THE
JAMESTOWN
FUNDS
NO-LOAD FUNDS
PROSPECTUS
AUGUST 1, 1998
REVISED OCTOBER 1, 1998
INVESTMENT ADVISOR
LOWE, BROCKENBROUGH & COMPANY, INC.
RICMOND, VIRGINIA
<PAGE>
PROSPECTUS
August 1, 1998
Revised October 1, 1998
THE JAMESTOWN FUNDS
No-Load Funds
- --------------------------------------------------------------------------------
The investment objectives of THE JAMESTOWN BALANCED FUND are long term growth of
capital and income through investment in a balanced portfolio of equity and
fixed income securities. Capital protection and low volatility are important
investment goals.
The investment objective of THE JAMESTOWN EQUITY FUND is long term growth of
capital through investment in a diversified portfolio composed primarily of
common stocks. Current income is incidental to this objective and may not be
significant.
The investment objective of THE JAMESTOWN INTERNATIONAL EQUITY FUND is to
achieve superior total returns through investment in equity securities of
issuers located outside the United States.
The investment objectives of THE JAMESTOWN TAX EXEMPT VIRGINIA FUND are to
provide current income exempt from federal income taxes and from the personal
income taxes of Virginia, to preserve capital, to limit credit risk and to take
advantage of opportunities to increase income and enhance the value of your
investment.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Company, Inc.
Richmond, Virginia
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown
International Equity Fund and the Jamestown Tax Exempt Virginia Fund (the
"Funds") are NO-LOAD, 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.
A Statement of Additional Information, dated August 1, 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.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Prospectus Summary ........................................................ 2
Synopsis of Costs and Expenses ............................................ 4
Financial Highlights ...................................................... 6
Investment Objectives, Investment Policies and Risk Considerations ........ 10
How to Purchase Shares .................................................... 22
How to Redeem Shares ...................................................... 23
How Net Asset Value is Determined ......................................... 25
Management of the Funds ................................................... 25
Tax Status of Tax Exempt Virginia Fund .................................... 28
Dividends, Distributions, Taxes and Other Information ..................... 30
Appendix A: Description of Municipal Obligations .......................... 33
Appendix B: Factors Affecting Virginia Municipal Obligations .............. 35
Application ............................................................... 37
- --------------------------------------------------------------------------------
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>
PROSPECTUS SUMMARY
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THE FUNDS. The Jamestown Balanced Fund (the "Balanced Fund"), The Jamestown
Equity Fund (the "Equity Fund"), The Jamestown International Equity Fund (the
"International Equity Fund") and The Jamestown Tax Exempt Virginia Fund (the
"Tax Exempt Virginia Fund") are No-Load, 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 investment
objectives and policies. An investor may elect one or more of the Funds to meet
individual investment objectives, and may switch from one Fund to an 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.
INVESTMENT OBJECTIVES. The Balanced Fund's investment objectives are long term
growth of capital and income through investment in a balanced portfolio of
equity and fixed income securities. Capital protection and low volatility are
important investment goals.
The Equity Fund's investment objective is long term growth of capital through
investment in a diversified portfolio composed primarily of common stocks.
Current income is incidental to this objective and may not be significant.
The International Equity Fund's investment objective is to achieve superior
total returns through investment in equity securities of issuers located outside
the United States.
The Tax Exempt Virginia Fund's investment objectives are to provide current
income exempt from federal income taxes and from the personal income taxes of
Virginia, to preserve capital, to limit credit risk and to take advantage of
opportunities to increase income and enhance the value of your investment.
INVESTMENT APPROACH. The percentage of assets of the Balanced Fund invested in
equities and fixed income securities is varied according to the Advisor's
judgment of market and economic conditions. The Advisor attempts to take
advantage of the long term capital growth and income opportunities available in
the securities markets considering the investment goals of capital protection
and low volatility.
The Advisor seeks to achieve the Equity Fund's objective through investment in a
diversified portfolio composed primarily of common stocks. Equity investments
are made primarily for growth, using strong fundamental factors, rankings of
growth/value models and attractive technical and other factors as selection
criteria.
With respect to the International Equity Fund, concentrated positions will be
established in countries and regions that look most attractive. In choosing a
country or region for the portfolio, the Fund will look for a favorable mix of
positive monetary outlook, attractive valuation levels, accelerating corporate
earnings, and a good supply and demand relationship for equities. In general,
the country or region concentration will be further focused on liquid
investments in specific companies where broadly defined value and accelerating
earnings have been identified.
The Advisor's philosophy in managing the Tax Exempt Virginia Fund is to
emphasize a disciplined balance between sector selection and moderate portfolio
duration shifts to enhance income and 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. The Fund intends to concentrate its
investments in "high quality" bonds by maintaining at least 75% of the Fund's
assets in bonds rated A or better. Due to the Fund's controlled duration and
high quality standards, it expects to exhibit less volatility than would mutual
funds with longer average maturities and lower quality portfolios. Prospective
investors should be aware that the net asset value of the shares of the Fund
will change as the general levels of interest rates fluctuate. When interest
rates decline, the value of a portfolio invested at higher yields can be
expected to rise.
2
<PAGE>
Conversely, when interest rates rise, the value of a portfolio invested at lower
yields can be expected to decline. (See "Investment Objectives, Investment
Policies and Risk Considerations.")
INVESTMENT ADVISOR. Lowe, Brockenbrough & Company, Inc. (the "Advisor") serves
as investment advisor to each of the Funds. For its services, the Advisor
receives compensation of 0.65% of the average daily net assets of each of the
Balanced Fund and the Equity Fund; 1.00% of the average daily net assets of the
International Equity Fund; and .40% of the average daily net assets of the Tax
Exempt Virginia Fund. The fees are reduced for the Balanced Fund or the Tax
Exempt Virginia Fund when the assets of the particular Fund exceed $250 million
and are reduced for the Equity Fund when that Fund's assets exceed $500 million.
(See "Management of the Funds.")
SUB-ADVISORS. Oechsle International Advisors, LLC ("Oechsle Advisors") has been
retained as sub-advisor to the International Equity Fund. Oechsle Advisors
receives compensation from the Advisor (not the Fund) in the amount of one-half
of the advisory fee received by the Advisor from the International Equity Fund.
The Advisor has retained Tattersall Advisory Group, Inc. ("Tattersall") to serve
as the investment manager to that portion of the Balanced Fund's portfolio
invested in fixed-income securities. (See "Management of the Funds.")
PURCHASE OF SHARES. 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 any Fund is $5,000. Subsequent
investments must be $500 or more. Shares may be purchased by individuals or
organizations and may be appropriate for use in Tax Sheltered Retirement Plans
and Systematic Withdrawal Plans. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions 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 is distributed monthly, with
respect to the Virginia Tax Exempt Fund, and is distributed quarterly, with
respect to the Balanced Fund, the Equity Fund and the International Equity Fund.
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
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THE JAMESTOWN BALANCED FUND
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
Investment Advisory Fees ........................................ 0.65%
Administrator's Fees ............................................ 0.17%
Other Expenses .................................................. 0.08%
-----
Total Fund Operating Expenses ................................... 0.90%
=====
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
------ ------- ------- --------
$9 $29 $50 $111
THE JAMESTOWN EQUITY FUND
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
Investment Advisory Fees ........................................ 0.65%
Administrator's Fees ............................................ 0.19%
Other Expenses .................................................. 0.09%
-----
Total Fund Operating Expenses ................................... 0.93%
=====
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
------ ------- ------- --------
$9 $30 $51 $114
4
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
Investment Advisory Fees ........................................ 1.00%
Administrator's Fees ............................................ .24%
Other Expenses .................................................. .32%
-----
Total Fund Operating Expenses ................................... 1.56%
=====
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
------ ------- ------- --------
$16 $49 $85 $186
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
Investment Advisory Fees (after waivers) ........................ 0.37%
Administrator's Fees ............................................ 0.16%
Other Expenses .................................................. 0.22%
-----
Total Fund Operating Expenses ................................... 0.75%
=====
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
------ ------- ------- --------
$8 $24 $42 $93
The purpose of the foregoing tables are 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 expenses incurred during the fiscal year ended March 31,
1998. Absent fee waivers by the Advisor, the Tax Exempt Virginia Fund's
investment advisory fees would have been 0.40% of average daily net assets and
total fund operating expenses would have been 0.78% 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 expense ratios of the Balanced Fund and the Equity Fund as a
result of a directed brokerage arrangement.
5
<PAGE>
FINANCIAL HIGHLIGHTS
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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 JAMESTOWN BALANCED FUND
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
July 3,
Years Ended March 31, 1989(a) to
------------------------------------------------------------------------------ March 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.17 $ 14.77 $ 12.76 $ 12.15 $ 12.49 $ 11.52 $ 10.88 $ 10.27 $ 10.16
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income ............. 0.37 0.35 0.36 0.33 0.30 0.31 0.32 0.38 0.25
Net realized and unrealized gains
(losses) on investments ........ 4.31 1.45 2.50 0.90 (0.18) 1.11 0.67 0.63 0.10
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations ..... 4.68 1.80 2.86 1.23 0.12 1.42 0.99 1.01 0.35
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income ......................... (0.37) (0.35) (0.36) (0.33) (0.30) (0.31) (0.31) (0.39) (0.24)
Distributions from net realized
gains .......................... (2.10) (1.05) (0.49) (0.29) (0.16) (0.14) (0.04) (0.01) --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions .................. (2.47) (1.40) (0.85) (0.62) (0.46) (0.45) (0.35) (0.40) (0.24)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value at end of period ..... $ 17.38 $ 15.17 $ 14.77 $ 12.76 $ 12.15 $ 12.49 $ 11.52 $ 10.88 $ 10.27
======== ======== ======== ======== ======== ======== ======== ======== ========
Total return ......................... 32.42% 12.29% 22.79% 10.54% 0.94% 12.50% 9.16% 9.99% 4.65%(c)
======== ======== ======== ======== ======== ======== ======== ======== ========
Net assets at end of period (000's) .. $101,408 $ 70,654 $ 61,576 $ 52,062 $ 46,928 $ 40,512 $ 23,786 $ 13,180 $ 4,399
======== ======== ======== ======== ======== ======== ======== ======== ========
Ratio of gross expenses to
average net assets ................ 0.90% 0.91% 0.93% 0.99% 1.01% 1.07% 1.19% 1.47% 1.61%(c)
Ratio of net expenses to
average net assets(b) ............. 0.87% 0.87% 0.88% 0.96% 0.98% 0.99% -- -- --
Ratio of net investment income
to average net assets ............. 2.21% 2.31% 2.52% 2.72% 2.47% 2.59% 3.00% 5.52% 5.24%(c)
Portfolio turnover rate .............. 90% 58% 72% 95% 123% 134% 153% 110% 7%
Average commission rate per share .... $ 0.0681 $ 0.0667 -- -- -- -- -- -- --
</TABLE>
(a) Effective date of the Fund's initial registration under the Securities Act
of 1933, as amended.
(b) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement.
(c) Annualized.
6
<PAGE>
THE JAMESTOWN EQUITY FUND
<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(a)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ...... $ 15.66 $ 13.96 $ 11.29 $ 10.19 $ 10.18 $ 10.00
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income .................... 0.11 0.13 0.15 0.10 0.08 0.04
Net realized and unrealized gains (losses)
on investments ........................ 6.47 2.00 2.98 1.15 (0.01) 0.18
-------- -------- -------- -------- -------- --------
Total from investment operations ............ 6.58 2.13 3.13 1.25 0.07 0.22
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ..... (0.11) (0.13) (0.15) (0.12) (0.06) (0.04)
Distributions from net realized gains .... (1.97) (0.30) (0.31) (0.03) -- --
-------- -------- -------- -------- -------- --------
Total distributions ......................... (2.08) (0.43) (0.46) (0.15) (0.06) (0.04)
-------- -------- -------- -------- -------- --------
Net asset value at end of period ............ $ 20.16 $ 15.66 $ 13.96 $ 11.29 $ 10.19 $ 10.18
======== ======== ======== ======== ======== ========
Total return ................................ 43.74% 15.27% 28.00% 12.33% 0.67% 6.81%(d)
======== ======== ======== ======== ======== ========
Net assets at end of period (000's) ......... $ 52,214 $ 31,180 $ 17,857 $ 8,111 $ 2,811 $ 1,953
======== ======== ======== ======== ======== ========
Ratio of gross expenses to average net assets 0.93% 0.98% 1.14% 1.99% 3.16% 3.19%(d)
Ratio of net expenses to average net assets . 0.90%(b) 0.92%(b) 1.01%(b) 1.44%(c) 1.50%(c) 1.50%(c)(d)
Ratio of net investment income
to average net assets .................... 0.60% 0.85% 1.27% 1.18% 0.82% 1.13%(d)
Portfolio turnover rate ..................... 59% 44% 54% 48% 92% 54%
Average commission rate per share ........... $ 0.0686 $ 0.0688 -- -- -- --
</TABLE>
(a) Represents the period from the commencement of operations (December 1,
1992) through March 31, 1993.
(b) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement.
(c) Ratios were determined based on net expenses after the Advisor waived all
or a portion of its advisory fee and/or reimbursed the Fund for operating
expenses.
(d) Annualized.
7
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
Selected per Share Data and Ratios for a Share Outstanding
Throughout Each Period
Year Period
Ended Ended
March 31, March 31,
1998 1997(a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period ............... $ 9.81 $ 10.00
-------- --------
Income from investment operations:
Net investment loss ............................... (0.01) (0.01)
Net realized and unrealized gains (losses)
on investments and foreign currencies .......... 2.91 (0.14)
-------- --------
Total from investment operations ..................... 2.90 (0.15)
-------- --------
Less distributions:
From net investment income ........................ (0.10) (0.04)
-------- --------
Net asset value at end of period ..................... $ 12.61 $ 9.81
======== ========
Total return ......................................... 29.67% (1.56)%(c)
======== ========
Net assets at end of period (000's) .................. $ 42,543 $ 29,290
======== ========
Ratio of net expenses to average net assets(b) ....... 1.56% 1.60%(c)
Ratio of net investment loss to average net assets ... (0.05)% (0.15)%(c)
Portfolio turnover rate .............................. 47% 70%(c)
Average commission rate per share .................... $ 0.0294 $ 0.0258
(a) Represents the period from the commencement of operations (April 16, 1996)
through March 31, 1997.
(b) Absent investment advisory fees waived by the Advisor, the ratio of
expenses to average net assets would have been 1.71%(c) for the period
ended March 31, 1997.
(c) Annualized.
8
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
<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(a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 9.83 $ 9.85 $ 9.68 $ 9.61 $ 10.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ........................... 0.44 0.45 0.45 0.44 0.23
Net realized and unrealized gains (losses)
on investments ............................... 0.33 (0.02) 0.17 0.07 (0.39)
-------- -------- -------- -------- --------
Total from investment operations ................... 0.77 0.43 0.62 0.51 (0.16)
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ............ (0.44) (0.45) (0.45) (0.44) (0.23)
-------- -------- -------- -------- --------
Net asset value at end of period ................... $ 10.16 $ 9.83 $ 9.85 $ 9.68 $ 9.61
======== ======== ======== ======== ========
Total return ....................................... 8.00% 4.39% 6.51% 5.47% (2.96)%(c)
======== ======== ======== ======== ========
Net assets at end of period (000's) ................ $ 18,213 $ 11,197 $ 8,779 $ 7,712 $ 2,056
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(b) ..... 0.75% 0.75% 0.75% 0.75% 0.75%(c)
Ratio of net investment income to average net assets 4.40% 4.51% 4.57% 4.64% 4.07%(c)
Portfolio turnover rate ............................ 33% 24% 14% 97% 33%
</TABLE>
(a) Represents the period from the commencement of operations (September 1,
1993) through March 31, 1994.
(b) Absent investment advisory fees waived and/or expenses reimbursed by the
Advisor, the ratios of expenses to average net assets would have been
0.78%, 0.88%, 1.04%, 1.62% and 4.83%(c) for the periods ended March 31,
1998, 1997, 1996, 1995 and 1994, 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.
9
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The investment objectives of the BALANCED FUND are long term growth of capital
and income through investment in a balanced portfolio of equity and fixed income
securities. Capital protection and low volatility are important investment
goals.
The investment objective of the EQUITY FUND is long term growth of capital
through investment in a diversified portfolio composed primarily of common
stocks. Current income is incidental to this objective and may not be
significant.
The investment objective of the INTERNATIONAL EQUITY FUND is to achieve superior
total returns through investment in equity securities of issuers located outside
of the United States.
The investment objectives of the TAX EXEMPT VIRGINIA FUND are to provide current
income exempt from federal income taxes and from the personal income taxes of
Virginia, to preserve capital, to limit credit risk and to take advantage of
opportunities to increase income and enhance the value of your investment.
Any investment involves risk, and there can be no assurance that the Funds will
achieve their investment objectives. The investment objectives 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.
EQUITY FUND AND BALANCED FUND
EQUITY SELECTION. The Equity Fund and the equity portion of the Balanced Fund
will be primarily invested in common stocks, straight preferred stocks,
convertible preferred stocks, and convertible bonds. Such investments are made
primarily for long term growth of capital, with income as a secondary
consideration. Selection of equity securities is made on the basis of several
criteria, including, among other things:
1. Fundamental factors such as financial strength, management record, size of
the company, strategy and position of its major products and services.
2. Stock rankings, through the use of a proprietary computerized screening
process which ranks stocks by using near term earnings momentum (the
percentage change in projected earnings for the next four quarters compared
to actual earnings for the last four quarters), earnings revisions and
projected earnings growth. The model uses consensus earnings estimates
obtained from published investment research sources. Each of the companies
is also ranked relative to other companies in their sector based on a
forward price-earnings ratio.
3. Companies that screen well are then subject to qualitative, judgmental
evaluation by the Advisor's equity team.
Attractive equity securities for investment would include companies that are
fundamentally attractive, rank well on the screening process, and pass the
review of the Advisor's equity team. These selections are used by the Advisor to
focus on financially strong, relatively large companies which offer above
average earnings growth and relatively modest valuations. Securities convertible
into common stocks are evaluated based on both their equity attributes and fixed
income attributes.
FIXED INCOME SELECTION. The Balanced Fund's fixed income investments may include
corporate debt obligations and "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
10
<PAGE>
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.
Corporate debt obligations will consist of "investment grade" securities rated
at least Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's Ratings Group ("S&P") or, if not rated, of equivalent quality in the
opinion of Tattersall. Corporate debt obligations are acquired primarily for
their income return and secondarily for capital appreciation. No bond having a
Moody's or S&P rating less than A will be acquired if, as a result, more than
10% of the total value of the fixed income portion of the Balanced Fund's assets
would be invested in such bonds. This applies at the time of acquisition; a
decline in the value of the Balanced Fund's assets subsequent to acquisition
will not require a sale of previously acquired securities, nor will a change in
rating subsequent to acquisition require a sale. Lower rated issues (those rated
lower than A) are considered speculative in certain respects. Descriptions of
the quality ratings of Moody's and S&P are contained in the Statement of
Additional Information. Although Tattersall utilizes the ratings of various
credit rating services as one factor in establishing creditworthiness, it relies
primarily upon its own analysis of factors establishing creditworthiness. For as
long as the Balanced Fund holds a fixed income issue, Tattersall monitors the
issuer's credit standing.
Fixed income investment decisions are made on the basis of the yield relative to
yields available on the same maturity of U.S. Treasury Notes or Bonds
("Treasuries"). When the yield "spread" between Treasuries and other debt
instruments is great, then U.S. Government agency securities (which will have
higher yields than U.S. Treasuries of the same maturity) or corporate bonds are
potentially attractive. When yield spreads are low, Treasuries would be the
preferred investment. The average maturity of the fixed income portion of the
Balanced Fund's portfolio will vary from three to twelve years. The average
maturity of the portfolio will be shifted to reflect Tattersall's assessment of
changes in credit conditions, international currency markets, economic
environment, fiscal policy, monetary policy and political climate.
PORTFOLIO ALLOCATION FOR THE BALANCED FUND. The Balanced Fund invests in a
balanced portfolio of equity and fixed income securities. Equity securities are
acquired for capital appreciation or a combination of capital appreciation and
income. Fixed income securities are acquired for income and secondarily for
capital appreciation.
In addition to investing in the types of securities described above, the Advisor
invests the Balanced Fund's assets among various companies, industries and
economic sectors and adjusts the Balanced Fund's portfolio allocation between
common stocks and fixed income securities in an attempt to take advantage of
what the Advisor believes are the best opportunities for long term growth of
capital and income, considering the investment goals of capital protection and
low volatility. In making determinations of how to allocate the portfolio
between equities and fixed income securities, the Advisor analyzes the projected
total return relationships between four year stock market total returns (using
the Standard & Poor's 500 Composite Index ("S&P 500") as a proxy for the market)
and U.S. Treasury Notes with a four-year maturity. A four-year time frame is
used in the Advisor's total return projections because, in its belief, four
years is a sufficiently long time period to assess the potential total return of
competing investments without being unduly influenced by short term economic and
market factors. A dividend discount model, based upon historical S&P 500 price
to dividend relationships, is used by the Advisor in projecting four-year stock
market total returns. This model compares the Advisor's projected S&P 500
four-year dividend streams and resulting computer generated fourth year S&P 500
index values to the current S&P 500 index value to derive estimates of the total
return potential from stocks. While the Advisor uses the foregoing analysis in
portfolio allocation considerations, it relies upon the judgment of its
professional staff to make conclusive portfolio allocation determinations,
especially during times of volatile stock market and interest rate fluctuation,
in an attempt to achieve the Balanced Fund's goal of low volatility. While the
S&P 500 is used as a proxy for the stock market in
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formulating portfolio allocation determinations, equity investments are not
limited to stocks included in the S&P 500 index. There is no assurance that the
projected S&P 500 total rate of return will be realized by the Balanced Fund,
and the rate of return of the Balanced Fund's portfolio may be significantly
different than the projected S&P 500 rate of return.
The Advisor does not attempt to predict the proportion of income or growth of
capital to be realized by the Balanced Fund. However, the common stock and fixed
income allocations will each normally range from a minimum of 25% to a maximum
of 75% of the Balanced Fund's assets.
FACTORS TO CONSIDER. To the extent that the Equity Fund's portfolio is fully
invested in equity securities, and the major portion of the Balanced Fund's
portfolio is invested in equity securities, it may be expected that the net
asset value of each Fund will be subject to greater fluctuation than a portfolio
containing mostly fixed income securities. The fixed income securities in which
the Balanced Fund will invest are also 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 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.")
The value of the Balanced Fund's 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 Balanced Fund's fixed income securities
would decrease in value, which would have a depressing influence on the Balanced
Fund's net asset value. At times when fixed income investments are emphasized,
the Balanced Fund's net asset value would not be subject to as much stock market
volatility but may be expected to fluctuate inversely with the direction of
interest rates. The Advisor believes that, by utilizing the investment policies
described herein, the Balanced Fund's net asset value may not rise as rapidly or
as much as the stock market (as represented by the S&P 500 Index) during rising
market cycles, but that during declining market cycles, the Balanced Fund would
not suffer as great a decline in its net asset value as the S&P 500 Index. This
should result, in the Advisor's opinion, in the Balanced Fund and its
shareholders experiencing less volatile year-to-year total returns than would be
experienced by the S&P 500 Index.
INVESTMENT LIMITATIONS. For the purpose of limiting the Funds' exposure to risk,
each Fund has adopted certain limitations which, together with its investment
objectives, 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 if,
immediately after such borrowing, the value of a Fund's assets, including all
borrowings then outstanding, less its liabilities (excluding all borrowings), is
equal to at least 300% of the aggregate amount of borrowings then outstanding,
and may pledge its assets to secure all such borrowings; (2) invest in
restricted securities, or 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) acquire foreign securities,
except that the Funds may acquire foreign securities sold as American Depository
Receipts in amounts not in excess of 5% of each Fund's assets; (4) write,
acquire or sell puts, calls or combinations thereof, or purchase or sell
commodities, commodities contracts, futures contracts or related options; and
(5) purchase securities of other investment companies, except through purchases
in the open market involving only customary brokerage commissions and as a
result of which not more than 5% of a Fund's total assets would be invested in
such securities, or except as part of a merger, consolidation or other
acquisition. Other fundamental investment limitations are listed in the
Statement of Additional Information.
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INTERNATIONAL EQUITY FUND
Concentrated positions will be established in countries and regions that look
most attractive. In choosing a country or region for the portfolio, the
International Equity Fund will look for a favorable mix of positive monetary
outlook, attractive valuation levels, accelerating corporate earnings, and a
good supply and demand relationship for equities. In general, the country or
region concentration will be further focused on liquid investments in specific
companies where broadly defined value and accelerating earnings have been
identified.
The Fund will not invest in physical commodities or speculative currency
positions. Stock and currency options may be used in a limited way. Currency
forward contracts may also be purchased.
Oechsle International Advisors, LLC ("Oechsle Advisors") believes that investors
must scan the world for investment opportunities. International diversification
is important because (i) non-U.S. stocks now account for more than sixty percent
of the world's stock market capitalization and (ii) Oechsle Advisors believes
that international investing meaningfully reduces risk while potentially
improving returns.
In 1967, the United States represented seventy percent of the world's stock
market capitalization, thus providing U.S. investors with ample choices at home.
However, by 1980 rapid growth in the economies of other countries and the
development of their equity markets reduced the U.S. percentage to approximately
50% of a much larger world market. By the end of 1996, the U.S. percentage had
declined further to approximately 45%. Therefore, non-U.S. stocks, now nearly
twice the amount of U.S. stocks in terms of market capitalization, represent a
large, increasingly significant pool presenting opportunities which investors
can no longer ignore.
Oechsle Advisors believes that international diversification significantly
reduces risk and potentially improves returns. Over the last 25 years, non-U.S.
stocks, as measured by the Europe, Australia and Far East ("EAFE") Index, have
outperformed U.S. equities, as measured by the Standard & Poor's 500 Index, by a
large margin. Furthermore, Oechsle Advisors believes that the inclusion of
international stocks to an existing portfolio of U.S. securities results in
lower risk mainly due to the fact that foreign economies and markets are not
synchronized with the U.S. economy or the U.S. equity market.
Recognition of the enhanced risk/reward characteristics of international
investing on the part of institutional investors is demonstrated by their
rapidly increasing exposure to international equity markets. By the end of 1996,
U.S. pension funds had invested nearly 11% of their equity portfolios in
international equities. This percentage is expected to significantly increase
over the next five years.
Oechsle Advisors combines top-down country selection with bottom-up stock
selection in order to exploit the inefficiencies within and between
international equity markets. Various academic studies have shown that 60 to 70
percent of a portfolio's returns are determined by the asset allocation mix,
while the remainder is the result of stock selection.
The world's financial markets continually change, and it is the job of the fund
manager to understand and act upon these changing trends. Over the last 25
years:
- -- major inflation in the United States and Europe during the 1970s decimated
the performance of common stocks, resulting in major gains in "hard
assets";
- -- a disinflationary period in the 1980s provided some of the best returns of
this century for common stocks both in Europe and the United States;
- -- the economies and securities markets of Japan and other Pacific Rim
countries performed spectacularly;
- -- Latin America reversed decades of economic stagnation in the mid-to
late-1980s as a result of dramatic political and economic changes; and
- -- technology transformed political, economic and financial patterns
worldwide.
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Oechsle Advisors believes that to consistently provide investors with superior
returns, it is imperative to focus on both country selection as well as stock
selection. Four primary factors are reviewed in the country selection process in
order to rank all the countries for potential returns in U.S. dollars. Oechsle
Advisors looks for a positive monetary environment that is likely to stimulate
economic growth. Oechsle Advisors looks for accelerating corporate earnings in
countries selling at reasonable valuation levels given the expected growth.
Finally, Oechsle Advisors looks at the demand and supply relationship for
equities in each country.
Oechsle Advisors seeks to control risk by diversifying across a number of
foreign markets. The Fund will generally have investments in 12 or more
countries, and the Fund will never be completely out of any major market in the
EAFE Index. The Fund will be further diversified by holding, on average, 80
stocks in the portfolio. A quantitative review of the portfolio serves to
identify the risk and return parameters of the investments.
Once the macro-economic framework is developed, Oechsle Advisors seeks to add
value through security selection. Oechsle Advisors focuses on medium and large
capitalization stocks, but the Fund may hold up to 25% of the Fund's assets in
companies that have a market capitalization of less than $1 billion. The minimum
market capitalization for an investment is $50 million. Turnover in the
portfolio will generally average between 25% and 50%.
The stock selection process is earnings driven with a particular focus on cash
earnings. In international markets where the accounting and reporting standards
are not as standardized as in the United States, Oechsle Advisors believes that
cash earnings are the best reflection of the true earnings power of a
corporation. Oechsle Advisors analyzes accounting and legal differences in order
to compare investment among different countries. The core of the equity research
process is driven by fundamental research. Oechsle Advisors' investment research
professionals annually visit more than 600 companies around the globe that are
potential investments. Oechsle feels that these company visits are an essential
part of understanding the cash generation capabilities of the companies. Oechsle
Advisors is headquartered in Boston and has offices and investment professionals
in Frankfurt, London and Tokyo.
The Fund will use currency hedges only as a defensive measure. Given its outlook
for the various currencies, Oechsle Advisors first seeks beneficial currency
exposure through country allocation. Secondly, Oechsle Advisors will concentrate
investments in securities that are likely to benefit from the currency outlook.
Finally, as a defensive measure, Oechsle Advisors may hedge some of the Fund's
currency position to protect the portfolio against a rise in the dollar of the
United States. The Fund may hedge up to 50% of its investments in international
markets.
Investing in foreign securities involves considerations and possible risks not
typically involved in investing in securities of companies domiciled and
operating in the United States, including the instability of some governments,
the possibility of expropriation, limitations on the use or removal of funds or
other assets, changes in governmental administration or economic or monetary
policy (in the United States or elsewhere) or changed circumstances in dealings
between nations. The application of non-U.S. tax laws (e.g., the imposition of
withholding taxes on dividend or interest payments) or confiscatory taxation may
also affect investment in such securities. Higher expenses may result from
investment in non-U.S. securities than would result from investment in U.S.
securities because of the costs that must be incurred in connection with
conversions between various currencies and brokerage commissions that may be
higher than those in the United States. Securities markets located outside the
United States also may be less liquid, more volatile and less subject to
governmental supervision than those in the United States. Investments in
countries other than the United States could be affected by other factors not
present in the United States, including lack of uniform accounting, auditing and
financial reporting standards and potential difficulties in enforcing
contractual obligations.
While the Fund intends to invest primarily in equity securities, up to 20% of
the Fund's assets may be invested in convertible bonds and other debt
securities. These debt obligations consist of U.S. and foreign government
securities and corporate debt securities. The Fund will limit its purchases of
debt securities to investment grade obligations.
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"Investment grade" debt refers to those securities rated within one of the four
highest categories by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group. While securities in these categories are generally accepted as
being of investment grade, the fourth highest grade is considered to be a medium
grade and has speculative characteristics even though it is regarded as having
adequate capacity to pay interest and repay principal.
HEDGING TECHNIQUES
Unless otherwise indicated, Oechsle Advisors may invest in the following
derivative securities to seek to hedge all or a portion of the Fund's assets
against market value changes resulting from changes in securities prices and
currency fluctuations. Hedging is a means of attempting to offset, or
neutralize, the price movement of an investment by making another investment,
the price of which should tend to move in the opposite direction from the
original investment. The imperfect correlation in price movement between an
option and the underlying financial instrument and/or the costs of implementing
such an option may limit the effectiveness of the hedging strategy.
PUT AND CALL OPTIONS. The Fund may write (sell) covered put and call options as
a means of enhancing its return and may buy put and call options written by
others covering securities, futures contracts and foreign currencies to attempt
to provide protection against the adverse effects of anticipated changes in the
prices of such instruments. The Fund may write covered call options as a means
of enhancing its return through the receipt of premiums when Oechsle Advisors
determines that the underlying securities, futures contracts or foreign
currencies have achieved their potential for appreciation. However, by writing
such options, the Fund forgoes the opportunity to profit from an increase in the
market price of the underlying security, futures contract or foreign currency
above the exercise price except insofar as the premium represents such a profit.
The Fund may also seek to earn additional income through receipt of premiums by
writing covered put options. The risk involved in writing such options is that
there could be a decrease in the market value of the underlying security,
futures contract or foreign currency. If this occurred, the option could be
exercised and the underlying instrument would then be sold to the Fund at a
higher price than its then current market value. The Fund may purchase put and
call options to attempt to provide protection against adverse price effects from
anticipated changes in prevailing prices of securities, futures contracts or
foreign currencies. The purchase of a put option protects the value of portfolio
holdings in a falling market, while the purchase of a call option protects cash
reserves from a failure to participate in a rising market. In purchasing a call
option, the Fund would be in a position to realize a gain if, during the option
period, the price of the security, futures contract or foreign currency
increased by an amount greater than the premium paid. It would realize a loss if
the price of the security, futures contract or foreign currency decreased or
remained the same or did not increase during the period by more than the amount
of the premium. If a put or call option purchased by the Fund were permitted to
expire without being sold or exercised, its premium would represent a realized
loss to the Fund. When writing put options the Fund will be required to
segregate cash and/or liquid high-grade debt securities to meet its obligations.
When writing call options the Fund will be required to own the underlying
financial instrument or segregate with its Custodian cash and/or short-term high
quality securities to meet its obligations under written calls. By so doing, the
Fund's ability to meet current obligations, to honor redemptions or to achieve
its investment objective may be impaired. The staff of the Securities and
Exchange Commission has taken the position that over-the-counter options and the
assets used as "cover" for over-the-counter options are illiquid securities.
FUTURES CONTRACTS. The Fund may buy and sell futures contracts as a hedge to
protect the value of the Fund's portfolio against anticipated changes in
securities prices and foreign currencies. There are several risks in using
futures contracts. One risk is that futures prices could correlate imperfectly
with the behavior of cash market prices of the financial instrument being hedged
so that even a correct forecast of general price trends may not result in a
successful transaction. Another risk is that Oechsle Advisors may be incorrect
in its expectation of future prices of the underlying financial instrument.
There is also a risk that a secondary market in the obligations that the Fund
holds may not exist or may not be adequately liquid to permit the Fund to close
out positions when it
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desires to do so. When buying or selling futures contracts the Fund will be
required to segregate cash and/or liquid high-grade debt obligations to meet its
obligations under these types of financial instruments. By so doing, the Fund's
ability to meet current obligations, to honor redemptions or to operate in a
manner consistent with its investment objective may be impaired.
FORWARD CURRENCY EXCHANGE CONTRACTS. When Oechsle Advisors believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, it may attempt to hedge some portion or all of this
anticipated risk by entering into a forward contract to sell an amount of
foreign currency approximating the value of some or all of the Fund's portfolio
obligations denominated in such foreign currency. It may also enter into such
contracts to protect against loss between trade and settlement dates resulting
from changes in foreign currency exchange rates. Such contracts will also have
the effect of limiting any gains to the Fund between trade and settlement dates
resulting from changes in such rates.
CERTAIN RISK CONSIDERATIONS
CURRENCY RISKS. The Fund's investments that are denominated in a currency other
than the U.S. dollar are subject to the risk that the value of a particular
currency will change in relation to one or more other currencies including the
U.S. dollar. Among the factors that may affect currency values are trade
balances, the level of short-term interest rates, differences in relative values
of similar assets in different currencies, long-term opportunities for
investment and capital appreciation and political developments. The Fund may try
to hedge these risks by investing in foreign currencies, currency futures
contracts and options thereon, forward currency exchange contracts, or any
combination thereof, but there can be no assurance that such strategies will be
effective.
Many European countries are about to adopt a single European currency, the euro.
The consequences of the euro conversion for foreign exchnage rates, interest
rates and the value of European securities eligible for purchase by the Fund are
unclear. Such consequences may adversely affect the value and/or increase the
volatility of securities held by the Fund.
MARKET RISKS. General price movements of securities and other investments may
significantly affect the value of the Fund's portfolio. With respect to the
investment strategy utilized by the Fund, there is always some, and occasionally
a significant, degree of market risk. Investing in small companies involves
certain special risks. Small companies may have limited product lines, markets,
or financial resources, and their managements may be dependent on a limited
number of key individuals. The securities of small companies may have limited
market liquidity and may be subject to more abrupt or erratic market movements
than securities of larger, more established companies or the market averages in
general.
EMERGING MARKETS. The risks of foreign investing are of greater concern in the
case of investments in emerging markets which may exhibit greater price
volatility and have less liquidity. Furthermore, the economies of emerging
market countries generally are heavily dependent upon international trade and,
accordingly, have been and may continue to be adversely affected by trade
barriers, managed adjustments in relative currency values, and other
protectionist measures applied internally or imposed by the countries with which
they trade. These emerging market economies also have been and may continue to
be adversely affected by economic conditions in the countries with which they
trade.
HEDGING TECHNIQUES. The Fund's ability to establish and close out positions in
futures contracts and options will be subject to the existence of a liquid
secondary market. Although the Fund generally will purchase or sell only those
futures contracts and options for which there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange will
exist for any particular futures contract or option or at any particular time.
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Transactions in options involve special risks. The Fund may not be able to enter
into a closing transaction to cancel its obligations with respect to the options
it has written or purchased. If an option purchased by the Fund expires
unexercised, the Fund will lose the premium it paid. In addition, the Fund could
suffer a loss if the premium paid by the Fund in a closing transaction exceeds
the premium income it received. When the Fund writes a call option, its ability
to participate in the capital appreciation of the underlying obligation is
limited.
CONFLICTS OF INTEREST. Oechsle Advisors may determine from time to time that
some investment opportunities are appropriate for certain of its clients and not
others, including the Fund, as the Fund has an investment objective that may
vary from that of other clients. For these and other reasons, such as differing
time horizons, liquidity needs, tax consequences and assessments of general
market conditions and of individual securities (including options), Fund
investment transactions may or may not vary from decisions made for others by
Oechsle Advisors. It may also occasionally be necessary to allocate limited
investment opportunities among the Fund and other clients of Oechsle Advisors,
on a fair and equitable basis deemed appropriate by Oechsle Advisors.
TAX EXEMPT VIRGINIA FUND
The Tax Exempt Virginia Fund is designed primarily to allow individual and
institutional investors seeking tax exempt current income to take advantage of
the professional investment management expertise of the Advisor. The Fund
maintains a policy of generating at least 80% of the Fund's annual income exempt
from federal income tax and excluded from the calculation of the federal
alternative minimum tax for individual taxpayers. The policy of the Fund will be
to maintain an investment of at least 65% of the Fund's total assets in Virginia
tax exempt securities during normal market conditions. The Advisor's philosophy
in the management of fixed income securities utilizes a disciplined balance
between sector selection and moderate portfolio duration shifts. The Advisor's
determination of optimal duration for the Fund is based on economic indicators,
inflation trends, credit demands, monetary policy and global influences as well
as psychological and technical factors. The Fund endeavors 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.
Although the Fund seeks to invest all the assets of the Fund in obligations
exempt from federal and Virginia state income taxes, market conditions may from
time to time limit the availability of such obligations. During periods when the
Fund is unable to purchase such obligations for the portfolio of the Fund, the
Fund will seek to invest the assets of the Fund in Municipal Obligations (as
defined below) the interest on which would be exempt from federal income taxes,
but which would be subject to the personal income taxes of Virginia. Also, as a
temporary defensive measure during times of adverse market conditions, up to 50%
of the assets of the Fund may be held in cash or invested in the short-term
obligations 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 the 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 Fund to a 2 year
minimum and a 15 year maximum. The precise point of the Fund's duration within
this range will depend on the Advisor's view of the market. For purposes of the
Fund, 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.
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The Fund expects the average maturity of its portfolio 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).
INVESTMENT GRADE SECURITIES. The Fund intends to limit its investment purchases
to investment grade securities. The Fund defines 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 Appendix A.
The Fund requires that 75% of its assets must be rated at least A by Moody's,
S&P, Fitch or D&P 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 bonds which are
rated A by one rating agency and which are not rated or rated lower than A by
other rating agencies, and such purchase would be within the bounds of the 75%
limitation previously stated. The final determination of quality and value will
remain with the Advisor. The Fund intends to purchase bonds rated BBB by S&P,
Fitch or D&P or Baa by Moody's only if in the Advisor's opinion these bonds have
some potential to improve in value or credit rating. Lower rated issues (those
rated lower than A) are considered speculative in certain respects. Although the
Advisor utilizes the ratings of various credit rating services as one factor in
establishing creditworthiness, it relies primarily upon its own analysis of
factors establishing creditworthiness. For as long as the Fund holds a fixed
income issue, the Advisor monitors the issuer's credit standing.
MUNICIPAL OBLIGATIONS. The Fund intends to invest in a broad range of investment
grade Municipal Obligations, including general obligation bonds, which are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest; revenue bonds, which are payable from the
revenue derived from a particular facility or class of facilities or, in some
cases, from annual appropriations made by the state legislature for the
repayment of interest and principal or other specific revenue source, but not
from the general taxing power; lease obligations backed by the municipality's
covenant to budget for the payments due under the lease obligation; and certain
types of industrial development bonds issued by or on behalf of public
authorities to obtain funds for privately-operated facilities, provided that the
interest paid on such securities qualifies as exempt from federal income tax.
The value of the securities in which the Fund will invest usually fluctuates
inversely with changes in prevailing interest rates.
For a general discussion of Municipal Obligations, the risks associated with an
investment therein, and descriptions of the ratings of Municipal Obligations
permitted as investments, see Appendix A. As used in this Prospectus, the terms
"Municipal Obligations" and "tax exempt securities" are used interchangeably to
refer to debt instruments issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies or instrumentalities, the interest on which is
exempt from federal income tax (without regard to whether the interest thereon
is also exempt from the personal income taxes of any State).
With respect to those Municipal Obligations which are not rated by a major
rating agency, the Fund will be more reliant on the Advisor's judgment, analysis
and experience than would be the case if such Municipal Obligations were rated.
In evaluating the creditworthiness of an issue, whether rated or unrated, the
Advisor may take into consideration, among other things, the issuer's financial
resources, its sensitivity to economic conditions and trends, the operating
history of and the community support for the facility financed by the issue, the
ability of the issuer's management and regulatory matters.
SHORT TERM OBLIGATIONS. To protect the capital of shareholders of the Fund under
adverse market conditions, the Fund may from time to time deem it prudent to
hold cash or to purchase taxable short-term obligations for the
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Fund with a resultant decrease in yield or increase in the proportion of taxable
income. These securities may consist of obligations of the United States
Government, its agencies or instrumentalities and repurchase agreements secured
by such instruments; certificates of deposit of domestic banks having capital,
surplus and undivided profits in excess of $100 million; bankers' acceptances of
such banks; and commercial paper and other corporate debt obligations which are
rated A-1 or A-2 by S&P or P-1 or P-2 by Moody's (or which are unrated but which
are considered to have essentially the same characteristics and qualities as
commercial paper having such ratings).
VARIABLE RATE SECURITIES. The Fund may invest in tax exempt securities that bear
interest at rates which are adjusted periodically to market rates. The market
value of fixed coupon securities fluctuates with changes in prevailing interest
rates, increasing in value when interest rates decline and decreasing in value
when interest rates rise. The value of variable rate securities, however, is
less affected by changes in prevailing interest rates because of the periodic
adjustment of their coupons to a market rate. The shorter the period between
adjustments, the smaller the impact of interest rate fluctuations on the value
of these securities. The market value of tax exempt variable rate securities
usually tends toward par (100% of face value) at interest rate adjustment time.
PUT BONDS. The Fund may invest in tax exempt securities (including securities
with variable interest rates) which may be redeemed or sold back (put) to the
issuer of the security or a third party at face value prior to stated maturity.
This type of security will normally trade as if maturity is the earlier put
date, even though stated maturity is longer.
MUNICIPAL LEASE OBLIGATIONS. The Fund may also invest in municipal lease
obligations, installment purchase contract obligations, and certificates of
participation in such obligations (collectively, "lease obligations"). A lease
obligation does not constitute a general obligation of the municipality for
which the municipality's taxing power is pledged, although the lease obligation
is ordinarily backed by the municipality's covenant to budget for the payments
due under the lease obligation. Certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease obligation payments in future years unless money is
appropriated for such purpose on a yearly basis. A risk peculiar to these
municipal lease obligations is the possibility that a municipality will not
appropriate funds for lease payments. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the property in
the event of foreclosure might prove difficult. The Advisor will seek to
minimize these risks by not investing more than 10% of the total assets of the
Fund in lease obligations that contain "non-appropriation" clauses. In
evaluating a potential investment in such a lease obligation, the Advisor will
consider: (1) the credit quality of the obligor, (2) whether the underlying
property is essential to a government function, and (3) whether the lease
obligation contains covenants prohibiting the obligor from substituting similar
property if the obligor fails to make appropriations for the lease obligation.
Municipal lease obligations may be determined to be liquid in accordance with
the guidelines established by the Board of Trustees and other factors the
Advisor may determine to be relevant to such determination. In determining the
liquidity of municipal lease obligations, the Advisor will consider a variety of
factors including: (1) the willingness of dealers to bid for the security; (2)
the number of dealers willing to purchase or sell the obligation and the number
of other potential buyers; (3) the frequency of trades and quotes for the
obligation; and (4) the nature of the marketplace trades. In addition, the
Advisor will consider factors unique to particular lease obligations affecting
their marketability. These include the general creditworthiness of the
municipality, the importance of the property covered by the lease to the
municipality, and the likelihood that the marketability of the obligation will
be maintained throughout the time the obligation is held by the Fund.
The Board of Trustees is responsible for determining the credit quality of
unrated municipal lease obligations on an ongoing basis, including an assessment
of the likelihood that the lease will not be cancelled.
FACTORS TO CONSIDER. Because of the concentration in Virginia Municipal
Obligations, the Fund is more susceptible to factors affecting Virginia issuers
than is a comparable municipal bond fund not concentrated in the obligations of
issuers located in a single state. For a general discussion on certain economic,
financial and legal matters pertaining to Virginia, see Appendix B. Yields on
Virginia Municipal Obligations depend on a variety of factors,
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including: the general conditions of the municipal bond market; the size of the
particular offering; the maturity of the obligations; and the rating of the
issue. Further, any adverse economic conditions or developments affecting the
Commonwealth of Virginia or its municipalities could impact the Fund's
portfolio. The ability of the Fund to achieve its investment objectives also
depends on the continuing ability of the issuers of Virginia Municipal
Obligations and participation interests, or the guarantors of either, to meet
their obligations for the payment of interest and principal when due. Certain
Virginia constitutional amendments, legislative measures, executive orders,
administrative regulations and voter initiatives could result in adverse
consequences affecting Virginia Municipal Obligations.
The net asset value of the shares of the Fund changes as the general levels of
interest rates fluctuate. When interest rates decline, the value of a portfolio
invested at higher yields can be expected to rise. Conversely, when interest
rates rise, the value of a portfolio invested at lower yields can be expected to
decline.
The Fund has registered as a non-diversified management investment company so
that more than 5% of the assets of the Fund may be invested in the obligations
of each of one or more issuers. Because a relatively high percentage of the
assets of the Fund may be invested in the obligations of a limited number of
issuers, the value of shares of the Fund may be more sensitive to any single
economic, political or regulatory occurrence than the shares of a diversified
investment company would be.
The Fund may invest its assets in a relatively high percentage of Municipal
Obligations issued by entities having similar characteristics. The issuers may
pay their interest obligations from revenue of similar projects such as
multi-family housing, nursing homes, electric utility systems, hospitals or life
care facilities. This too may make the Fund more sensitive to economic,
political, or regulatory occurrences, particularly because such issuers would
likely be located in the same State. As the similarity in issuers increases, the
potential for fluctuation of the net asset value of the Fund's shares also
increases. The Fund will only invest in securities of issuers which it believes
will make timely payments of interest and principal.
OTHER INVESTMENT TECHNIQUES
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. For temporary
defensive purposes, when the Advisor determines that market conditions warrant,
a Fund may depart from its normal investment objectives and money market
instruments may be emphasized, even to the point that 100% of a Fund's assets
may be so invested. Money market instruments mature in thirteen months or less
from the date of purchase and include U.S. Government Securities (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 by Moody's or S&P or, if not rated,
issued by a corporation having an outstanding unsecured debt issue rated A or
better by Moody's or S&P or, if not so rated, of equivalent quality in the
Advisor's opinion. See the Statement of Additional Information for a further
description of money market investments.
BORROWING. Each Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 33.3% of its total assets
(except that this limit is 15% of total assets with respect to the Tax Exempt
Virginia Fund) 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.
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LENDING PORTFOLIO SECURITIES. The International Equity Fund may make short-term
loans of its portfolio securities to banks, brokers and dealers. Lending
portfolio securities exposes the Fund to the risk that the borrower may fail to
return the loaned securities or may not be able to provide additional collateral
or that the Fund may experience delays in recovery of the loaned securities or
loss of rights in the collateral if the borrower fails financially. To minimize
these risks, the borrower must agree to maintain collateral marked to market
daily, in the form of cash and/or liquid securities with the Fund's Custodian in
an amount at least equal to the market value of the loaned securities. The Fund
will limit the amount of its loans of portfolio securities to no more than 25%
of its net assets. This lending policy may not be changed without the
affirmative vote of a majority of its outstanding shares.
SECURITIES OF 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 Fund. 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.
The Equity Fund and the Balanced Fund will not purchase securities of other
investment companies, except through purchases in the open market involving only
customary brokerage commissions and as a result of which not more than 5% of a
Fund's total assets would be invested in such securities, or except as part of a
merger, consolidation or other acquisition. Neither the International Equity
Fund nor the Tax Exempt Virginia Fund presently intends to invest more than 10%
of its total assets in securities of other investment companies. In addition,
neither the International Equity Fund nor the Tax Exempt Virginia 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.
PORTFOLIO TURNOVER. Portfolio turnover will not be limiting factor when the
Advisor deems changes appropriate. By utilizing the approach to investing
described herein, it is expected that annual portfolio turnover will generally
not exceed 100% with respect to the Equity Fund, the International Equity Fund
and the Tax Exempt Virginia Fund and 200% with respect to the Balanced Fund.
Market conditions may dictate, however, a higher rate of portfolio turnover in a
particular year. The degree of portfolio activity affects the brokerage costs of
the 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 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.
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HOW TO PURCHASE SHARES
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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 Funds, unless stated otherwise herein, is $5,000. 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 Jamestown 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:
Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For the (name of Fund)
(Shareholder name and account number or tax identification number)
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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 $500) 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.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
net asset value on or about the 15th day and/or the last business day of the
month. The shareholder may change the amount of the investment or discontinue
the plan at any time by writing to the Administrator.
EXCHANGE PRIVILEGE. You may use proceeds from the redemption of shares of any
Fund to purchase shares of another 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 another 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 $1,000. See the Statement of Additional Information for further
details.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
HOW TO REDEEM SHARES
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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 $5,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 60 days' written notice. If the
shareholder brings his account value up to $5,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
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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 Jamestown
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 name of the
applicable 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 domestic 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.
SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of any Fund valued at
$10,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter as specified, the Funds will automatically
redeem
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sufficient shares from your account to meet the specified withdrawal amount. The
shareholder may establish this service whether dividends and distributions are
reinvested or paid in cash. Systematic withdrawals may be deposited directly to
the shareholder's bank account by completing the applicable section on the
Account Application form accompanying this Prospectus, or by writing the Funds.
See the Statement of Additional Information for further details.
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). Securities held by the International Equity Fund may be
primarily listed on foreign exchanges or traded in foreign markets which are
open on days (such as Saturdays and U.S. holidays) when the New York Stock
Exchange is not open for business. As a result, the net asset value per share of
the International Equity Fund may be significantly affected by trading on days
when the Fund is not open for business. Net asset value per share is determined
by dividing the total value of all Fund securities (valued at market value) and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily. See the Statement of Additional Information for further details.
Securities which are traded over-the-counter are priced at the last sale price,
if available, otherwise, at the last quoted bid price. Securities traded on a
national stock exchange will be valued based upon the closing price on the
valuation date on the principal exchange where the security is traded. Fixed
income securities will ordinarily be traded in the over-the-counter market and
common stocks will ordinarily be traded on a national securities exchange, but
may also be traded in the over-the-counter market. When market quotations are
not readily available, fixed income securities may be valued on the basis of
prices provided by an independent pricing service. The prices provided by the
pricing service are determined with consideration given to institutional bid and
last sale prices and take into account securities prices, yields, maturities,
call features, ratings, institutional trading in similar groups of securities
and developments related to specific securities. The Trustees will satisfy
themselves that such pricing services consider all appropriate factors relevant
to the value of such securities in determining their fair value. Securities and
other assets for which no quotations are readily available will be valued in
good faith at fair value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUNDS
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The Funds are 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, Lowe,
Brockenbrough & Company, Inc. (the "Advisor") provides the Balanced Fund, the
Equity Fund and the Tax Exempt Virginia Fund 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. Subject to the authority of
the Board of Trustees, the Advisor provides the International Equity Fund with
general investment supervisory services pursuant to an Investment Advisory
Agreement with the Trust.
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<PAGE>
The Advisor was organized as a Virginia corporation in 1970 and is controlled by
Austin Brockenbrough, III. In addition to acting as Advisor to the Funds, the
Advisor also provides investment advice to corporations, trusts, pension and
profit sharing plans, other business and institutional accounts and individuals.
The address of the Advisor is 6620 West Broad Street, Suite 300, Richmond,
Virginia 23230.
BALANCED FUND -- Henry C. Spalding, Jr. is primarily responsible for managing
the portfolio of the Balanced Fund and has acted in this capacity since the
Fund's inception. Mr. Spalding has been Executive Vice President of the Advisor
since 1988.
Compensation of the Advisor with respect to the Balanced Fund, based upon the
Fund's average daily net assets, is at the following annual rates: On the first
$250 million, 0.65%; on the next $250 million, 0.60%; and on assets over $500
million, 0.55%. For the fiscal year ended March 31, 1998, the Advisor received
$561,887 in investment advisory fees from the Balanced Fund, which represented
0.65% of the Fund's average daily net assets.
The Advisor has retained Tattersall Advisory Group, Inc. ("Tattersall") to
manage that portion of the Balanced Fund invested in fixed income securities,
pursuant to a Sub-Advisory Agreement among the Trust, the Advisor and
Tattersall. Tattersall will select fixed income securities for investment by the
Balanced Fund, and, upon making any purchase or sale decision, place orders for
the execution of such portfolio transaction. The fixed income portion of the
Balanced Fund is managed on a day to day basis by a committee comprised of
Tattersall's fixed income portfolio management professionals, each portfolio
professional responsible for designated specific sectors of the fixed income
market. Compensation of Tattersall, with respect to the Balanced Fund, is paid
by the Advisor (not the Fund) at the rate of $1,250 for each fiscal quarter of
the Trust. Tattersall is a Virginia corporation controlled by Fred T. Tattersall
and its address is 6802 Paragon Place, Suite 200, Richmond, Virginia 23230.
EQUITY FUND -- Henry C. Spalding, Jr. is primarily responsible for managing the
portfolio of the Equity Fund and has acted in this capacity since the Fund's
inception, Mr. Spalding has been Executive Vice President of the Advisor since
1988.
Compensation of the Advisor with respect to the Equity Fund, based upon the
Fund's average daily net assets, is at the following annual rates: On the first
$500 million, 0.65%; and on assets over $500 million, 0.50%. For the fiscal year
ended March 31, 1998, the Advisor received $259,757 in investment advisory fees
from the Equity Fund, which represented 0.65% of the Fund's average daily net
assets.
INTERNATIONAL EQUITY FUND -- Compensation of the Advisor is at the annual rate
of 1.00% of the Fund's average daily net assets. For the fiscal year ended March
31, 1998, the Advisor received $355,460 in investment advisory fees from the
Fund, which represented 1.00% of the Fund's average daily net assets.
Subject to the authority of the Board of Trustees and the supervision of the
Advisor, Oechsle International Advisors, LLC ("Oechsle Advisors") provides the
Fund with a continuous program of supervision of the International Equity Fund's
assets, including the composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to a Sub-Advisory Agreement with the
Trust and the Advisor. Oechsle Advisors is also responsible for the selection of
broker-dealers through which the Fund executes portfolio transactions, subject
to brokerage policies established by the Trustees.
Oechsle Group, LLC is the Member Manager of Oechsle Advisors and owns
approximately a 44% interest (on a fully diluted basis) in Oechsle Advisors. The
following individuals own approximately an 89% interest in Oechsle Group, LLC:
Walter Oechsle, S. Dewey Keesler, Jr., L. Sean Roche, Stephen P. Langer, Steven
H. Schaefer, Warren Walker and Andrew S. Parlin. The management, policies and
control of Oechsle Advisors is, subject to certain limitations, invested
exclusively in Oechsle Group, LLC. Day-to-day management of Oechsle Advisors is
exercised by the Management Committee of Oechsle Group, LLC, which consists of
Messrs. Keesler, Roche, Langer,Walker and Parlin. Fleet Financial Group, Inc. of
Boston, Massachusetts holds approximately a 35% non-voting interest (on a fully
diluted basis) in Oechsle Advisors.
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<PAGE>
Walter Oechsle, who has 36 years experience in the international investment
arena, began his career at Arnhold and S. Bleichroeder before moving to Putnam
to become the President and Chief Investment Officer of Putnam International
Advisors. In 1986, Mr. Oechsle left with most of the team from Putnam
International Advisors and established Oechsle Advisors. The founding partners
of Oechsle Advisors have an average tenure of fifteen years with the current
investment team. Oechsle Advisors has twenty investment professionals located in
offices in Boston, Frankfurt, London and Tokyo. Oechsle Advisors manages over
$10 billion in international assets in separately managed and commingled
accounts for private and institutional investors. Oechsle Advisors' address is
One International Place, Boston, Massachusetts 02110.
Since January 1997, Kathleen Harris has primary responsibility for the
day-to-day management of the International Equity Fund's portfolio. Ms. Harris
has been employed by Oechsle Advisors since January 1995. Prior to her
employment with Oechsle, she was Portfolio Manager and Investment Director for
the State of Wisconsin Investment Board, where she managed international equity
assets. Walter Oechsle participates in the management of the Fund particularly
with respect to country asset allocation decisions, which are made by both Mr.
Oechsle and Ms. Harris.
Compensation of Oechsle Advisors is paid by the Advisor (not the Fund) in the
amount of one-half of the advisory fee received by the Advisor (net of any
advisory fee waivers).
TAX EXEMPT VIRGINIA FUND -- Beth Ann Walk, CFA is primarily responsible for
managing the portfolio of the Tax Exempt Virginia Fund and has acted in this
capacity since the Fund's inception. Ms. Walk is a Portfolio Manager of the
Advisor and has been with the firm since 1983.
Compensation of the Advisor with respect to the Tax Exempt Virginia Fund, based
upon the Fund's average daily net assets, is at the following annual rates: On
the first $250 million, 0.40%; on the next $250 million, 0.35%; and on assets
over $500 million, 0.30%. For the fiscal year ended March 31, 1998, the Advisor
received $61,250 in investment advisory fees from the Fund (net of fee waivers),
which represented 0.37% of the Fund's average daily net assets.
ADMINISTRATOR. The Funds have retained Countrywide Fund Services, Inc., 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 of
the Balanced Fund and the Equity Fund pays the Administrator a fee for these
services at the annual rate of 0.20% of the average value of its daily net
assets up to $25 million, 0.175% on the next $25 million of such assets and
0.15% of such assets in excess of $50 million; provided, however, that the
minimum fee is $2,000 per month with respect to each Fund. The International
Equity Fund pays the Administrator a fee for these services at the annual rate
of 0.25% of the average value of its daily net assets up to $25 million, 0.225%
on the next $25 million of such assets and 0.20% of such assets in excess of $50
million; provided, however, that the minimum fee is $4,000 per month. The Tax
Exempt Virginia Fund pays the Administrator a fee for these services at the
annual rate of 0.15% of the average value of its daily net assets up to $200
million and 0.10% of such assets in excess of $200 million; provided, however,
that the minimum fee is $2,000 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.
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CUSTODIANS. The Custodian of the assets of the Balanced Fund, the Equity Fund
and the Tax Exempt Virginia Fund is Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian of the International Equity Fund's assets
is The Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois 60675.
The Advisor, Administrator or interested persons thereof may have banking
relationships with the Custodians.
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 the Balanced Fund was 0.90% of its average daily
net assets, the expense ratio of the Equity Fund was 0.93% of its average daily
net assets, the expense ratio of the International Equity Fund was 1.56% of its
average daily net assets, and the expense ratio of the Tax Exempt Virginia Fund
was 0.75% of its average daily net assets after expense reimbursements.
BROKERAGE. The Funds have adopted brokerage policies which allow the Advisor or
a sub-advisor to prefer brokers which provide research or other valuable
services to the Advisor, the sub-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 or a sub-advisor for its other clients;
conversely, the Funds may benefit from research services obtained through the
brokerage transactions of the Advisor's or a sub-advisor's other clients.
Subject to the requirements of the 1940 Act and procedures adopted by the Board
of Trustees, the Funds may execute portfolio transactions through any broker or
dealer and pay brokerage commissions to a broker (i) which is an affiliated
person of the Trust, or (ii) which is an affiliated person of such person, or
(iii) an affiliated person of which is an affiliated person of the Trust, the
Advisor or a sub-advisor of the Funds. The Statement of Additional Information
contains more information about the management and brokerage practices of the
Funds. It is anticipated that most fixed income securities transactions of the
Fund will be handled on a principal, rather than agency, basis. Fixed income
securities, including Municipal Obligations, 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.
TAX STATUS OF TAX EXEMPT VIRGINIA FUND
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FEDERAL INCOME TAXES. Because the Tax Exempt Virginia Fund intends to distribute
to shareholders substantially all of its net investment income and net realized
capital gains in accordance with the timing requirements imposed by the Code, it
is expected that the Fund will not be required to pay any federal income or
excise taxes. The Fund also expects the dividends it pays to shareholders of the
Fund from interest on Municipal Obligations generally to be exempt from federal
income tax because the Trust intends the Fund to satisfy certain requirements of
the Code.
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One such requirement is that at the close of each quarter of the taxable year of
the Fund, at least 50% of the value of its total assets consists of obligations
whose interest is exempt from federal income tax. Distributions of income from
investments in taxable securities and from certain other investments of the Fund
(including capital gains from the sale of securities) will be taxable to the
shareholder, whether distributed in cash or in additional shares. However, it is
expected that such amounts would not be substantial in relation to the
tax-exempt interest received by the Fund.
A statement will be sent to each shareholder of the Fund promptly after the end
of each calendar year setting forth the federal income tax status of all
distributions for each calendar year, including the portion exempt from federal
income tax as "exempt-interest dividends;" the portion, if any, that is a tax
preference item under the federal alternative minimum tax; the portion taxable
as ordinary income; the portion taxable as capital gains; and the portion
representing a return of capital (which is free of current taxes but results in
a basis reduction).
Current federal tax law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest and makes interest on certain
tax-exempt bonds and distributions by the Fund of such interest a tax preference
item for purposes of the individual and corporate alternative minimum tax. In
addition, all exempt-interest dividends may affect a corporate shareholder's
alternative minimum tax liability. Applicable tax law and changes therein may
also affect the availability of Municipal Obligations for investment by the Fund
and the value of the Fund's portfolio. The tax discussion in this Prospectus is
for general information only. Prospective investors should consult their own tax
advisors as to the tax consequences of an investment in the Fund.
STATE INCOME TAXES. The Trust is organized as a Massachusetts business trust
and, under current law, the Fund is not liable for any income or franchise tax
in the Commonwealth of Massachusetts as long as it qualifies as a regulated
investment company under the Code. The Fund will have a business location in
Virginia and will be subject to the income tax laws of that state. A regulated
investment company generally will not be required to pay any Virginia income tax
so long as it (i) does not have to pay any federal income tax and (ii) receives
no interest income that is exempt from federal income tax but is not exempt from
Virginia income tax, such as federally tax-exempt interest on obligations of a
state other than Virginia.
Set forth below is a brief description of the personal income tax status of an
investment in the Fund under Virginia tax laws currently in effect. A statement
setting forth the state income tax status of all distributions made during each
calendar year will be sent to shareholders annually.
The Virginia Department of Taxation has ruled that, under existing Virginia law,
as long as the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code and 50% or more of the value of the total assets of the
Fund consists of obligations whose interest is exempt from federal income tax,
dividends received from the Fund will not be subject to Virginia personal income
taxes to the extent that such dividends are either (i) excludable from gross
income for federal income tax purposes and attributable to interest on
obligations issued by the Commonwealth of Virginia or any of its political
subdivisions or instrumentalities or obligations issued by Guam, Puerto Rico or
the United States Virgin Islands or (ii) attributable to interest on obligations
issued by the United States or any authority, commission, or instrumentality of
the United States in the exercise of borrowing power, and backed by the full
faith and credit of the United States. For shareholders who are subject to
Virginia income tax, dividends received from the Fund (whether paid in cash or
reinvested in additional shares) generally will be includable in Virginia
taxable income to the extent not described in the preceding sentence. Thus, for
example, the portion of dividends excludable from gross income for federal
income tax purposes and attributable to interest on obligations of a state other
than Virginia will not be exempt from Virginia income tax.
Capital gains distributed by the Fund and gain recognized on the sale or other
disposition of shares of the Fund generally will not be exempt from Virginia
income taxation.
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Interest on indebtedness incurred (directly or indirectly) by a shareholder of
the Fund to purchase or carry shares of the Fund (i) will not be deductible for
Virginia income tax purposes to the extent that such interest expense relates to
the portions of dividends received from the Fund exempt from Virginia income tax
and (ii) will be deductible for Virginia income tax purposes as an offset
against the portions of the dividends received from the Fund attributable to
interest income not exempt from Virginia income taxation to the extent that such
interest expense is not deducted in determining federal taxable income and is
related to such non-exempt portions.
The maximum marginal Virginia personal income tax rate is 5.75%. The same rate
applies to capital gains as to other taxable income.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code, Treasury regulations, and Virginia tax laws presently in effect.
For the complete provisions, reference should be made to the pertinent Code
sections, the Treasury regulations promulgated thereunder, and the applicable
Virginia tax laws. The Code, Treasury regulations, and Virginia tax laws are
subject to change by legislative, judicial or administrative action either
prospectively or retroactively. Shareholders are urged to consult their own tax
advisors regarding specific questions as to federal, state, local or foreign
taxes.
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. The discussion herein of the federal
and state income tax consequences of an investment in the Funds is not
exhaustive on the subject. 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 Tax Exempt Virginia Fund intends to declare dividends on each business
day and to pay such dividends monthly. Each of the Balanced Fund, the Equity
Fund and the International Equity Fund intends to declare dividends quarterly,
payable in March, June, September and December, on a date selected by the
Trustees. In addition, distributions may be made annually in December out of any
net short-term or long-term capital gains derived from the sale of securities
realized through October 31 of that year. 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 made to persons who are neither citizens nor
residents of the U.S.
Distributions resulting from the sale of foreign currencies and foreign
obligations, to the extent of foreign exchange gains, are taxed as ordinary
income or loss. If these transactions result in reducing the International
Equity Fund's net income, a portion of the income may be classified as a return
of capital (which will lower your tax basis). If the International Equity Fund
pays nonrefundable taxes to foreign governments during the year, the taxes will
reduce the Fund's net investment income but still may be included in your
taxable income. However, you may be able to claim an offsetting tax credit or
itemized deduction on your return for your portion of foreign taxes paid by the
International Equity Fund.
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Under applicable tax law, the International Equity Fund may be required to limit
its gains from hedging in foreign currency forwards, futures and options.
Although it is anticipated the International Equity Fund will comply with such
limits, the Fund's extensive use of these hedging techniques involves greater
risk of unfavorable tax consequences than funds not engaging in such techniques.
Hedging may also result in the application of the mark-to-market and straddle
provisions of the Internal Revenue Code. These provisions could result in an
increase (or decrease) in the amount of taxable dividends paid by the Fund as
well as affect whether dividends paid by the Fund are classified as capital gain
or ordinary income.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains for either Fund. Current
practice of the Balanced Fund, the Equity Fund and the International Equity
Fund, subject to the discretion of the Board of Trustees, is for declaration and
payment of income dividends during the last week of each calendar quarter. All
dividends and capital gains distributions are reinvested in additional shares of
the 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.
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 Funds 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 Bond Fund and The Jamestown Short Term
Bond Fund, which are managed by Tattersall Advisory Group, 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, or funds, at any time.
Shares are freely transferable, have no preemptive or conversion rights and,
when issued, are fully paid and non-assessable. Upon liquidation of the Trust or
a particular Fund of the Trust, holders of the outstanding shares of the Fund
being liquidated shall be entitled to receive, in proportion to the number of
shares of the Fund held by them, the excess of that Fund's assets over its
liabilities. Each outstanding share is entitled to one vote for each full share
and a fractional vote for each fractional share, on all matters which concern
the Trust as a whole. On any matter submitted to a vote of shareholders, all
shares of the Trust then issued and outstanding and entitled to vote,
irrespective of the Fund, shall be voted in the aggregate and not by Fund,
except (i) when required by the 1940 Act, shares shall be voted by individual
Fund; and (ii) when the matter does not affect any interest of a particular
Fund, then only shareholders of the affected Fund or Funds shall be entitled to
vote thereon. Examples of matters which affect only a particular Fund could be a
proposed change in the fundamental investment objectives or policies of that
Fund or a proposed change in the investment advisory agreement for a particular
Fund. The shares of the 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 the Trustees may hold office indefinitely,
except that: (1) any Trustee may resign or retire; (2) any Trustee may be
removed with or without cause at any time: (a) by a written instrument, signed
by at least two-thirds of the number of Trustees prior to such removal; (b) by
vote of shareholders holding not less than two-thirds of the outstanding shares
of the Trust, cast in person or by proxy at a meeting called for that
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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 and the Tax Exempt Virginia
Fund may advertise its tax-equivalent yield. Both yield and total return figures
are based on historical earnings and are not intended to indicate future
performance.
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. The
tax-equivalent yield of the Virginia Tax Exempt Fund is computed by using the
tax-exempt yield figure and dividing by one minus the tax rate. 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.
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APPENDIX A
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DESCRIPTION OF MUNICIPAL OBLIGATIONS
Municipal Obligations include bonds, notes and commercial paper issued by or on
behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies or
instrumentalities, the interest on which is exempt from federal income taxes
(without regard to whether the interest thereon is also exempt from the personal
income taxes of any state). Municipal Obligation bonds are issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligation bonds may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses, and
obtaining funds to loan to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide privately-operated
housing facilities, airport, mass transit or port facilities, sewage disposal,
solid waste disposal or hazardous waste treatment or disposal facilities and
certain local facilities for water supply, gas or electricity. Such obligations
are included within the term Municipal Obligations if the interest paid thereon
qualifies as exempt from federal income tax. Other types of industrial
development bonds, the proceeds of which are used for the construction,
equipment, repair or improvement of privately operated industrial or commercial
facilities, may constitute Municipal Obligations, although the current federal
tax laws place substantial limitations on the size of such issues.
The two principal classifications of Municipal Obligation bonds are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its good faith, credit and taxing power for the payment of
principal and interest. The payment of the principal of and interest on such
bonds may be dependent upon an appropriation by the issuer's legislative body.
The characteristics and enforcement of general obligation bonds vary according
to the law applicable to the particular issuer. Revenue bonds are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other specific revenue
source. Industrial development bonds which are Municipal Obligations are in most
cases revenue bonds and do not generally constitute the pledge of the credit of
the issuer of such bonds.
Municipal Obligations also include participations in municipal leases. These are
undivided interests in a portion of an obligation in the form of a lease or
installment purchase which is issued by state and local governments to acquire
equipment and facilities. Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds. Leases and
installment purchase or conditional sale contracts (which normally provide for
title to the leased asset to pass eventually to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations are deemed to be inapplicable because of
the inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. Accordingly, a
risk peculiar to these municipal lease obligations is the possibility that a
governmental issuer will not appropriate funds for lease payments. Although the
obligations will be secured by the leased equipment or facilities, the
disposition of the property in the event of non-appropriation or foreclosure
might, in some cases, prove difficult. There are, of course, variations in the
security of Municipal Obligations, both within a particular classification and
between classifications, depending on numerous factors.
Municipal Obligation notes generally are used to provide for short-term capital
needs and generally have maturities of one year or less. Municipal Obligation
notes include:
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1. TAX ANTICIPATION NOTES. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they are issued in anticipation of
various tax revenues, such as income, sales, use and business taxes, and are
payable from these specific future taxes.
2. REVENUE ANTICIPATION NOTES. Revenue Anticipation Notes are issued in
expectation of receipt of other kinds of revenue, such as federal revenues
available under Federal Revenue Sharing Programs.
3. BOND ANTICIPATION NOTES. Bond Anticipation Notes are issued to provide
interim financing until long-term bond financing can be arranged. In most cases,
the long-term bonds then provide the money for the repayment of the Notes.
Issues of commercial paper typically represent short-term, unsecured, negotiable
promissory notes. These obligations are issued by agencies of state and local
governments to finance seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general revenues of
municipalities or are refinanced with long-term debt. In most cases, Municipal
Obligation commercial paper is backed by letters of credit, lending agreements,
note repurchase agreements or other credit facility agreements offered by banks
or other institutions.
The yields on Municipal Obligations are dependent on a variety of factors,
including general market conditions, supply and demand and general conditions of
the Municipal Obligation market, size of a particular offering, the maturity of
the obligation and rating (if any) of the issue.
DESCRIPTION OF MUNICIPAL BOND RATINGS. The ratings of the nationally recognized
statistical rating organizations (Moody's Investors Service, Inc., Standard &
Poor's Ratings Group, Fitch Investors Service and Duff & Phelps) represent each
firm's opinion as to the quality of various Municipal Obligations. It should be
emphasized, however, that ratings are not absolute standards of quality.
Consequently, Municipal Obligations with the same maturity, coupon and rating
may have different yields while Municipal Obligations of the same maturity and
coupon with different ratings may have the same yield. The descriptions offered
by each individual rating firm may differ slightly, but the following offers a
description by Moody's Investors Service, Inc. of each rating category:
Aaa or AAA: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa or AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa or BBB: Bonds which are 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.
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APPENDIX B
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FACTORS AFFECTING VIRGINIA MUNICIPAL OBLIGATIONS
The Commonwealth, its officials and employees are named as defendants in legal
proceedings which occur in the normal course of governmental operations, some
involving substantial amounts. It is not possible at the present time to
estimate the ultimate outcome or liability, if any, of the Commonwealth with
respect to these lawsuits. However, the ultimate liability resulting from these
suits is not expected to have a material, adverse effect on the financial
condition of the Commonwealth.
In Davis v. Michigan (decided March 28, 1989), the United States Supreme Court
ruled unconstitutional states' exempting from state income tax the retirement
benefits paid by the state or local governments without exempting retirement
benefits paid by the federal government. At that time, Virginia exempted state
and local retirement benefits but not federal retirement benefits. At a Special
Session held in April 1989, the General Assembly repealed the exemption of state
and local retirement benefits. Following Davis, at least five suits, some with
multiple plaintiffs, for refunds of Virginia income taxes, were filed by federal
retirees. These suits were consolidated under the name of Harper v. Virginia
Department of Taxation.
In a Special Session in 1994, the General Assembly passed emergency legislation
to provide payments in five annual installments to federal retirees in
settlement of their claims as a result of Davis. In 1995 and 1996, the General
Assembly passed legislation allowing more retirees to participate in the
settlement. As of April 15, 1996, the estimated total cost to the Commonwealth
for the settlement was approximately $316.2 million.
On September 15, 1995 the Supreme Court of Virginia rendered its decision in
Harper. The Court reversed the judgment of the trial court and entered final
judgment in favor of the taxpayers, directing that the amounts unlawfully
collected be refunded with statutory interest. The Commonwealth issued refund
checks on November 9, 1995, and interest stopped accruing as of November 3,
1995. The cost of refunding all Virginia income taxes paid on federal government
pensions for taxable years 1985, 1986, 1987 and 1988 to federal government
pensioners who opted out of the settlement was approximately $78.7 million,
including interest earnings.
The total cost of refunding all Virginia income taxes paid on federal pensions
on account of the settlement (approximately $316.2 million) and the judgment
($78.7 million) is approximately $394.9 million, of which $203.2 million ($124.5
million in respect of the settlement and the entire $78.7 million in respect of
the judgment) has been paid, leaving $191.7 million payable in respect of the
settlement - approximately $63.2 million in fiscal year 1997, $62.5 million on
March 31, 1998, and (subject to appropriation) $66 million on March 31, 1999.
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THE JAMESTOWN FUNDS
Send completed application to:
THE JAMESTOWN 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 Initial) (Last Name)
_________________________________________________________________
(Birthdate of Minor) (SS # of Minor)
o For Corporations __________________________________________________
Partnerships, Trusts, Name of Corporation or Partnership. If a Trust,
Retirement Plans and include the name(s) of Trustees in which account
Third Party IRAs 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: $5,000)
o Enclosed is a check payable to the applicable Fund for $________________
(Please indicate Fund below)
_____ o Jamestown Balanced Fund (80) _____ o Jamestown Equity Fund (81)
_____ o Jamestown International _____ o Jamestown Tax Exempt
Equity Fund (85) Virginia Fund (84)
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 (name of Fund)
For (shareholder name and Social Security or Taxpayer ID Number)
- --------------------------------------------------------------------------------
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.
37
<PAGE>
SIGNATURE AUTHORIZATION - FOR USE BY CORPORATIONS, TRUSTS, PARTNERSHIPS AND
OTHER INSTITUTIONS
Please retain a copy of this document for your files. Any modification of the
information contained in this section will require an Amendment to this
Application Form.
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 JAMESTOWN FUNDS for the Registered Owner and to execute and deliver any
instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
________________________ ________________________ ___________________________
________________________ ________________________ ___________________________
________________________ ________________________ ___________________________
THE JAMESTOWN 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)
SYSTEMATIC WITHDRAWAL
Please redeem sufficient shares from this account at the then net asset value,
in accordance with the instructions below: (subject to a minimum $100 per
distribution)
Dollar amount of each withdrawal $____________ beginning the last business day
of __________
Withdrawals to be made: o Monthly o Quarterly
o Please DEPOSIT DIRECTLY the proceeds to the bank account below
o Please mail redemption proceeds to the name and address of record
AUTOMATIC INVESTMENT
Please purchase shares of o Jamestown Balanced Fund
o Jamestown Equity Fund
o Jamestown International Equity Fund
o Jamestown Tax Exempt Virginia Fund
by withdrawing from the commercial bank account below, per the instructions
below:
Amount $___________ (minimum $100) Please make my automatic investment on:
__________________________________ o the last business day of each month
(Name of Bank) o the 15th day of each month
o both the 15th and last business day
is hereby authorized to charge to
my account the bank draft amount
here indicated. I understand the
payment of this draft is subject
to all provisions of the contract
as stated on my bank account
signature card.
__________________________________________________________________
(Signature as your name appears on the bank account to be drafted)
Name as it appears on the account ______________________________________________
Commercial bank account # ______________________________________________________
ABA Routing # __________________________________________________________________
City, State and Zip in which bank is located ___________________________________
For AUTOMATIC INVESTMENT or SYSTEMATIC WITHDRAWAL please attach a voided check
from the above account.
- --------------------------------------------------------------------------------
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Funds and affirm that I have received a current prospectus and
understand the 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, Lowe, Brockenbrough & Company,
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
38
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39
<PAGE>
THE JAMESTOWN FUNDS
INVESTMENT ADVISOR
Lowe, Brockenbrough & Company, Inc.
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
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
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.
