $37,708
and reimbursed the Fund for $6,909 of other operating expenses for the year
ended March 31, 1998. Certain trustees and officers of the Trust are also
officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .075% of its average daily net assets up to $200
million and .05% of such net assets in excess of $200 million, subject to a
$2,000 minimum monthly fee. In addition, the Fund pays out-of-pocket expenses
including, but not limited to, postage, supplies and cost of pricing the Fund's
portfolio securities. Certain officers of the Trust are also officers of CFS.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Short Term Bond Fund (a series of The Williamsburg Investment
Trust), including the portfolio of investments, as of March 31, 1998, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Short Term Bond Fund as of March 31, 1998, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
