Registration No. 33-25301
811-5685
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No.
Post-Effective Amendment No. 31
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 34
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Williamsburg Investment Trust
-----------------------------
(Exact Name of Registrant as Specified in Charter)
312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (513) 629-2000
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W. Lee H. Dunham, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to Rule 485(b)
/x/ on August 1, 1998 pursuant to Rule 485(b)
/ / ___ days after filing pursuant to Rule 485(a)
/ / on ( ) pursuant to Rule 485(a)
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended.
<PAGE>
WILLIAMSBURG INVESTMENT TRUST
-----------------------------
Cross-Reference Sheet Pursuant to Rule 495(a)
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Part A Prospectus
Form Item Cross-Reference
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Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary;
Synopsis of Costs and
Expenses
Item 3. Condensed Financial Dividends, Distributions,
Information Taxes and Other
Information
Item 4. General Description Investment Objective,
of Registrant Investment Policies and
Risk Considerations;
Management of the Fund
Item 5. Management of the Fund Management of the Fund
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Tax Status; Dividends,
Distributions, Taxes and Other
Other Securities Information
Item 7. Purchase of Securities How to Purchase Shares;
Being Offered How Net Asset Value is
Determined; Application
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Pending Legal Proceedings Not Applicable
Statement of
Part B Additional Information
Form Item Cross-Reference
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
<PAGE>
Item 12. General Information Capital Shares and Voting
and History
Item 13. Investment Objectives Investment Objective and
and Policies Policies; Investment
Limitations
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Not Applicable
Principal Holders of
Securities
Item 16. Investment Advisory and Investment Advisor;
Other Services Administrator;
Other Services
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock and Capital Shares and Voting
Other Securities
Item 19. Purchase, Redemption and Special Shareholder
Pricing of Securities Services; Purchase of
Being Offered Shares; Redemption of
Shares; Net Asset Value
Determination
Item 20. Tax Status Additional Tax
Information
Item 21. Underwriters Not Applicable
Item 22. Calculation of Calculation of
Performance Data Performance Data
Item 23. Financial Statements Not Applicable
<PAGE>
THE
FLIPPIN, BRUCE & PORTER
FUNDS
-----------------------
FBP Contrarian Equity Fund
FBP Contrarian Balanced Fund
PROSPECTUS NO-LOAD FUNDS
August 1, 1998
No-Load Funds
<PAGE>
PROSPECTUS THE NO-LOAD FUNDS
August 1, 1998 FLIPPIN, BRUCE & PORTER
FUNDS
-----------------------
FBP Contrarian Equity Fund
FBP Contrarian Balanced Fund
- --------------------------------------------------------------------------------
The FBP CONTRARIAN EQUITY FUND seeks long term growth of capital through
investment in a diversified portfolio comprised primarily of equity securities,
with current income as a secondary objective.
The FBP CONTRARIAN BALANCED FUND seeks long term capital appreciation and
current income through investment in a balanced portfolio of equity and fixed
income securities assuming a moderate level of investment risk.
The FBP Contrarian Equity Fund and the FBP Contrarian Balanced Fund (the
"Funds") are NO-LOAD, diversified, open-end series of the Williamsburg
Investment Trust, a registered management investment company. This Prospectus
provides you with the basic information you should know before investing in the
Funds. You should read it and keep it for future reference. While there is no
assurance that the Funds will achieve their investment objectives, they endeavor
to do so by following the investment policies described in this Prospectus.
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 ............................................ 3
Financial Highlights ...................................................... 4
Investment Objectives, Investment Policies and Risk Considerations ........ 6
How to Purchase Shares .................................................... 12
How to Redeem Shares ...................................................... 14
How Net Asset Value is Determined ......................................... 15
Management of the Funds ................................................... 15
Dividends, Distributions, Taxes and Other Information ..................... 17
Application ............................................................... 21
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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1
<PAGE>
PROSPECTUS SUMMARY
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THE FUNDS. The FBP Contrarian Equity Fund (the "Equity Fund") and the FBP
Contrarian Balanced Fund (the "Balanced Fund") are NO-LOAD, diversified,
open-end series of the Williamsburg Investment Trust, a registered management
investment company commonly known as a "mutual fund". Each represents a separate
mutual fund with its own investment objectives and policies. An investor may
elect one or both of the Funds to meet individual investment objectives, and may
switch from one Fund to the other without charge when a shareholder's investment
objectives or plans change. While there is no assurance that the Funds will
achieve their investment objectives, they each endeavor to do so by following
the investment policies described in this Prospectus.
INVESTMENT OBJECTIVES. The Equity Fund's investment objective is long term
growth of capital through investment in a diversified portfolio comprised
primarily of equity securities, with current income as a secondary objective.
The Balanced Fund's investment objectives are long term capital appreciation and
current income through investment in a balanced portfolio of equity and fixed
income securities assuming a moderate level of investment risk.
INVESTMENT APPROACH. In seeking to achieve the investment objectives of both the
Equity Fund and the Balanced Fund, a "contrarian" investment strategy is
utilized. Contrarian investing entails the acquisition of securities of
companies which, in the Adviser's judgment, are undervalued in the securities
markets, usually because they are out of favor with most of the investment
community. A company's securities may be out of favor because, for example, of
earnings declines, business or economic cycle slumps, competitive problems,
litigation, product obsolescence and other reasons. Such securities are selected
based upon the Adviser's assessment of historical valuations, future recovery
prospects and other factors. (See "Investment Objectives, Investment Policies
and Risk Considerations.")
INVESTMENT ADVISER. Flippin, Bruce & Porter, Inc. (the "Adviser") serves as
investment adviser to each of the Funds. For its services, the Adviser receives
compensation of 0.75% of the average daily net assets of each of the Funds. The
fees are reduced for either Fund when the assets of the particular Fund exceed
$250 million. (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 either Fund is $25,000 ($1,000 for
IRAs or Keogh accounts). Subsequent investments in both Funds must be $1,000 or
more ($300 for IRA or Keogh accounts). 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 of the Funds is distributed
quarterly. Net capital gains, if any, are distributed at least annually.
Shareholders may elect to receive dividends and capital gain distributions in
cash or the dividends and capital gain distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Funds are series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Funds. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Funds.")
2
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
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FBP CONTRARIAN EQUITY FUND
SHAREHOLDER TRANSACTION EXPENSES: ................................ None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average daily net assets)
Investment Advisory Fees ......................................... 0.75%
Administrator's Fees ............................................. 0.20%
Other Expenses ................................................... 0.17%
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Total Fund Operating Expenses .................................... 1.12%
=====
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
------ ------- ------- --------
$11 $36 $62 $136
FBP CONTRARIAN BALANCED FUND
SHAREHOLDER TRANSACTION EXPENSES: ................................ None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average daily net assets)
Investment Advisory Fees ......................................... 0.75%
Administrator's Fees ............................................. 0.19%
Other Expenses ................................................... 0.10%
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Total Fund Operating Expenses .................................... 1.04%
=====
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
------ ------- ------- --------
$11 $33 $57 $127
The purpose of the foregoing tables is to assist investors in the Funds in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Funds" for more information about the fees
and costs of operating the Funds. The Annual Fund Operating Expenses shown above
are based upon actual operating history for the fiscal year ended March 31,
1998. 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.
3
<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.
<TABLE>
<CAPTION>
FBP CONTRARIAN EQUITY FUND
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------------------------------------------
July 30,
Years Ended March 31, 1993(a) To
------------------------------------------------ March 31,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 16.08 $ 14.21 $ 11.21 $ 10.15 $ 10.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.19 0.22 0.24 0.21 0.12
Net realized and unrealized gains on investments 5.98 2.24 3.05 1.14 0.19
--------- --------- --------- --------- ---------
Total from investment operations ................... 6.17 2.46 3.29 1.35 0.31
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.19) (0.22) (0.24) (0.23) (0.10)
Distributions from net realized gains ........... (0.61) (0.37) (0.05) (0.06) (0.06)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.80) (0.59) (0.29) (0.29) (0.16)
--------- --------- --------- --------- ---------
Net asset value at end of period ................... $ 21.45 $ 16.08 $ 14.21 $ 11.21 $ 10.15
========= ========= ========= ========= =========
Total return ....................................... 38.90% 17.65% 29.54% 13.52% 4.59%(c)
========= ========= ========= ========= =========
Net assets at end of period (000's) ................ $ 35,322 $ 16,340 $ 9,090 $ 5,323 $ 3,135
========= ========= ========= ========= =========
Ratio of net expenses to average net assets(b) ..... 1.12% 1.21% 1.25% 1.25% 1.25%(c)
Ratio of net investment income to average net assets 1.04% 1.50% 1.89% 2.15% 1.98%(c)
Portfolio turnover rate ............................ 10% 9% 12% 9% 7%
Average commission rate per share .................. $ 0.0852 $ 0.0925 -- -- --
</TABLE>
(a) Commencement of operations.
(b) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.25%, 1.67%, 2.27% and
3.10%(c) for the periods ended March 31, 1997, 1996, 1995 and 1994,
respectively.
(c) Annualized.
4
<PAGE>
<TABLE>
<CAPTION>
FBP CONTRARIAN BALANCED FUND
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ----------------------------------------------------------------------------------------------------------
Years Ended March 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period ............. $ 15.87 $ 14.86 $ 12.80 $ 12.19 $ 12.10 $ 11.10
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ........... 0.41 0.42 0.43 0.38 0.33 0.34
Net realized and unrealized gains
(losses) on investments ...... 4.26 1.49 2.44 0.87 0.15 1.06
------- ------- ------- ------- ------- -------
Total from investment operations ... 4.67 1.91 2.87 1.25 0.48 1.40
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from
net investment income ........ (0.41) (0.42) (0.43) (0.39) (0.32) (0.35)
Distributions from
net realized gains ........... (1.05) (0.48) (0.38) (0.25) (0.07) (0.05)
------- ------- ------- ------- ------- -------
Total distributions ................ (1.46) (0.90) (0.81) (0.64) (0.39) (0.40)
------- ------- ------- ------- ------- -------
Net asset value at end of period ... $ 19.08 $ 15.87 $ 14.86 $ 12.80 $ 12.19 $ 12.10
======= ======= ======= ======= ======= =======
Total return ....................... 30.22% 13.15% 22.86% 10.54% 3.88% 12.76%
======= ======= ======= ======= ======= =======
Net assets at end of period (000's) $55,940 $40,854 $35,641 $25,976 $21,969 $16,435
======= ======= ======= ======= ======= =======
Ratio of net expenses
to average net assets ........... 1.04% 1.08% 1.17% 1.17%(b) 1.25%(c) 1.31%(c)
Ratio of net investment income
to average net assets ........... 2.33% 2.65% 3.04% 3.10% 2.64% 3.09%
Portfolio turnover rate ............ 21% 24% 17% 14% 28% 27%
Average commission rate per share .. $0.0630 $0.0779 -- -- -- --
</TABLE>
July 3,
Years Ended March 31, 1989(a) To
--------------------- March 31,
1992 1991 1990
- --------------------------------------------------------------------------------
Net asset value at
beginning of period ............. $ 9.90 $ 9.75 $ 10.16
------- ------- -------
Income from investment operations:
Net investment income ........... 0.36 0.45 0.28
Net realized and unrealized gains
(losses) on investments ...... 1.17 0.18 (0.42)
------- ------- -------
Total from investment operations ... 1.53 0.63 (0.14)
------- ------- -------
Less distributions:
Dividends from
net investment income ........ (0.33) (0.48) (0.27)
Distributions from
net realized gains ........... -- -- --
------- ------- -------
Total distributions ................ (0.33) (0.48) (0.27)
------- ------- -------
Net asset value at end of period ... $ 11.10 $ 9.90 $ 9.75
======= ======= =======
Total return ....................... 15.71% 6.98% (1.78%)(d)
======= ======= =======
Net assets at end of period (000's) $ 9,572 $ 5,285 $ 3,270
======= ======= =======
Ratio of net expenses
to average net assets ........... 1.35%(c) 1.40%(c) 1.84%(c)(d)
Ratio of net investment income
to average net assets ........... 3.61% 5.07% 4.90%(d)
Portfolio turnover rate ............ 14% 13% 16%
Average commission rate per share .. -- -- --
(a) Effective date of the Fund's initial registration under the Securities Act
of 1933, as amended.
(b) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's custodian fees for the year ended March 31, 1995 was paid
through an arrangement with a third-party broker-dealer who was compensated
through commission trades. Payment of the fees was based on a percentage of
commissions earned. Absent expenses reimbursed through the directed
brokerage arrangement, the ratio of expenses to average net assets would
have been 1.20% for the year ended March 31, 1995.
(c) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.36%, 1.43%, 1.66%,
1.95% and 2.59% (d) for the periods ended March 31, 1994, 1993, 1992, 1991
and 1990, respectively.
(d) 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.
5
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
A description of the investment objectives and policies of each Fund appears
below. 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.
THE EQUITY FUND
The investment objective of the Equity Fund is long term growth of capital
through investment in a diversified portfolio comprised primarily of equity
securities. As income is a secondary objective, any income produced will be a
by-product of the effort to achieve the Equity Fund's primary objective.
In seeking to achieve the Fund's investment objective, the Adviser follows a
contrarian investment approach in the selection and sale of equity securities.
The contrarian philosophy is a disciplined form of value management, setting the
stage for investors to take advantage of quality securities which in the opinion
of the Adviser are undervalued. These securities, while out of favor with much
of the investment community when purchased, still retain the fundamental
characteristics that may return their performance to historical levels. (See
"Investment Selection.")
It is the intention of the Adviser for the Equity Fund to remain fully invested
at all times. Equity securities will normally comprise 70-100% of the Fund's
assets, while money market instruments will comprise 0-30%. The use of money
market instruments enables the Fund to earn interest while satisfying its
working capital needs, such as the accumulation of liquid reserves for
anticipated acquisition of portfolio securities.
THE BALANCED FUND
The investment objective of the Balanced Fund is long term capital appreciation
and current income by investing in a balanced portfolio of equity and fixed
income securities assuming a moderate level of investment risk.
The Balanced Fund invests in both equity and fixed income securities. Equity
securities are acquired for capital appreciation or a combination of capital
appreciation and income. Fixed income securities, including money market
instruments, are acquired for income and secondarily for capital appreciation.
(See "Investment Selection.")
In addition to investing in various types of securities, the Adviser also
invests in various companies, industries and economic sectors. The percentage of
assets invested in equities, fixed income securities and money market
instruments will vary from time to time depending upon the Adviser's judgment of
general market and economic conditions, trends in yields and interest rates and
changes in fiscal or monetary policies. Depending upon the Adviser's
determination of market and economic conditions, investment emphasis may be
placed on equities or fixed income securities as reflected in the table below.
This allocation between stocks and bonds creates an opportunity for investors to
receive competitive returns of capital growth and income while maintaining
diversification. Under normal market conditions the Balanced Fund's portfolio
allocation ranges will be as follows:
% of Total Assets
-----------------
Equity Securities 40-70%
Fixed Income Securities 25-50%
Money Market Instruments 0-35%
6
<PAGE>
INVESTMENT SELECTION -- EQUITY FUND AND BALANCED FUND
- --------------------------------------------------------------------------------
The concept of "contrarian" investing used in both the Equity Fund and the
Balanced Fund entails the acquisition of securities of companies which, in the
Adviser's judgment, are undervalued in the securities markets. Candidates for
such contrarian investment will usually include the equity securities of
domestic, established companies. Under normal conditions, at least 65% of each
Fund's assets will be invested utilizing the contrarian investment approach
described herein.
It is the Adviser's belief that the securities of well managed companies which
may be temporarily out of favor due to earnings declines or other adverse
developments, such as competitive problems, litigation or product obsolescence,
are likely to provide a greater total investment return than securities of
companies which are favored by most investors because of actual or anticipated
favorable developments. The reason, the Adviser believes, is that the prices of
securities of "out of favor" companies often tend to be driven lower than
fundamentally derived values because of overly pessimistic investor
expectations, while the prices of securities of "in favor" companies tend to be
driven higher than fundamentally derived values because of overly optimistic
investor perceptions.
No assurance can be given, of course, that the Adviser will be correct in its
expectations of recovery for the securities selected for the Funds' portfolios.
While portfolio securities are generally acquired for the long term, they will
be sold when the Adviser believes that: (a) the anticipated price appreciation
has been achieved or is no longer probable; (b) alternate investments offer
superior total return prospects; or (c) the risk of decline in market value is
increased. In an attempt to reduce overall portfolio risk, provide stability,
and to meet operations and cash needs of both of the Funds, and generate income
for the Balanced Fund, the Adviser allocates a portion of the Equity Fund's
assets to money market instruments, and a portion of the Balanced Fund's assets
to fixed income securities as well as money market instruments.
As a temporary defensive measure, when the Adviser determines that market
conditions warrant, the Equity Fund and the Balanced Fund may depart from their
normal investment objective and money market instruments may be emphasized, even
to the point that 100% of either Fund's assets may be so invested.
EQUITY SELECTION. The Adviser will invest the Funds' assets among various
companies, industries and economic sectors in an attempt to take advantage of
what the Adviser believes are the best opportunities for capital appreciation
and growth with limited risk.
The Equity Fund and the equity portion of the Balanced Fund will be primarily
invested in common stocks, convertible preferred stocks, and investment rights
and warrants traded on domestic securities exchanges or on the over-the-counter
market. Foreign securities, if held, will be held in the form of American
Depository Receipts ("ADRs"). ADRs are foreign securities denominated in U.S.
Dollars and traded on U.S. securities markets. The Funds will invest only in
sponsored ADRs on foreign equities.
The majority of the equities in the Equity Fund and the equity portion of the
Balanced Fund will be in the securities of established companies, having
operating histories of 10 years or longer and having a market capitalization of
$500 million or more, which are undervalued in the Adviser's opinion. In
determining whether a common stock is undervalued, the Adviser considers, among
other things, such factors as: research material generated by the brokerage
community; investment and business publications and general investor attitudes
as perceived by the Adviser; valuation with respect to price-to-book value,
price-to-sales, price-to-cash flow, price-to-earnings ratios, and dividend
yield, all compared to historical valuations and future prospects for the
company as judged by the Adviser.
In order to implement the Funds' contrarian strategy, the Adviser allocates the
total portfolio of the Equity Fund, and the equity portion of the Balanced
Fund's portfolio as follows:
7
<PAGE>
FRESHLY IDENTIFIED CONTRARIAN SECURITIES will normally comprise
approximately 25% of the equities held by the Funds. Such securities will
be of companies which the Adviser believes have reached the low point of
their business cycle and have, as a result, fallen out of favor with most
of the investment community. Such companies must, in the Adviser's
assessment, possess the capability to achieve full recovery of business and
economic viability, as well as investment community favor, within a typical
time frame of from three to four years.
SECURITIES OF RECOVERING COMPANIES will normally comprise approximately 50%
of the equities held by the Funds. Such companies will be evidencing
varying degrees of recovery from their business cycle low points and the
investment community will, in varying degrees, be recognizing this
recovery. Recognition may take many forms, some of which may be in the form
of favorable research reports and purchase recommendations by brokerage
firms and other investment professionals, renewed institutional interest in
the form of reported large block purchase transactions and/or favorable
market price movements relative to the stock market as a whole. Such
securities, considered by many to be so called "value" purchases, are
considered by the Adviser to have attractive potential for long term
capital appreciation and growth.
SECURITIES OF RECOVERED COMPANIES will comprise approximately 25% of the
equities held by the Funds. These once contrarian issues are now at or near
the top of the Adviser's growth and price expectations, have generally
achieved renewed favor of the investment community and are, generally,
candidates for the option writing activities described herein or for other
disposition in order to realize their capital gains potential.
FIXED INCOME SELECTION. The Balanced Fund's fixed income investments may include
corporate debt obligations and "U.S. Government Securities." The Balanced Fund
will generally invest in obligations which mature in one to ten years from the
date of purchase except when, in the Adviser's opinion, long term interest rates
are expected by the Adviser to be in a declining trend, in which case maturities
may extend to thirty years.
Corporate debt obligations will consist primarily 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 Adviser's opinion. Corporate debt obligations are acquired
primarily for their income return and secondarily for capital appreciation.
Those acquired for their capital appreciation potential may be "contrarian"
issues as described herein. For example, fixed income securities of companies
and/or industries at the low point of their business cycle often experience a
downgrading of their quality ratings by Moody's, S&P or other rating services,
generally resulting in reduced prices for such securities. The Adviser believes
such downgraded debt obligations often represent opportunities for capital
appreciation as well as current income and will acquire such securities after a
downgrading where it believes that the company's financial condition (and
therefore its quality ratings) will be improving. Such downgraded securities
will usually be rated less than A by Moody's and S&P. The Balanced Fund will
invest no more than 5% of its net assets in fixed income securities rated less
than Baa by Moody's or BBB by S&P and will not invest in fixed income securities
rated lower than B (or the equivalent, in the Adviser's opinion, if not rated).
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 the Adviser
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, the Adviser monitors the issuer's credit standing.
The Adviser expects that U.S. Government Securities will normally comprise at
least 10% of the Balanced Fund's total assets. "U.S. Government Securities"
include direct obligations of the U.S. Treasury, securities issued or guaranteed
as to interest and principal by agencies or instrumentalities of the U.S.
Government, or any of the foregoing subject to repurchase agreements. (See
"Repurchase Agreements.") While obligations of some U.S. Government sponsored
entities are supported by the full faith and credit of the U.S. Government,
several are supported by the right of the issuer to borrow from the U.S.
Government, and still others are supported only by the credit of the issuer
itself. The guarantee of the U.S. Government does not extend to the yield or
value of the U.S. Government Securities held by the Funds or to either Fund's
shares. See the Statement of Additional Information for a more detailed
description.
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MONEY MARKET INSTRUMENTS. 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
Adviser's opinion. See the Statement of Additional Information for a further
description of money market instruments.
OPTIONS. When the Adviser believes that individual portfolio securities within
the Equity Fund and Balanced Fund are approaching the top of the Adviser's
growth and price expectations, covered call options ("Calls") may be written
(sold) against such securities in a disciplined approach to selling portfolio
securities.
When the Funds write a call, they receive a premium and agree to sell the
underlying security to a purchaser of a corresponding call at a specified price
("strike price") by a future date ("exercise date"). To terminate its obligation
on a call the Fund has written, it may purchase a corresponding call in a
"closing purchase transaction". A profit or loss will be realized, depending
upon whether the price of the closing purchase transaction is more or less than
the premium (net of transaction costs) previously received on the call written.
The Funds may also realize a profit if the call it has written lapses
unexercised, in which case the Funds keep the premium and retain the underlying
security as well. If a call written by one of the Funds is exercised, the Fund
forgoes any possible profit from an increase in the market price of the
underlying security over the exercise price plus the premium received. The Funds
write options only for hedging purposes and not for speculation where the
aggregate value of the underlying obligations will not exceed 25% of a Fund's
net assets. If the Adviser is incorrect in its expectations and the market price
of a stock subject to a call option rises above the exercise price of the
option, the Funds will lose the opportunity for further appreciation of that
security.
Profits on closing purchase transactions and premiums on lapsed calls written
are considered capital gains for financial reporting purposes and are short term
gains for federal income tax purposes. When short term gains are distributed to
shareholders, they are taxed as ordinary income. If the Funds desire to enter
into a closing purchase transaction, but there is no market when they desire to
do so, they would have to hold the securities underlying the call until the call
lapses or until the call is exercised.
The Funds will only write options which are issued by the Options Clearing
Corporation and listed on a national securities exchange. Call writing affects
the Funds' portfolio turnover rate and the brokerage commissions paid.
Commissions for options, which are normally higher than for general securities
transactions, are payable when writing calls and when purchasing closing
purchase transactions. The Statement of Additional Information contains
additional information about covered call options.
FACTORS TO CONSIDER. Neither Fund is intended to be a complete investment
program and there can be no assurance that the Funds will achieve their
investment objectives. 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 from changes in
creditworthiness of the issuers, which may result from adverse business and
economic developments or proposed corporate transactions, such as a leveraged
buy-out or recapitalization of the issuer. 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
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<PAGE>
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 Adviser 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 Adviser'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.
UNSEASONED ISSUERS. The Funds may invest in the securities of unseasoned
issuers, that is, companies having an operating history of less than three years
(including predecessors and, in the case of fixed income securities,
guarantors). The management of such companies frequently does not have
substantial business experience. Furthermore, they may be competing with other
companies which are well established, more experienced and better financed.
Because of these and other risks, described in the Statement of Additional
Information, investment in unseasoned issuers is restricted by the Funds to no
more than 5% of each Fund's net assets.
SHARES OF OTHER INVESTMENT COMPANIES. The Funds may invest in shares of other
investment companies, including shares of the DIAMONDS Trust ("DIAMONDs") and
Standard & Poor's Depository Receipts ("SPDRs"). DIAMONDs and SPDRs are
exchange-traded securities that represent ownership in long-term unit investment
trusts established to accumulate and hold a portfolio of common stocks that is
intended to track the price performance and dividend yield of the Dow Jones
Industrial Average and the Standard & Poor's Composite Stock Price Index,
respectively. To the extent the Funds invest in securities of other investment
companies, Fund shareholders would indirectly pay a portion of the operating
costs of such companies. These costs include management, brokerage, shareholder
servicing and other operational expenses. Indirectly, then, shareholders may pay
higher operational costs than if they owned the underlying investment companies
directly. Each Fund does not presently intend to invest more than 5% of its net
assets in securities of other investment companies.
FOREIGN SECURITIES. The Funds may invest in foreign securities in order to take
advantage of opportunities for growth where, as with domestic securities, they
are depressed in price because they are out of favor with most of the investment
community. The same factors would be considered in selecting foreign securities
as with domestic securities. Foreign securities investment presents special
considerations not typically associated with investments in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial or social instability or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
Because of the inherent risk of foreign securities over domestic issues, the
Funds have adopted a policy limiting foreign investments to those traded
domestically as American Depository Receipts (ADRs).
LOWER RATED FIXED INCOME SECURITIES. The Balanced Fund will invest to a limited
extent in fixed income securities which are rated lower than A by Moody's and
S&P. Issues rated lower than A are speculative in certain respects. The Balanced
Fund limits its investment in issues rated less than Baa by Moody's and BBB by
S&P to 5% of the Balanced Fund's net assets and the Balanced Fund will not
invest in issues rated lower than B by either rating service. The Adviser
carefully evaluates such lower rated issues prior to purchase to ascertain that
the
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<PAGE>
issuer's financial condition is, in the Adviser's judgment, improving. See the
Statement of Additional Information for descriptions of the rating categories.
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
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Funds borrow for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If while such borrowing is in effect, the value of the particular
Fund's assets declines, the Fund would be forced to liquidate portfolio
securities when it is disadvantageous to do so. The Funds would incur interest
and other transaction costs in connection with such borrowing. A Fund will not
make any additional investments while its outstanding borrowings exceed 5% of
the current value of its total assets.
PORTFOLIO TURNOVER. By utilizing the contrarian approach to investing described
herein, it is expected that annual portfolio turnover will generally not exceed
100% with respect to either 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 market interest rate earned by the Funds effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. For purposes of the Investment Company Act of 1940 (the "1940
Act"), a repurchase agreement is considered to be a loan collateralized by the
securities subject to the repurchase agreement. Neither Fund will enter into a
repurchase agreement which will cause more than 10% of its assets to be invested
in repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Funds' exposure to risk,
each Fund has adopted certain limitations which, together with its investment
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 net 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 without limit; (4) write, acquire or sell puts, calls or combinations
thereof, or purchase or sell commodities, commodities contracts, futures
contracts or related options, except that the Funds may (a) write covered call
options provided that the aggregate value of the obligations underlying the call
options will not exceed 25% of a Fund's net assets and (b) purchase exchange
listed put and call options provided the aggregate premiums paid on all such
options which are held at any time do not exceed 20% of a Fund's net assets; 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.
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With respect to the purchase of put and call options, limitation numbered 4(b)
above, the Funds reserve the right to, but do not intend to, engage in such
transactions during the coming year. Should the Trustees determine that it is
desirable for the Funds to do so in the future, shareholders would be provided
60 days' notice in writing (including a description of the implications of such
transactions) and the Prospectus would be amended. Other fundamental investment
limitations are listed in the Statement of Additional Information.
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
There are NO SALES COMMISSIONS CHARGED TO INVESTORS. Assistance in opening
accounts may be obtained from the Administrator by calling 1-800-443-4249, or by
writing to the Funds at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Funds. Such broker-dealer may charge you a fee for its services. Payment
for shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. Your investment will purchase
shares at a Fund's net asset value next determined after your order is received
by the Funds in proper order as indicated herein. The minimum initial investment
in the Funds, unless stated otherwise herein, is $25,000. The minimum for an
Individual Retirement Account ("IRA") or self employed retirement plan ("Keogh
Plan") is $1,000. The Funds may, in the Adviser's sole discretion, accept
certain accounts with less than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. 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 Flippin, Bruce & Porter Funds
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Funds, at
1-800-443-4249, before wiring funds, to advise the Funds of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
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<PAGE>
Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For either FBP Contrarian Equity Fund or
FBP Contrarian Balanced Fund
(Shareholder name and account number or tax identification number)
It is important that the wire contain all the information and that the Funds
receive prior telephone notification to ensure proper credit. Once your wire is
sent you should, as soon as possible thereafter, complete and mail your Account
Application to the Funds as described under "Regular Mail Orders," above.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire (minimum
additional investment of $1,000, or $300 for IRAs and Keoghs) 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 either
Fund to purchase shares of the other Fund. Shares of either Fund may also be
exchanged for the following money market funds:
Institutional Government Income Fund (a series of Countrywide Investment
Trust)--invests in short-term U.S. Government obligations and seeks high
current income, consistent with protection of capital.
Tax-Free Money Fund (a series of Countrywide Tax-Free Trust)--invests in
high quality, short-term municipal obligations and seeks the highest level
of interest income that is exempt from federal income tax, consistent with
protection of capital.
Shares of the Institutional Government Income Fund and the Tax-Free Money Fund
acquired via exchange may be reexchanged for shares of either Fund at net asset
value.
There is no charge for this exchange privilege. Exchanges may only be made for
shares of funds then offered for sale in your state of residence. Before making
an exchange, you should read 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.
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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 $1,000 (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 $1,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Funds, at 1-800-443-4249, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Flippin, Bruce
& Porter 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 Equity Fund
or the Balanced Fund, the account number, and the number of shares or
dollar amount to be redeemed. This request must be signed by all registered
shareholders in the exact names in which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, a Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Funds may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Funds to dispose of securities owned by them, or
to fairly determine the value of their assets, and (iii) for such other periods
as the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Funds
may not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Funds. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Funds. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also
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<PAGE>
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 either Fund valued
at $25,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter as specified, the Funds will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by 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). 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. Calls written
by the Funds are valued at the then current market quotation, using the ask
price, as of the close of each day on the principal exchanges on which they are
traded. Securities and other assets for which no quotations are readily
available will be valued in good faith at fair value using methods determined by
the Board of Trustees.
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
The Funds are diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Funds under
the laws of Massachusetts governing the responsibilities of trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Funds and provides information about them.
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<PAGE>
INVESTMENT ADVISER. Subject to the authority of the Board of Trustees, Flippin,
Bruce & Porter, Inc. (the "Adviser") provides the Funds with a continuous
program of supervision of each Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to
Investment Advisory Agreements with the Trust. The Adviser is also responsible
for the selection of broker-dealers through which the Funds execute portfolio
transactions, subject to brokerage policies established by the Trustees, and
provides certain executive personnel to the Funds.
The Adviser, organized as a Virginia corporation in March 1985, is controlled by
John M. Flippin, John T. Bruce and R. Gregory Porter, III. In addition to acting
as Adviser to the Funds, the Adviser also provides investment advice to
corporations, trusts, pension and profit sharing plans, other business and
institutional accounts and individuals.
John T. Bruce is primarily responsible for managing the portfolio of each Fund
and has acted in this capacity since the Funds' inception. Mr. Bruce has been a
principal of the Adviser since the founding of the firm in 1985.
Compensation of the Adviser, based upon each Fund's average daily net assets, is
at the following annual rates: On the first $250 million, 0.75%; on the next
$250 million, 0.65%; on assets over $500 million, 0.50%. For the fiscal year
ended March 31, 1998, the Adviser received $184,384 in investment advisory fees
from the Equity Fund, which represented 0.75% of the Fund's average daily net
assets. For the fiscal year ended March 31, 1998, the Adviser received $365,477
in investment advisory fees from the Balanced Fund, which represented 0.75% of
the Fund's average daily net assets.
The Adviser's address is 800 Main Street, Suite 202, P.O. Box 6138, Lynchburg,
Virginia 24505.
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 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 Administrator also charges the Funds for certain costs
involved with the daily valuation of investment securities and is reimbursed for
out-of-pocket expenses.
DISTRIBUTOR. The Funds have entered into an Underwriting Agreement with CW Fund
Distributors, Inc. (the "Distributor"), 312 Walnut Street, Cincinnati, Ohio
45202 , under which the Distributor provides distribution services to the Funds.
The Distributor is a wholly-owned indirect subsidiary of Countrywide Credit
Industries, Inc. Mark J. Seger and John F. Splain are officers of both the Trust
and the Distributor.
CUSTODIAN. The Custodian of the Funds' assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Adviser, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Funds pay all expenses not assumed by the Adviser,
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
Adviser, 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
16
<PAGE>
expense of shareholders' meetings and proxy solicitations. The Funds are also
liable for any nonrecurring expenses as 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 1.04% of its average daily
net assets and the expense ratio of the Equity Fund was 1.12% of its average
daily net assets.
BROKERAGE. The Funds have adopted brokerage policies which allow the Adviser to
prefer brokers which provide research or other valuable services to the Adviser
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 Adviser for its
other clients; conversely, the Funds may benefit from research services obtained
through the brokerage transactions of the Adviser'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 or the
Advisor. The Statement of Additional Information contains more information about
the management and brokerage practices of the Funds.
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, tax aspects of
the Funds' activities in options, and other matters. Shareholders should be
aware that dividends from the Funds which are derived in whole or in part from
interest on U.S. Government Securities may not be taxable for state income tax
purposes. Other state income tax implications are not covered, nor is this
discussion exhaustive on the subject of federal income taxation. Consequently,
investors should seek qualified tax advice.
Each Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Funds but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed to
them. The Funds intend to declare dividends quarterly, payable in March, June,
September and December, on a date selected by the Trustees. In addition,
distributions may be made annually in December out of any net short-term or
long-term capital gains derived from the sale of securities and premiums from
expired options 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 or residents of the U.S.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains for either Fund. Current
practice of the Funds, subject to the discretion of the Board of Trustees, is
for declaration and payment of income dividends during the last week of each
calendar quarter. All dividends and capital gains distributions are reinvested
in additional shares of the Funds unless the shareholder requests in writing to
receive dividends and/or capital gains distributions in cash. That request must
be received by the Funds prior to the record date to be effective as to the next
dividend. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or if received in additional shares of the Funds.
17
<PAGE>
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 Equity Fund and the Balanced Fund described in this
Prospectus: shares of The Jamestown Balanced Fund, The Jamestown Equity Fund,
The Jamestown International Equity Fund and The Jamestown Tax Exempt Virginia
Fund, which are managed by Lowe, Brockenbrough & Tattersall, Inc. of Richmond,
Virginia; shares of The Jamestown Bond Fund and The Jamestown Short Term Bond
Fund, which are managed by Tattersall Advisory Group, Inc. of Richmond,
Virginia; shares of The Government Street Equity Fund, The Government Street
Bond Fund and The Alabama Tax Free Bond Fund, which are managed by T. Leavell &
Associates, Inc. of Mobile, Alabama; and shares of The 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 will have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
Trustees can elect all of the Trustees if they so choose.
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 purpose;
or (c) by a written declaration signed by shareholders holding not less than
two-thirds of the outstanding shares of the Trust and filed with the Trust's
custodian. In case a vacancy or an anticipated vacancy shall for any reason
exist, the vacancy shall be filled by the affirmative vote of a majority of the
remaining Trustees, subject to the provisions of Section 16(a) of the 1940 Act.
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the Statement of Additional Information for more information.
Shareholder inquiries may be made in writing, addressed to the Funds at the
address shown on the cover.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See the Statement of Additional Information
for further information about the Trust and its shares.
CALCULATION OF PERFORMANCE DATA. From time to time each Fund may advertise its
total return. Each Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance.
18
<PAGE>
The "total return" of a Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If a Fund has been operating less than 1, 5 or 10 years, the time period
during which the Fund has been operating is substituted.
In addition, the Funds may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same or
different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative percentage rate of return,
actual year-by-year rates or any combination thereof.
The "yield" of a Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Funds all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated.
19
<PAGE>
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20
<PAGE>
THE FLIPPIN, BRUCE & PORTER FUNDS
Send completed application to:
THE FLIPPIN, BRUCE & PORTER FUNDS
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $25,000; $1,000 minimum for tax
qualified account)
o Enclosed is a check payable to THE FLIPPIN, BRUCE & PORTER FUNDS for
$_______________ (Please indicate Fund below)
o FBP Contrarian Equity Fund (71) o FBP Contrarian Balanced Fund (70)
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 FBP Contrarian Equity Fund or FBP Contrarian Balanced 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 or savings account.
PLEASE ATTACH A VOIDED CHECK.
17
<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 FLIPPIN, BRUCE & PORTER FUNDS for the Registered Owner and to execute and
deliver any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE FLIPPIN, BRUCE & PORTER 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 FBP Contrarian Equity Fund
o FBP Contrarian Balanced 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
is hereby authorized to charge to my o both the 15th and last business day
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 accountsignature 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, Flippin, Bruce & Porter, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The certifications in this paragraph are required from all
non-exempt persons to prevent backup withholding of 31% of all taxable
distributions and gross redemption proceeds under the federal income tax law.
The Internal Revenue Service does not require my consent to any provision of
this document other than the certifications required to avoid backup
withholding. (Check here if you are subject to backup withholding) [ ].
____________________________________ _______________________________________
APPLICANT DATE JOINT APPLICANT DATE
____________________________________ _______________________________________
OTHER AUTHORIZED SIGNATORY DATE OTHER AUTHORIZED SIGNATORY DATE
22
<PAGE>
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23
<PAGE>
The Flippin, Bruce & Porter Funds
INVESTMENT ADVISOR
Flippin, Bruce & Porter, Inc.
800 Main Street, Suite 202
P.O. Box 6138
Lynchburg, Virginia 24505
800-FBP-9375
ADMINISTRATOR
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
OFFICERS
John M. Flippin, President
John T. Bruce, Vice President and
Portfolio Manager
R. Gregory Porter, III, Vice President
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
<PAGE>
THE GOVERNMENT
STREET EQUITY FUND
A No-Load Fund
Investment Advisor
T. Leavell & Associates, Inc.
Founded 1979
<PAGE>
PROSPECTUS
August 1, 1998
THE GOVERNMENT STREET
EQUITY FUND
A No-Load Fund
- --------------------------------------------------------------------------------
The investment objective of The Government Street Equity Fund is to seek capital
appreciation through investments in common stocks. To achieve the Fund's
objective, the Fund will be governed by an investment philosophy which focuses
on the management of portfolio risk. To the extent practicable, the Fund
generally will remain fully invested in equities. Current income will be of
secondary importance.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
Mobile, Alabama
The Government Street Equity Fund (the "Fund") is a NO-LOAD, diversified,
open-end series of the Williamsburg Investment Trust, a registered management
investment company. This Prospectus provides you with the basic information you
should know before investing in the Fund. You should read it and keep it for
future reference. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this Prospectus.
A Statement of Additional Information, dated August 1, 1998, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354, and
its telephone number is 1-800-443-4249. A copy of the Statement of Additional
Information may be obtained at no charge by calling or writing the Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Prospectus Summary ........................................................ 2
Synopsis of Costs and Expenses ............................................ 3
Financial Highlights ...................................................... 4
Investment Objective, Investment Policies and Risk Considerations ......... 5
How to Purchase Shares .................................................... 8
How to Redeem Shares ...................................................... 10
How Net Asset Value is Determined ......................................... 12
Management of the Fund .................................................... 12
Dividends, Distributions, Taxes and Other Information ..................... 14
Application ............................................................... 17
- --------------------------------------------------------------------------------
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
THE FUND. The Government Street Equity Fund (the "Fund") is a No-Load,
diversified, open-end series of the Williamsburg Investment Trust, a registered
management investment company commonly known as a "mutual fund." The Fund's
investment objective is to seek capital appreciation through the compounding of
dividends and of capital gains, both realized and unrealized. Current income
will be of secondary importance. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this Prospectus.
INVESTMENT APPROACH. In seeking to achieve the Fund's investment objective, the
Fund will be governed by an investment philosophy which focuses on the
management of portfolio risk. The Advisor does not engage in "market timing" as
related to the wholesale movement of Fund assets into and out of the stock
market. To the extent practicable, the Fund generally will remain fully invested
in common stocks. (See "Investment Objective, Investment Policies and Risk
Considerations.")
INVESTMENT ADVISOR. T. Leavell & Associates, Inc. (the "Advisor") serves as
investment advisor to the Fund. For its services, the Advisor receives
compensation of 0.60% of the average daily net assets of the Fund. The fees are
reduced when the assets of the Fund exceed $100 million. (See "Management of the
Fund.") The Advisor currently serves as investment advisor to approximately $500
million in assets, of which approximately one-half are equities and one-half are
fixed income securities. The Advisor currently serves as investment advisor to
two additional mutual funds, the subjects of separate prospectuses.
PURCHASE OF SHARES. Shares are offered "No Load," which means they may be
purchased directly from the Fund without the imposition of any sales or 12b-1
charges. The minimum initial purchase for the Fund is $5,000 ($1,000 for IRA or
Keogh accounts). 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. Shares may
be redeemed at any time in which the Fund is open for business at the net asset
value next determined after receipt of a redemption request by the Fund. (See
"How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is distributed
quarterly. Net capital gains, if any, are distributed at least annually.
Shareholders may elect to receive dividends and capital gain distributions in
cash or the dividends and capital gain distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Fund is a series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Fund.")
2
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES: ................................ None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average daily net assets)
Investment Advisory Fees ...................................... 0.60%
Administrator's Fees .......................................... 0.18%
Other Expenses ................................................ 0.08%
-----
Total Fund Operating Expenses .................................... 0.86%
=====
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 $27 $48 $106
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees and
costs of operating the Fund. The Annual Fund Operating Expenses shown above are
based upon actual operating history for the fiscal year ended March 31, 1998.
THE EXAMPLE SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following audited financial information has been audited by Tait, Weller &
Baker, independent accountants, whose report covering the fiscal year ended
March 31, 1998 is contained in the Statement of Additional Information. This
information should be read in conjunction with the Fund's 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 Fund.
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
June 3,
Years Ended March 31, 1991(a) to
------------------------------------------------------------------- March 31,
1998 1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 32.59 $ 29.41 $ 23.87 $ 22.69 $ 23.06 $ 21.37 $ 20.00
------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.32 0.37 0.40 0.38 0.30 0.34 0.28
Net realized and unrealized
gains (losses) on investments 12.28 4.50 5.75 1.19 (0.37) 1.71 1.35
------- ------- ------- ------- ------- ------- -------
Total from investment operations 12.60 4.87 6.15 1.57 (0.07) 2.05 1.63
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.32) (0.36) (0.40) (0.39) (0.30) (0.36) (0.26)
Distributions from net realized gains (1.08) (1.33) (0.21) -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total distributions (1.40) (1.69) (0.61) (0.39) (0.30) (0.36) (0.26)
------- ------- ------- ------- ------- ------- -------
Net asset value at end of period $ 43.79 $ 32.59 $ 29.41 $ 23.87 $ 22.69 $ 23.06 $ 21.37
======= ======= ======= ======= ======= ======= =======
Total return 39.31% 16.94% 25.96% 7.02% ( 0.31% ) 9.66% 9.99%(c)
======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) $75,643 $49,629 $41,421 $31,473 $27,101 $21,735 $14,971
======= ======= ======= ======= ======= ======= =======
Ratio of net expenses to average net assets(b) 0.86% 0.89% 0.94% 0.91% 1.00% 1.00% 1.00%(c)
Ratio of net investment income
to average net assets 0.82% 1.17% 1.50% 1.71% 1.33% 1.55% 1.88%(c)
Portfolio turnover rate 18% 20% 31% 55% 63% 59% 20%
Average commission rate per share $0.0351 $0.0410 $ -- $ -- $ -- $ -- $ --
</TABLE>
(a) Commencement of operations.
(b) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's administrative and custodian fees for periods ended prior to
March 31, 1996 were paid through an arrangement with a third-party
broker-dealer who was compensated through commission trades. Payment of the
fees was based on a percentage of commissions earned. Absent expenses
reimbursed through the directed brokerage arrangement, the ratios of
expenses to average net assets would have been 1.00%, 1.16%, 1.20% and
1.18%(c) for the periods ended March 31, 1995, 1994, 1993 and 1992,
respectively.
(c) Annualized.
Further information about the performance of the Fund is contained in the Annual
Report, a copy of which can be obtained at no charge by calling the Fund.
4
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The investment objective of the Fund is capital appreciation through the
compounding of dividends and of capital gains, both realized and unrealized. The
Fund will seek to attain its objective by investing in common stocks. Current
income will be of secondary importance. Any investment involves risk, and there
can be no assurance that the Fund will achieve its investment objective. The
investment objective of the Fund may not be altered without the prior approval
of a majority (as defined by the Investment Company Act of 1940) of the Fund's
shares.
The Fund is governed by an investment philosophy that focuses on the management
of risk in the portfolio. The Advisor's approach is quantitative, highly
consistent, and systematic. It is further supported by the fundamental
statistical relationships between individual stocks. This approach seeks to
reduce risk (the variability of returns) in the portfolio while increasing
compounded returns.
The portfolio consists primarily of the common stocks of medium to large
capitalization companies which are broadly diversified among economic sectors
and industries.
The Advisor does not engage in "market timing" as related to the significant
movement of Fund assets into and out of the stock market. To the extent
practicable, the Fund generally will remain fully invested in common stocks.
The Fund's portfolio will be comprised of common stocks traded on the New York
Stock Exchange, American Stock Exchange or on the over-the-counter market.
Foreign securities, if held, will be held in the form of American Depository
Receipts ("ADRs"). ADRs are foreign securities denominated in U.S. Dollars and
traded on U.S. securities markets. The Fund will invest only in sponsored ADRs
on foreign equities.
The process of selecting common stocks for the Fund combines quantitative
analysis of securities with more basic fundamental analysis to construct an
efficiently diversified portfolio.
The selection process begins with a stock list of approximately 550 common
stocks. This list is the S&P 500 plus "special consideration" stocks. The stocks
on this list are screened monthly for fundamental strength based on balance
sheet quality and financial ratios (including but not limited to debt/equity,
return on equity, return on assets and net worth). The net result is a stock
universe of approximately 350 stocks.
Stocks in the universe are then characterized by their diversification
characteristics. Stocks are grouped into either "growth" or "value" stocks
(depending upon their respective price/book values). Each group ("growth" and
"value") is then sorted into capitalization sectors (small, medium or large)
using the capitalization sector weightings of the S&P 500 as benchmarks. These
six sectors are the basis for the diversification that is inherent in the
portfolio.
To ensure broad diversification, a target representation for each sector is
established. There is equal representation of "growth" and "value" stocks. The
capitalization distribution is based on the sector weightings of the S&P 500.
An optimization program is then employed to suggest the most efficient
combination of stocks in terms of risk and return. The optimization program is
based upon the expected return of each stock, the historical variability of each
stock and the statistical
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relationships between all stock pairs in the universe. The optimization process
is subject to constraints that limit the amount of exposure of any one stock (to
no more than approximately 4% of the portfolio). The result of the optimization
is a portfolio that is broadly diversified and represents the most efficient
combination of stocks from the universe.
The performance of the Fund and of its individual securities is monitored on an
ongoing basis. To maintain the quality and diversification that is desired, the
portfolio is continuously evaluated, and it is re-balanced periodically.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its investment
objective. To the extent that the major portion of the Fund's portfolio is
invested in equity securities, it may be expected that its net asset value will
be subject to greater fluctuation than a portfolio containing mostly fixed
income securities. The Fund may borrow using its assets as collateral, but only
under certain limited conditions. Borrowing, if done, would tend to exaggerate
the effects of market fluctuations on the Fund's net asset value until repaid.
(See "Borrowing.")
MONEY MARKET INSTRUMENTS. Money market instruments may be purchased for
temporary defensive purposes when the Advisor believes the prospect for capital
appreciation in the equity securities markets is not attractive. Money market
instruments will typically represent a portion of the Fund's portfolio, as funds
awaiting investment, to accumulate cash for anticipated purchases of portfolio
securities and to provide for shareholder redemptions and operational expenses
of the Fund. Money market instruments mature in thirteen months or less from the
date of purchase and may include U.S. Government Securities and corporate debt
securities (including those subject to repurchase agreements), bankers'
acceptances and certificates of deposit of domestic branches of U.S. banks, and
commercial paper (including variable amount demand master notes). At the time of
purchase, money market instruments will have a short-term rating in the highest
category from any nationally recognized statistical rating organization
("NRSRO") or, if not rated, issued by a corporation having an outstanding
unsecured debt issue rated in the three highest categories of any NRSRO or, if
not so rated, of equivalent quality in the Advisor's opinion. See the Statement
of Additional Information for a further description of money market instruments.
UNSEASONED ISSUERS. The Fund may invest in the securities of unseasoned issuers,
that is, companies having an operating history of less than three years
(including predecessors and, in the case of fixed income securities,
guarantors). The management of such companies frequently does not have
substantial business experience. Furthermore, they may be competing with other
companies who are well established, more experienced and better financed.
Because of these and other risks, described in the Statement of Additional
Information, investment in unseasoned issuers is restricted by the Fund to no
more than 5% of its net assets.
SHARES OF OTHER INVESTMENT COMPANIES. The Fund may invest in shares of other
investment companies, including shares of the DIAMONDS Trust ("DIAMONDs") and
Standard & Poor's Depository Receipts ("SPDRs"). DIAMONDs and SPDRs are
exchange-traded securities that represent ownership in long-term unit investment
trusts established to accumulate and hold a portfolio of common stocks that is
intended to track the price performance and dividend yield of the Dow Jones
Industrial Average and the Standard & Poor's Composite Stock Price Index,
respectively. To the extent the Fund invests in securities of other investment
companies, Fund shareholders
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would indirectly pay a portion of the operating costs of such companies. These
costs include management, brokerage, shareholder servicing and other operational
expenses. Indirectly, then, shareholders may pay higher operational costs than
if they owned the underlying investment companies directly. The Fund does not
presently intend to invest more than 5% of its net assets in securities of other
investment companies.
FOREIGN SECURITIES. Foreign securities investment presents special
considerations not typically associated with investments in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial or social instability or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
Because of the inherent risk of foreign securities over domestic issues, the
Fund has adopted a policy limiting foreign investments to those traded
domestically as American Depository Receipts (ADRs).
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 33.3% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
PORTFOLIO TURNOVER. By utilizing the approach to investing described herein, it
is expected that annual portfolio turnover will average approximately 50% and
will generally not exceed 100%. Market conditions may dictate, however, a higher
rate of turnover in a particular year. The degree of portfolio activity affects
the brokerage costs of the Fund and may have an impact on the amount of taxable
distributions to shareholders.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. For purposes of the Investment
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Company Act of 1940 (the "1940 Act"), a repurchase agreement is considered to be
a loan collateralized by the securities subject to the repurchase agreement. The
Fund will not enter into a repurchase agreement which will cause more than 10%
of its assets to be invested in repurchase agreements which extend beyond seven
days and other illiquid securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to risk,
the Fund has adopted certain limitations which, together with its investment
objective, are considered fundamental policies which may not be changed without
shareholder approval. The 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 the Fund's total assets or, (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities if,
immediately after such borrowing, the value of the Fund's assets, including all
borrowings then outstanding, less its liabilities (excluding all borrowings), is
equal to at least 300% of the aggregate amount of borrowings then outstanding,
and may pledge its assets to secure all such borrowings; (2) make loans of money
or securities, except that the Fund may invest in repurchase agreements (but
repurchase agreements having a maturity of longer than seven days, together with
other securities which are not readily marketable, are limited to 10% of the
Fund's net assets); (3) acquire foreign securities, except that the Fund may
acquire foreign securities sold as American Depository Receipts without limit;
(4) write, acquire or sell puts, calls or combinations thereof, or purchase or
sell commodities, commodities contracts, futures contracts or related options;
(5) invest more than 5% of its total assets in the securities of any one issuer
nor hold more than 10% of the voting stock of any one issuer; and (6) invest in
restricted securities. Other fundamental investment limitations are listed in
the Statement of Additional Information.
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 Fund at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Fund. Such broker-dealer may charge you a fee for its services. Payment
for shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. Your investment will purchase
shares at the Fund's net asset value next determined after your order is
received by the Fund in proper order as indicated herein. The minimum initial
investment in the Fund, unless stated otherwise herein, is $5,000. The minimum
for an Individual Retirement Account ("IRA") or self-employed retirement plan
("Keogh Plan") is $1,000. The Fund may, in the Advisor's sole discretion, accept
certain accounts with less than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Administrator, whether by mail, bank
wire or facsimile order from a qualified broker-dealer, prior to 4:00 p.m.
Eastern time will purchase shares at the net asset value 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.")
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Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Fund or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to The
Government Street Equity Fund, and mail it to:
The Government Street Equity Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Fund, at
1-800-443-4249, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
Star Bank, N. A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For The Government Street Equity Fund
(Shareholder name and account number or tax identification number)
It is important that the wire contain all the information and that the Fund
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 Fund 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 Fund at 1-800-443-4249 to alert the Fund that your
wire is to be sent. Follow the wire instructions above to send your wire. When
calling for any reason, please have your account number ready, if known. Mail
orders should include, when possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, be sure to identify
your account in your letter.
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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.
EMPLOYEES AND AFFILIATES OF THE FUND. The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Fund or certain
parties related thereto. The minimum initial investment for such accounts is
$1,000. See the Statement of Additional Information for further details.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
HOW TO REDEEM SHARES
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Shares of the Fund may be redeemed on each day that the Fund is open for
business by sending a written request to the Fund. The Fund is open for business
on each day the New York Stock Exchange (the "Exchange") is open for business.
Any redemption may be for more or less than the purchase price of your shares
depending on the market value of the Fund's portfolio securities. All redemption
orders received in proper form, as indicated herein, by the Administrator prior
to 4:00 p.m. Eastern time will redeem shares at the net asset value determined
as of that business day's close of trading. Otherwise, your order will redeem
shares on the next business day. You may also redeem your shares through a
broker-dealer who may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $1,000 (due to redemptions or transfers,
but not due to market action) upon 60 days' written notice. If the shareholder
brings his account value up to $1,000 or more during the notice period, the
account will not be redeemed. Redemptions from retirement plans may be subject
to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-443-4249, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Government
Street Equity Fund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request for
redemption must include:
1) your letter of instruction or a stock assignment specifying the account
number, and the number of shares or dollar amount to be redeemed. This
request must be signed by all registered shareholders in the exact names in
which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
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Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized persons, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Fund may
not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Fund. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Fund. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
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 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 the 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 Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by writing the Fund. See the Statement of Additional Information for further
details.
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HOW NET ASSET VALUE IS DETERMINED
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The net asset value of the Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m., Eastern time). 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. Common
stocks will ordinarily be traded on a national securities exchange, but may also
be traded in the over-the-counter market. Securities and other assets for which
no quotations are readily available will be valued in good faith at fair value
using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUND
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The Fund is a diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Fund under
the laws of Massachusetts governing the responsibilities of Trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Fund and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, T.
Leavell & Associates, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
Investment Advisory Agreement with the Trust. The Advisor is also responsible
for the selection of broker-dealers through which the Fund executes portfolio
transactions, subject to brokerage policies established by the Trustees, and
provides certain executive personnel to the Fund.
The Advisor, organized as an Alabama corporation in 1979, is controlled by
Thomas W. Leavell, Richard Mitchell, Dorothy G. Gambill and Timothy S. Healey.
In addition to acting as Advisor to the Fund, the Advisor also provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals. The Advisor also
serves as investment advisor to The Government Street Bond Fund and The Alabama
Tax Free Bond Fund (two series of the Trust), the subjects of separate
prospectuses.
Thomas W. Leavell and Stephen W. Simmons are primarily responsible for managing
the portfolio of the Fund. Mr. Leavell, who has served as portfolio manager
since the Fund's inception, has been a principal of the Advisor since the
founding of the firm in 1979. Mr. Leavell holds a B.S. degree from Auburn
University and an M.B.A. from the University of Kentucky. Mr. Simmons has served
as co-portfolio manager of the Fund since joining
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the Advisor in February, 1998. Prior to his employment with the Advisor, Mr.
Simmons was employed as Director of Equity Investments for The Retirement
Systems of Alabama and as a Trust Investments Officer for AmSouth Bank. He holds
a B.S. degree from the University of Alabama and an M.B.A. from Auburn
University and is a Chartered Financial Analyst.
Compensation of the Advisor with respect to the Fund, based upon the Fund's
average daily net assets, is at the following annual rates: On the first $100
million, 0.60%; on assets over $100 million, 0.50%. For the fiscal year ended
March 31, 1998, the Advisor received $375,712 in investment advisory fees from
the Fund, which represented 0.60% of the Fund's average daily net assets.
The Advisor's address is 150 Government Street, Post Office Box 1307, Mobile,
Alabama 36633.
ADMINISTRATOR. The Fund has 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.
The 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. The
Administrator also charges the Fund for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Fund pays all expenses not assumed by the Advisor,
including its fees. Fund expenses include, among others, the fees and expenses,
if any, of the Trustees and officers who are not "affiliated persons" of the
Advisor, fees of the Fund's Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Fund's shareholder servicing
operations, fees and expenses of qualifying and registering the Fund's shares
under federal and state securities laws, expenses of preparing, printing and
distributing prospectuses and reports to existing shareholders, auditing and
legal expenses, insurance expenses, association dues, and the expense of
shareholders' meetings and proxy solicitations. The Fund is also liable for any
nonrecurring expenses as may arise such as litigation to which the Fund may be a
party. The Fund may be obligated to indemnify the Trustees and officers with
respect to such litigation. All expenses of the Fund are accrued daily on the
books of the Fund at a rate which, to the best of its belief, is equal to the
actual expenses expected to be incurred by the Fund in accordance with generally
accepted accounting practices. For the fiscal year ended March 31, 1998, the
expense ratio of the Fund was 0.86% of its average daily net assets.
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BROKERAGE. The Fund has adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Fund. In all cases, the primary consideration for selection of
broker-dealers through which to execute brokerage transactions will be to obtain
the most favorable price and execution for the Fund. Research services obtained
through the Fund's brokerage transactions may be used by the Advisor for its
other clients; conversely, the Fund may benefit from research services obtained
through the brokerage transactions of the Advisor's other clients. Subject to
the requirements of the 1940 Act and procedures adopted by the Board of
Trustees, the Fund may execute portfolio transactions through any broker or
dealer and pay brokerage commissions to a broker (i) which is an affiliated
person of the Trust, or (ii) which is an affiliated person of such person, or
(iii) an affiliated person of which is an affiliated person of the Trust or the
Advisor. The Statement of Additional Information contains more information about
the management and brokerage practices of the Fund.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
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The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general and,
particularly, with respect to dividends and distributions and other matters. The
discussion herein of the federal income tax consequences of an investment in the
Fund is not exhaustive on the subject. Consequently, investors should seek
qualified tax advice.
The 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 Fund but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed to
them. The Fund intends to declare dividends quarterly, payable in March, June,
September and December, on a date selected by the Trustees. In addition,
distributions may be made annually in December out of any net short-term or
long-term capital gains derived from the sale of securities realized through
October 31 of that year. The Fund may make a supplemental distribution of
capital gains at the end of its fiscal year. The nature and amount of all
dividends and distributions will be identified separately when tax information
is distributed by the Fund at the end of each year. The Fund intends to withhold
30% on taxable dividends and any other payments that are subject to such
withholding and are made to persons who are neither citizens nor residents of
the U.S.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. Current practice of the Fund,
subject to the discretion of the Board of Trustees, is for declaration and
payment of income dividends during the last week of each calendar quarter. All
dividends and capital gains distributions are reinvested in additional shares of
the Fund unless the shareholder requests in writing to receive dividends and/or
capital gains distributions in cash. That request must be received by the Fund
prior to the record date to be effective as to the next dividend. Tax
consequences to shareholders of dividends and distributions are the same if
received in cash or if received in additional shares of the Fund.
14
<PAGE>
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the Fund, see "Additional
Tax Information" in the Statement of Additional Information.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Fund: shares of the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund, which are managed by Flippin, Bruce & Porter, Inc. of
Lynchburg, Virginia; shares of The Jamestown Balanced Fund, The Jamestown Equity
Fund, The Jamestown International Equity Fund and The Jamestown Tax Exempt
Virginia Fund, which are managed by Lowe, Brockenbrough & Tattersall, Inc. of
Richmond, Virginia; shares of The Jamestown Bond Fund and The Jamestown Short
Term Bond Fund, which are managed by Tattersall Advisory Group, Inc. of
Richmond, Virginia; shares of The Davenport Equity Fund, which is managed by
Davenport & Company LLC of Richmond, Virginia; and shares of The Government
Street Bond Fund and The Alabama Tax Free Bond Fund, which are managed by T.
Leavell & Associates, Inc. The Trustees are permitted to create additional
series, or funds, at any time.
Shares are freely transferable, have no preemptive or conversion rights and,
when issued, are fully paid and non-assessable. Upon liquidation of the Trust or
a particular Fund of the Trust, holders of the outstanding shares of the Fund
being liquidated shall be entitled to receive, in proportion to the number of
shares of the Fund held by them, the excess of that Fund's assets over its
liabilities. Each outstanding share is entitled to one vote for each full share
and a fractional vote for each fractional share, on all matters which concern
the Trust as a whole. On any matter submitted to a vote of shareholders, all
shares of the Trust then issued and outstanding and entitled to vote,
irrespective of the Fund, shall be voted in the aggregate and not by Fund,
except (i) when required by the 1940 Act, shares shall be voted by individual
Fund; and (ii) when the matter does not affect any interest of a particular
Fund, then only shareholders of the affected Fund or Funds shall be entitled to
vote thereon. Examples of matters which affect only a particular Fund could be a
proposed change in the fundamental investment objectives or policies of that
Fund or a proposed change in the investment advisory agreement for a particular
Fund. The shares of the Fund will have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
Trustees can elect all of the Trustees if they so choose.
The Declaration of Trust provides that the Trustees may hold office
indefinitely, except that: (1) any Trustee may resign or retire; and (2) any
Trustee may be removed with or without cause at any time: (a) by a written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal; (b) by vote of shareholders holding not less than two-thirds of
the outstanding shares of the Trust, cast in person or by proxy at a meeting
called for that purpose; or (c) by a written declaration signed by shareholders
holding not less than two-thirds of the outstanding shares of the Trust and
filed with the Trust's custodian. In case a vacancy or an anticipated vacancy
shall for any reason exist, the vacancy shall be filled by the affirmative vote
of a majority of the remaining Trustees, subject to the provisions of Section
16(a) of the 1940 Act.
15
<PAGE>
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the Statement of Additional Information for more information.
Shareholder inquiries may be made in writing, addressed to the Fund at the
address shown on the cover.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See the Statement of Additional Information
for further information about the Trust and its shares.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance.
The "total return" of the Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If the Fund has been operating less than 1, 5 or 10 years, the time
period during which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandarized 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 rate of return, actual
year-by-year rates or any combination thereof.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated.
16
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
Send completed application to:
THE GOVERNMENT STREET EQUITY FUND
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $5,000; $1,000 minimum for tax
qualified account)
o Enclosed is a check payable to THE GOVERNMENT STREET EQUITY FUND for $_______
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 FUND AT 1-800-443-4249 SO THAT YOUR WIRE TRANSFER IS
PROPERLY CREDITED TO YOUR ACCOUNT. Please forward your completed
application by mail immediately thereafter to the Fund. The wire
should be routed as follows:
Star Bank, N.A.
ABA #042000013
For credit Williamsburg Investment Trust #485777056
For The Government Street Equity 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 or savings account.
PLEASE ATTACH A VOIDED CHECK.
17
<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 GOVERNMENT STREET EQUITY FUND for the Registered Owner and to execute and
deliver any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE GOVERNMENT STREET EQUITY FUND, or any agent of the Fund may, without
inquiry, rely upon the instruction of any person(s) purporting to be an
authorized person named above, or in any Amendment received by the Fund or their
agent. The Fund and its Agent shall not be liable for any claims, expenses or
losses resulting from having acted upon any instruction reasonably believed to
be genuine.
- --------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
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 THE GOVERNMENT STREET EQUITY 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
is hereby authorized to charge to my o both the 15th and last business day
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 accountsignature card.
______________________________________
(Signature as your name appears on the
bank account to be drafted)
Name as it appears on the account_______________________________________________
Commercial bank account #_______________________________________________________
ABA Routing #___________________________________________________________________
City, State and Zip in which bank is located____________________________________
For AUTOMATIC INVESTMENT or SYSTEMATIC WITHDRAWAL please attach a voided check
from the above account.
- --------------------------------------------------------------------------------
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Fund and affirm that I have received a current prospectus and
understand the investment 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, T. Leavell & Associates, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The 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
18
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
19
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, Alabama 36633
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Richard Mitchell, President
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
PORTFOLIO MANAGER
Thomas W. Leavell
Stephen W. Simmons
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
<PAGE>
THE GOVERNMENT
STREET BOND FUND
A No-Load Fund
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
Founded 1979
<PAGE>
PROSPECTUS
August 1, 1998
THE GOVERNMENT STREET
BOND FUND
A No-Load Fund
- --------------------------------------------------------------------------------
The investment objectives of The Government Street Bond Fund are to preserve
capital, to provide current income and to protect the value of the portfolio
against the effects of inflation. To achieve the Fund's objectives, the Fund
will emphasize preservation of capital by limiting investments in the portfolio
to securities in the four highest quality ratings. Capital appreciation will be
of secondary importance.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
Mobile, Alabama
The Government Street Bond Fund (the "Fund") is a NO-LOAD, diversified, open-end
series of the Williamsburg Investment Trust, a registered management investment
company. This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. While there is no assurance that the Fund will achieve its investment
objectives, it endeavors 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 Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354, and
its telephone number is 1-800-443-4249. A copy of the Statement of Additional
Information may be obtained at no charge by calling or writing the Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Prospectus Summary ........................................................ 2
Synopsis of Costs and Expenses ............................................ 3
Financial Highlights ...................................................... 4
Investment Objectives, Investment Policies and Risk Considerations ........ 5
How to Purchase Shares .................................................... 8
How to Redeem Shares ...................................................... 10
How Net Asset Value is Determined ......................................... 11
Management of the Fund .................................................... 12
Dividends, Distributions, Taxes and Other Information ..................... 14
Application ............................................................... 17
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
THE FUND. The Government Street Bond Fund (the "Fund") is a No-Load,
diversified, open-end series of the Williamsburg Investment Trust, a registered
management investment company commonly known as a "mutual fund." The Fund's
investment objectives are to preserve capital, to provide current income and to
protect the value of the portfolio against the effects of inflation. Capital
appreciation will be of secondary importance. While there is no assurance that
the Fund will achieve its investment objectives, it endeavors to do so by
following the investment policies described in this Prospectus.
INVESTMENT APPROACH. In seeking to achieve the Fund's investment objectives, the
Fund will emphasize preservation of capital by limiting investments in the
portfolio to securities in the four highest quality ratings. A minimum of 40% of
the Fund's total assets will be invested in U.S. Treasury securities or
securities issued or guaranteed as to interest and principal by agencies or
instrumentalities of the U.S. Government. (See "Investment Objectives,
Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR. T. Leavell & Associates, Inc. (the "Advisor") serves as
investment advisor to the Fund. For its services, the Advisor receives
compensation of 0.50% of the average daily net assets of the Fund. The fees are
reduced when the assets of the Fund exceed $100 million. (See "Management of the
Fund.") The Advisor currently serves as investment advisor to approximately $500
million in assets, of which approximately one-half are equities and one-half are
fixed income securities. The Advisor currently serves as investment advisor to
two additional mutual funds, the subjects of separate prospectuses.
PURCHASE OF SHARES. Shares are offered "No Load," which means they may be
purchased directly from the Fund without the imposition of any sales or 12b-1
charges. The minimum initial purchase for the Fund is $5,000 ($1,000 for IRA or
Keogh accounts). 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. Shares may
be redeemed at any time in which the Fund is open for business at the net asset
value next determined after receipt of a redemption request by the Fund. (See
"How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is distributed
monthly. 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 Fund is a series of the Williamsburg Investment Trust (the
"Trust"),the Board of Trustees of which is responsible for overall management of
the Trust and the Fund. The Trust has employed Countrywide Fund Services, Inc.
(the "Administrator") to provide administration, accounting and transfer agent
services. (See "Management of the Fund.")
2
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES: ................................ None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average daily net assets)
Investment Advisory Fees ...................................... 0.50%
Administrator's Fees .......................................... 0.08%
Other Expenses ................................................ 0.16%
-----
Total Fund Operating Expenses .................................... 0.74%
=====
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 $41 $92
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees and
costs of operating the Fund. The Annual Fund Operating Expenses shown above are
based upon actual operating history for the fiscal year ended March 31, 1998.
THE EXAMPLE SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following audited financial information has been audited by Tait, Weller &
Baker, independent accountants, whose report covering the fiscal year ended
March 31, 1998 is contained in the Statement of Additional Information. This
information should be read in conjunction with the Fund's 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 Fund.
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
June 3,
Years Ended March 31, 1991(a) to
-------------------------------------------------------------------- March 31,
1998 1997 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ...... $ 20.47 $ 20.87 $ 20.33 $ 20.87 $ 21.77 $ 20.67 $ 20.00
-------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income .................... 1.32 1.34 1.35 1.35 1.32 1.34 0.95
Net realized and unrealized
gains (losses) on investments ......... 0.60 (0.40) 0.54 (0.53) (0.90) 1.10 0.67
-------- -------- -------- -------- -------- -------- --------
Total from investment operations ............ 1.92 0.94 1.89 0.82 0.42 2.44 1.62
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ..... (1.33) (1.34) (1.35) (1.36) (1.32) (1.33) (0.95)
Distributions from net realized gains .... -- -- -- -- -- (0.01) --
-------- -------- -------- -------- -------- -------- --------
Total distributions ......................... (1.33) (1.34) (1.35) (1.36) (1.32) (1.34) (0.95)
-------- -------- -------- -------- -------- -------- --------
Net asset value at end of period ............ $ 21.06 $ 20.47 $ 20.87 $ 20.33 $ 20.87 $ 21.77 $ 20.67
======== ======== ======== ======== ======== ======== ========
Total return ................................ 9.61% 4.60% 9.43% 4.12% 1.85% 12.14% 9.95%(c)
======== ======== ======== ======== ======== ======== ========
Net assets at end of period (000's) ......... $ 36,908 $ 29,442 $ 28,718 $ 27,780 $ 22,633 $ 15,955 $ 6,506
======== ======== ======== ======== ======== ======== ========
Ratio of net expenses to average net assets(b) 0.74% 0.75% 0.76% 0.85% 0.86% 0.88% 0.93%(c)
Ratio of net investment income
to average net assets .................... 6.35% 6.44% 6.38% 6.68% 6.15% 6.44% 7.02%(c)
Portfolio turnover rate ..................... 10% 20% 10% 11% 10% 17% 15%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations.
(b) Absent investment advisory fees waived by the Advisor, the ratios of
expenses to average net assets would have been 1.03%, 1.09% and 1.30%(c)
for the periods ended March 31, 1994, 1993 and 1992, respectively.
(c) Annualized.
Further information about the performance of the Fund is contained in the Annual
Report, a copy of which can be obtained at no charge by calling the Fund.
4
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The investment objectives of the Fund are to preserve capital, to provide
current income and to protect the value of the portfolio against the effects of
inflation. Capital appreciation will be of secondary importance. Any investment
involves risk, and there can be no assurance that the Fund will achieve its
investment objectives. The investment objectives of the Fund may not be altered
without the prior approval of a majority (as defined by the Investment Company
Act of 1940) of the Fund's shares.
In order to achieve its objectives, the Fund invests in fixed income securities
in the four highest classifications (often called "investment grade") by any of
the nationally recognized statistical rating organizations ("NRSROs") - Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"),
Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps ("D&P"). For S&P, Fitch
and D&P those ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa,
Aa, A and Baa. For a description of these ratings, see the Statement of
Additional Information. A minimum of 40% of the Fund's total assets will be
invested in U.S. Treasury securities or securities issued or guaranteed as to
interest and principal by agencies or instrumentalities of the U.S. Government.
(See "U.S. Government Securities" below.)
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.
Maturities in the portfolio will range from less than one year to fifteen years
from the date of purchase. The Fund will be adjusted from time to time to
maintain an average maturity of between three and seven years, depending upon
the Advisor's market interest rate forecasts.
The selection of corporate bonds and/or notes will be based upon the overall
credit quality of the issuer, the bonds' relative interest rate spread over U.S.
Treasury securities of comparable maturity, and call features. The corporate
fixed income securities selected for the portfolio may include floating rate
securities which adjust their effective interest rate at predetermined periodic
intervals.
In the event that a corporate fixed income security held by the Fund is
downgraded such that its rating is no longer among the four highest ratings by
at least two of the NRSROs, the Advisor has the discretion to determine whether
the security will be sold or retained by the Fund.
U.S. GOVERNMENT SECURITIES. The Fund will invest at least 40% of its portfolio
in U.S. Government Securities. "U.S. Government Securities" include U.S.
Treasury bonds, and U.S. Treasury bills, obligations guaranteed by the U.S.
Government such as Government National Mortgage Association ("GNMA") as well as
obligations of U.S. Government authorities, agencies and instrumentalities such
as Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation ("FHLMC"), Federal Farm Credit Bank, Federal Home Loan Bank,
Resolution Funding Corporation, Financing Corporation, Tennessee Valley
Authority and Student Loan Marketing Association. While obligations of some U.S.
Government sponsored entities are supported by the full faith and credit of the
U.S. Government, several are supported
5
<PAGE>
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 Fund or to the Fund's shares.
Obligations of GNMA, FNMA and FHLMC may include direct pass-through
"certificates" representing undivided ownership interests in pools of mortgages.
Such certificates are guaranteed as to payment of principal and interest (but
not as to price and yield) by the issuer. In the case of securities issued by
GNMA, the payment of principal and interest would be backed by the full faith
and credit of the U.S. Government. Mortgage pass-through certificates issued by
FNMA or FHLMC would be guaranteed as to payment of principal and interest by the
credit of the issuing U.S. Government agency. Securities issued by other
non-governmental entities (such as commercial banks or mortgage bankers) may
offer credit enhancement such as guarantees, insurance, or letters of credit.
Mortgage pass-through certificates are subject to more rapid prepayment than
their stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates or increased property
transfers and, as a result, the proceeds from such prepayments may be reinvested
in instruments which have lower yields. To the extent such securities were
purchased at a premium, such prepayments could result in capital losses. The
issuer of a pass-through mortgage certificate does not guarantee premiums or
market value of its issue.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its investment
objectives. The fixed income securities in which the Fund will invest are
subject to fluctuation in value. Such fluctuations may be based on movements in
interest rates or from changes in creditworthiness of the issuers, which may
result from adverse business and economic developments or proposed corporate
transactions, such as a leveraged buy-out or recapitalization of the issuer.
The value of the 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 Fund's fixed income securities would decrease in value, which would
have a depressing influence on the Fund's net asset value.
MONEY MARKET INSTRUMENTS. Money market instruments may be purchased when the
Advisor believes interest rates are rising, the prospect for capital
appreciation in the longer term fixed income securities markets is not
attractive, or when the "yield curve" favors short-term fixed income securities
versus longer term fixed income securities. Money market instruments will
typically represent a portion of the Fund's portfolio, as funds awaiting
investment, to accumulate cash for anticipated purchases of portfolio securities
and to provide for shareholder redemptions and operational expenses of the Fund.
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 any NRSRO or, if not rated, issued by a corporation having an
outstanding unsecured debt issue rated in the three highest categories of any
NRSRO
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or, if not so rated, of equivalent quality in the Advisor's opinion. See the
Statement of Additional Information for a further description of money market
instruments.
UNSEASONED ISSUERS. The Fund may invest in the securities of unseasoned issuers,
that is, companies having an operating history of less than three years
(including predecessors and, in the case of fixed income securities,
guarantors). The management of such companies frequently does not have
substantial business experience. Furthermore, they may be competing with other
companies who are well established, more experienced and better financed.
Because of these and other risks, described in the Statement of Additional
Information, investment in unseasoned issuers is restricted by the Fund to no
more than 5% of its net assets.
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 33.3% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
PORTFOLIO TURNOVER. By utilizing the approach to investing described herein, it
is expected that annual portfolio turnover will generally not exceed 50%. Market
conditions may dictate, however, a higher rate of turnover in a particular year.
The degree of portfolio activity affects the brokerage costs of the Fund and may
have an impact on the amount of taxable distributions to shareholders.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. For purposes of the Investment Company Act of 1940 (the "1940
Act"), a repurchase agreement is considered to be a loan collateralized by the
securities subject to the repurchase agreement. The Fund will not enter into a
repurchase agreement which will cause more than 10% of its assets to be invested
in repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to risk,
the Fund has adopted certain limitations which, together with its investment
objectives, are considered fundamental policies which may not be changed without
shareholder approval. The 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 the Fund's total assets, or (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities if,
immediately after such borrowing, the value of the Fund's assets, including all
borrowings then outstanding, less its
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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) make loans of money or securities, except that
the Fund may invest in repurchase agreements (but repurchase agreements having a
maturity of longer than seven days, together with other securities which are not
readily marketable, are limited to 10% of the Fund's net assets); (3) acquire
foreign securities, except that the Fund may acquire foreign securities sold as
American Depository Receipts without limit; (4) write, acquire or sell puts,
calls or combinations thereof, or purchase or sell commodities, commodities
contracts, futures contracts or related options; (5) invest more than 5% of its
total assets in the securities of any one issuer nor hold more than 10% of the
voting stock of any one issuer; and (6) invest in restricted securities. Other
fundamental investment limitations are listed in the Statement of Additional
Information.
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
There are NO SALES COMMISSIONS CHARGED TO INVESTORS. Assistance in opening
accounts may be obtained from the Administrator by calling 1-800-443-4249, or by
writing to the Fund at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Fund. Such broker-dealer may charge you a fee for its services. Payment
for shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. Your investment will purchase
shares at the Fund's net asset value next determined after your order is
received by the Fund in proper order as indicated herein. The minimum initial
investment in the Fund, unless stated otherwise herein, is $5,000. The minimum
for an Individual Retirement Account ("IRA") or self-employed retirement plan
("Keogh Plan") is $1,000. The Fund may, in the Advisor's sole discretion, accept
certain accounts with less than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Administrator, whether by mail, bank
wire or facsimile order from a qualified broker-dealer, prior to 4:00 p.m.
Eastern time will purchase shares at the net asset value determined on that
business day. If your order is not received by 4:00 p.m. Eastern time, your
order will purchase shares at the net asset value determined on the next
business day. (See "How Net Asset Value is Determined.")
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Fund or the Administrator in the transaction.
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<PAGE>
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to The
Government Street Bond Fund, and mail it to:
The Government Street Bond Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Fund, at
1-800-443-4249, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For The Government Street Bond Fund
(Shareholder name and account number or tax identification number)
It is important that the wire contain all the information and that the Fund
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 Fund 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 Fund at 1-800-443-4249 to alert the Fund that your
wire is to be sent. Follow the wire instructions above to send your wire. When
calling for any reason, please have your account number ready, if known. Mail
orders should include, when 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.
EMPLOYEES AND AFFILIATES OF THE FUND. The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Fund or certain
parties related thereto. The minimum initial investment for such accounts is
$1,000. See the Statement of Additional Information for further details.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
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<PAGE>
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares of the Fund may be redeemed on each day that the Fund is open for
business by sending a written request to the Fund. The Fund is open for business
on each day the New York Stock Exchange (the "Exchange") is open for business.
Any redemption may be for more or less than the purchase price of your shares
depending on the market value of the Fund's portfolio securities. All redemption
orders received in proper form, as indicated herein, by the Administrator prior
to 4:00 p.m. Eastern time will redeem shares at the net asset value determined
as of that business day's close of trading. Otherwise, your order will redeem
shares on the next business day. You may also redeem your shares through a
broker-dealer who may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $1,000 (due to redemptions or transfers,
but not due to market action) upon 60 days' written notice. If the shareholder
brings his account value up to $1,000 or more during the notice period, the
account will not be redeemed. Redemptions from retirement plans may be subject
to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-443-4249, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Government
Street Bond Fund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request for
redemption must include:
1) your letter of instruction or a stock assignment specifying the account
number, and the number of shares or dollar amount to be redeemed. This
request must be signed by all registered shareholders in the exact names in
which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized persons, or you can have the
proceeds sent by
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<PAGE>
bank wire to your bank ($5,000 minimum). Shares of the Fund may not be redeemed
by wire on days in which your bank is not open for business. Redemption proceeds
will only be sent to the bank account or person named in your Account
Application currently on file with the Fund. You can change your redemption
instructions anytime you wish by filing a letter including your new redemption
instructions with the Fund. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
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 the 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 Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by writing the Fund. See the Statement of Additional Information for further
details.
HOW NET ASSET VALUE IS DETERMINED
- --------------------------------------------------------------------------------
The net asset value of the Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m., Eastern time). 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. When
market quotations are not readily available, fixed income securities may be
valued on the basis of prices
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<PAGE>
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 FUND
- --------------------------------------------------------------------------------
The Fund is a diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Fund under
the laws of Massachusetts governing the responsibilities of Trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Fund and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, T.
Leavell & Associates, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
Investment Advisory Agreement with the Trust. The Advisor is also responsible
for the selection of broker-dealers through which the Fund executes portfolio
transactions, subject to brokerage policies established by the Trustees, and
provides certain executive personnel to the Fund.
The Advisor, organized as an Alabama corporation in 1979, is controlled by
Thomas W. Leavell, Richard Mitchell, Dorothy G. Gambill and Timothy S. Healey.
In addition to acting as Advisor to the Fund, the Advisor also provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals. The Advisor also
serves as investment advisor to The Government Street Equity Fund and The
Alabama Tax Free Bond Fund (two series of the Trust), the subjects of separate
prospectuses.
Mary Shannon Hope is primarily responsible for managing the portfolio of the
Fund and has acted in this capacity since July, 1997. Mrs. Hope has been
employed by the Advisor since 1987. Mrs. Hope holds a B.S. degree from the
University of Alabama and an M.B.A. from the University of South Alabama.
Compensation of the Advisor with respect to the Fund, based upon the Fund's
average daily net assets, is at the following annual rates: On the first $100
million, 0.50%; on assets over $100 million, 0.40%. For the fiscal year ended
March 31, 1998, the Advisor received $164,236 in investment advisory fees from
the Fund, which represented 0.50% of the Fund's average daily net assets.
The Advisor's address is 150 Government Street, Post Office Box 1307, Mobile,
Alabama 36633.
ADMINISTRATOR. The Fund has 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
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<PAGE>
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.
The Fund pays the Administrator a fee for these services at the annual rate of
0.075% of the average value of its daily net assets up to $200 million and 0.05%
of such assets in excess of $200 million; provided, however, that the minimum
fee is $2,000 per month. The Administrator also charges the Fund for certain
costs involved with the daily valuation of investment securities and is
reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Fund pays all expenses not assumed by the Advisor,
including its fees. Fund expenses include, among others, the fees and expenses,
if any, of the Trustees and officers who are not "affiliated persons" of the
Advisor, fees of the Fund's Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Fund's shareholder servicing
operations, fees and expenses of qualifying and registering the Fund's shares
under federal and state securities laws, expenses of preparing, printing and
distributing prospectuses and reports to existing shareholders, auditing and
legal expenses, insurance expenses, association dues, and the expense of
shareholders' meetings and proxy solicitations. The Fund is also liable for any
nonrecurring expenses as may arise such as litigation to which the Fund may be a
party. The Fund may be obligated to indemnify the Trustees and officers with
respect to such litigation. All expenses of the Fund are accrued daily on the
books of the Fund at a rate which, to the best of its belief, is equal to the
actual expenses expected to be incurred by the Fund in accordance with generally
accepted accounting practices. For the fiscal year ended March 31, 1998, the
expense ratio of the Fund was 0.74% of its average daily net assets.
BROKERAGE. The Fund has adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Fund. In all cases, the primary consideration for selection of
broker-dealers through which to execute brokerage transactions will be to obtain
the most favorable price and execution for the Fund. Research services obtained
through the Fund's brokerage transactions may be used by the Advisor for its
other clients; conversely, the Fund may benefit from research services obtained
through the brokerage transactions of the Advisor's other clients. The Statement
of Additional Information contains more information about the management and
brokerage practices of the Fund. It is anticipated that most securities
transactions of the Fund will be handled on a principal, rather than agency,
basis. Fixed income securities are normally traded on a net basis (without
commission) through broker-dealers and banks acting for their own account. Such
firms attempt to profit from buying at the bid price and selling at the higher
asked price of the market, the difference being referred to as the spread.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general and,
particularly, with respect to dividends and distributions and other matters.
Shareholders should be aware that dividends from the Fund which are derived in
whole or in part from interest on U.S. Government Securities may not be taxable
for state income tax purposes. Other state income tax implications are not
covered, nor is this discussion exhaustive on the subject of federal income
taxation. Consequently, investors should seek qualified tax advice.
The Fund intends to 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 Fund but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed to
them. The Fund intends to declare and pay dividends on the last business day of
each month. In addition, distributions may be made annually in December out of
any net short-term or long-term capital gains derived from the sale of
securities realized through October 31 of that year. The 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 Fund at the end of each
year. The Fund intends to withhold 30% on taxable dividends and any other
payments that are subject to such withholding and are made to persons who are
neither citizens nor residents of the U.S.
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. All dividends and capital
gains distributions are reinvested in additional shares of the Fund unless the
shareholder requests in writing to receive dividends and/or capital gains
distributions in cash. That request must be received by the Fund prior to the
record date to be effective as to the next dividend. Tax consequences to
shareholders of dividends and distributions are the same if received in cash or
if received in additional shares of the Fund.
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the Fund, see "Additional
Tax Information" in the Statement of Additional Information.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Fund: shares of the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund, which are managed by Flippin, Bruce & Porter, Inc. of
Lynchburg, Virginia; shares of The Jamestown Balanced Fund, The Jamestown Equity
Fund, The Jamestown International Equity Fund and The Jamestown Tax Exempt
Virginia Fund, which are managed by Lowe, Brockenbrough & Tattersall, Inc. of
Richmond, Virginia; shares of The Jamestown Bond Fund and The Jamestown Short
Term Bond
14
<PAGE>
Fund, which are managed by Tattersall Advisory Group, Inc. of Richmond,
Virginia; shares of The Davenport Equity Fund, which is managed by Davenport &
Company LLC of Richmond, Virginia; and shares of The Government Street Equity
Fund and The Alabama Tax Free Bond Fund, which are managed by T. Leavell &
Associates, Inc. The Trustees are permitted to create additional series, or
funds, at any time.
Shares are freely transferable, have no preemptive or conversion rights and,
when issued, are fully paid and non-assessable. Upon liquidation of the Trust or
a particular Fund of the Trust, holders of the outstanding shares of the Fund
being liquidated shall be entitled to receive, in proportion to the number of
shares of the Fund held by them, the excess of that Fund's assets over its
liabilities. Each outstanding share is entitled to one vote for each full share
and a fractional vote for each fractional share, on all matters which concern
the Trust as a whole. On any matter submitted to a vote of shareholders, all
shares of the Trust then issued and outstanding and entitled to vote,
irrespective of the Fund, shall be voted in the aggregate and not by Fund,
except (i) when required by the 1940 Act, shares shall be voted by individual
Fund; and (ii) when the matter does not affect any interest of a particular
Fund, then only shareholders of the affected Fund or Funds shall be entitled to
vote thereon. Examples of matters which affect only a particular Fund could be a
proposed change in the fundamental investment objectives or policies of that
Fund or a proposed change in the investment advisory agreement for a particular
Fund. The shares of the Fund will have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
Trustees can elect all of the Trustees if they so choose.
The Declaration of Trust provides that the Trustees may hold office
indefinitely, except that: (1) any Trustee may resign or retire; and (2) any
Trustee may be removed with or without cause at any time: (a) by a written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal; (b) by vote of shareholders holding not less than two-thirds of
the outstanding shares of the Trust, cast in person or by proxy at a meeting
called for that purpose; or (c) by a written declaration signed by shareholders
holding not less than two-thirds of the outstanding shares of the Trust and
filed with the Trust's custodian. In case a vacancy or an anticipated vacancy
shall for any reason exist, the vacancy shall be filled by the affirmative vote
of a majority of the remaining Trustees, subject to the provisions of Section
16(a) of the 1940 Act.
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the Statement of Additional Information for more information.
Shareholder inquiries may be made in writing, addressed to the Fund at the
address shown on the cover.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See the Statement of Additional Information
for further information about the Trust and its shares.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance.
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<PAGE>
The "total return" of the Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If the Fund has been operating less than 1, 5 or 10 years, the time
period during which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandarized 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 rate of return, actual
year-by-year rates or any combination thereof.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated.
16
<PAGE>
THE GOVERNMENT STREET BOND FUND
Send completed application to:
THE GOVERNMENT STREET BOND FUND
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $5,000; $1,000 minimum for tax
qualified account)
o Enclosed is a check payable to THE GOVERNMENT STREET BOND FUND for $_________
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 FUND AT 1-800-443-4249 SO THAT YOUR WIRE TRANSFER IS
PROPERLY CREDITED TO YOUR ACCOUNT. Please forward your completed
application by mail immediately thereafter to the Fund. The wire
should be routed as follows:
Star Bank, N.A.
ABA #042000013
For credit Williamsburg Investment Trust #485777056
For The Government Street Bond 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 or savings account.
PLEASE ATTACH A VOIDED CHECK.
17
<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 GOVERNMENT STREET BOND FUND for the Registered Owner and to
execute and deliver any instrument necessary to effectuate the authority hereby
conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE GOVERNMENT STREET BOND FUND, or any agent of the Fund may, without inquiry,
rely upon the instruction of any person(s) purporting to be an authorized person
named above, or in any Amendment received by the Fund or their agent. The Fund
and its Agent shall not be liable for any claims, expenses or losses resulting
from having acted upon any instruction reasonably believed to be genuine.
- --------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
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 THE GOVERNMENT STREET BOND 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
is hereby authorized to charge to my o both the 15th and last business day
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 accountsignature card.
______________________________________
(Signature as your name appears on the
bank account to be drafted)
Name as it appears on the account_______________________________________________
Commercial bank account #_______________________________________________________
ABA Routing #___________________________________________________________________
City, State and Zip in which bank is located____________________________________
For AUTOMATIC INVESTMENT or SYSTEMATIC WITHDRAWAL please attach a voided check
from the above account.
- --------------------------------------------------------------------------------
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Fund and affirm that I have received a current prospectus and
understand the investment 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, T. Leavell & Associates, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The 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
18
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
19
<PAGE>
THE GOVERNMENT STREET BOND FUND
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, Alabama 36633
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Richard Mitchell, President
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
PORTFOLIO MANAGER
Mary Shannon Hope
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
<PAGE>
THE ALABAMA
TAX FREE
BOND FUND
A No-Load Fund
Investment Advisor
T. Leavell & Associates, Inc.
Founded 1979
<PAGE>
PROSPECTUS
August 1, 1998
THE ALABAMA
TAX FREE BOND FUND
A No-Load Fund
- --------------------------------------------------------------------------------
The investment objectives of THE ALABAMA TAX FREE BOND FUND are to provide
current income exempt from federal income taxes and from the personal income
taxes of Alabama and to preserve capital. Capital appreciation will be of
secondary importance.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
Mobile, Alabama
The Alabama Tax Free Bond Fund (the "Fund") is a NO-LOAD, non-diversified,
open-end series of the Williamsburg Investment Trust, a registered management
investment company. This Prospectus provides you with the basic information you
should know before investing in the Fund. You should read it and keep it for
future reference. While there is no assurance that the Fund will achieve its
investment objectives, it endeavors 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 Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354, and
its telephone number is 1-800-443-4249. A copy of the Statement of Additional
Information may be obtained at no charge by calling or writing the Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Prospectus Summary ......................................................... 2
Synopsis of Costs and Expenses ............................................. 3
Financial Highlights ....................................................... 4
Investment Objectives, Investment Policies and Risk Considerations ......... 5
How to Purchase Shares ..................................................... 11
How to Redeem Shares ....................................................... 12
How Net Asset Value is Determined .......................................... 14
Management of the Fund ..................................................... 15
Tax Status ................................................................. 17
Dividends, Distributions, Taxes and Other Information ...................... 18
Appendix A: Description of Municipal Obligations ........................... 21
Appendix B: Factors Affecting Alabama Issuers .............................. 24
Application ................................................................ 25
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
The Alabama Tax Free Bond Fund (the "Fund") is a NO-LOAD, non-diversified,
open-end series of the Williamsburg Investment Trust, a registered management
investment company commonly known as a "mutual fund." The Fund's investment
objectives are to provide current income exempt from federal income taxes and
from the personal income taxes of Alabama and to preserve capital. Capital
appreciation will be of secondary importance. While there is no assurance that
the Fund will achieve its investment objectives, it endeavors to do so by
following the investment policies described in this Prospectus.
HISTORY OF THE FUND. Pursuant to an Agreement and Plan of Reorganization dated
March 1, 1994, the Fund, on April 1, 1994, succeeded to the assets and
liabilities of another mutual fund of the same name (the "Predecessor Fund"),
which was an investment series of Albemarle Investment Trust. The investment
objectives, policies and restrictions of the Fund and the Predecessor Fund are
practically identical and the financial data and information in this Prospectus
for periods prior to April 1, 1994 relates to the Predecessor Fund.
INVESTMENT CONSIDERATIONS. The primary investment objectives of the Fund are to
provide current income exempt from federal income taxes and from the personal
income taxes of Alabama and to preserve capital. Prospective investors should be
aware that the net asset value of the shares of the Fund (as with any open-end
investment company) 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. 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. T. Leavell & Associates, Inc. (the "Advisor") serves as
investment advisor to the Fund and was investment advisor to the Predecessor
Fund. For its services, the Advisor receives compensation of 0.35% of the
average daily net assets of the Fund. The fees are reduced when the assets of
the Fund exceed $100 million. (See "Management of the Fund.") The Advisor
currently serves as investment advisor to approximately $500 million in assets,
of which approximately one-half are equities and one-half are fixed income
securities. The Advisor currently serves as investment advisor to two additional
mutual funds, the subjects of separate prospectuses.
PURCHASE OF SHARES. Shares are offered "No-Load," which means they may be
purchased directly from the Fund without the imposition of any sales or 12b-1
charges. The minimum initial purchase for the Fund is $5,000. Subsequent
investments must be $500 or more. Shares may be purchased by individuals or
organizations. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions. Shares may
be redeemed at any time in which the Fund is open for business at the net asset
value next determined after receipt of a redemption request by the Fund. (See
"How to Redeem Shares.")
2
<PAGE>
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is distributed
monthly. 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.")
THE FUND. The Fund has registered as a non-diversified management investment
company so that it will be able to invest more than 5% of its assets in
obligations of each of one or more issuers. The proceeds of sales of shares of
the Fund are used to buy securities (primarily municipal bonds and notes and
other debt instruments, the interest on which is exempt from federal income
taxes and from the personal income taxes of Alabama) for the portfolio of the
Fund.
MANAGEMENT. The Fund is a series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Fund.")
SYNOPSIS OF COSTS AND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES: ................................ None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average daily net assets)
Investment Advisory Fees (After waivers) ..................... 0.25%
Administrator's Fees ......................................... 0.15%
Other Expenses ............................................... 0.25%
-----
Total Fund Operating Expenses .................................... 0.65%
=====
EXAMPLE: You would pay the following expenses on a $1,000 investment, whether or
not you redeem at the end of the period, assuming 5% annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$7 $21 $36 $81
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees and
costs of operating the Fund. The Annual Fund Operating Expenses shown above are
based upon actual operating history for the fiscal year ended March 31, 1998.
Absent fee waivers by the Advisor, the Fund's investment advisory fees would
have been 0.35% of average daily net assets and total fund operating expenses
would have been 0.75% of average daily net assets. THE EXAMPLE SHOWN SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES IN
THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following audited financial information has been audited by Tait, Weller &
Baker, independent accountants, whose report covering the fiscal year ended
March 31, 1998 is contained in the Statement of Additional Information. This
information should be read in conjunction with the Fund's 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 Fund.
Selected Per Share Data and Ratios for a Share
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Seven
Months January 15,
Years Ended March 31, Ended 1993(b) to
------------------------------------------------ March 31, August 31,
1998 1997 1996 1995 1994(a) 1993
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ....... $ 10.18 $ 10.23 $ 9.96 $ 9.96 $ 10.30 $ 10.00
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ..................... 0.44 0.43 0.42 0.45 0.26 0.23
Net realized and unrealized
gains (losses) on investments .......... 0.31 (0.05) 0.27 -- (0.34) 0.30
--------- --------- --------- --------- --------- ---------
Total from investment operations ............. 0.75 0.38 0.69 0.45 (0.08) 0.53
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ...... (0.44) (0.43) (0.42) (0.45) (0.26) (0.23)
--------- --------- --------- --------- --------- ---------
Net asset value at end of period ............. $ 10.49 $ 10.18 $ 10.23 $ 9.96 $ 9.96 $ 10.30
========= ========= ========= ========= ========= =========
Total return ................................. 7.44% 3.82% 7.02% 4.66% (1.50%)(d) 8.79%(d)
========= ========= ========= ========= ========= =========
Net assets at end of period (000's) .......... $ 19,938 $ 16,801 $ 15,480 $ 12,816 $ 9,716 $ 3,429
========= ========= ========= ========= ========= =========
Ratio of net expenses to average net assets(c) 0.65% 0.66% 0.75% 0.75% 0.75%(d) 0.75%(d)
Ratio of net investment income
to average net assets ..................... 4.19% 4.24% 4.11% 4.56% 4.46%(d) 4.01%(d)
Portfolio turnover rate ...................... 2% 6% 4% 36% 3% 2%
</TABLE>
(a) Effective April 1, 1994, the Fund was reorganized and changed its fiscal
year end from August 31 to March 31.
(b) Commencement of operations.
(c) Absent investment advisory fees waived and/or expenses reimbursed by the
Advisor, the ratios of expenses to average net assets would have been
0.75%, 0.78%, 0.86%, 1.05%, 1.76%(d) and 2.75%(d) for the periods ended
March 31, 1998, 1997, 1996, 1995, 1994 and August 31, 1993, respectively.
(d) Annualized.
Further information about the performance of the Fund is contained in the Annual
Report, a copy of which may be obtained at no charge by calling the Fund.
4
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The investment objectives of the Fund are to provide current income exempt from
federal income taxes and from the personal income taxes of Alabama and to
preserve capital. Capital appreciation will be of secondary importance. Any
investment involves risk, and there can be no assurance that the Fund will
achieve its investment objectives. The investment objectives of the Fund may not
be altered without the prior approval of a majority (as defined by the
Investment Company Act of 1940) of the Fund's shares.
As a fundamental policy, the Trust seeks to achieve the investment objectives of
the Fund by investing the assets of the Fund primarily (i.e., at least 80% of
its assets under normal conditions) in municipal bonds and notes and other debt
instruments, the interest on which is exempt from federal income taxes and from
the personal income taxes of Alabama and not subject to the alternative minimum
tax. These obligations are issued primarily by Alabama, its political
subdivisions, municipalities, agencies, instrumentalities or public authorities
and other qualifying issuers (including Puerto Rico, the U.S. Virgin Islands and
Guam). The securities will be rated in the three highest grades used by the
recognized rating agencies or comparable securities. Under normal circumstances,
the Fund's average maturity is expected to be of an intermediate term (three to
ten years).
Although the Fund seeks to invest all the assets of the Fund in the obligations
exempt from federal and Alabama 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 Alabama. 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 in paragraphs 3 and 4 below. All of the investments of the
Fund will be made in:
(1) Tax-exempt securities which are rated AAA, AA, or A by Standard & Poor's
Ratings Group ("S&P") or are rated Aaa, Aa, or A by Moody's Investors
Service, Inc. ("Moody's") (or of equivalent rating by any of the nationally
recognized statistical rating organizations) or which are considered by the
Advisor to have essentially the same characteristics and quality as
securities having such ratings;
(2) Notes of issuers having an issue of outstanding Municipal Obligations rated
AAA, AA or A by S&P or Aaa, Aa or A by Moody's or which are guaranteed by
the U.S. Government or which are rated MIG-1 or MIG-2 by Moody's;
(3) Obligations issued or guaranteed as to interest and principal by the U.S.
Government or its agencies or instrumentalities, which may be subject to
repurchase agreements; and
(4) Commercial paper which is rated A-1 or A-2 by S&P or P-1 or P-2 by Moody's
(or which is unrated but which is considered to have essentially the same
characteristics and qualities as commercial paper having such ratings),
obligations of banks with $1 billion of assets (including certificates of
deposit, bankers' acceptances and repurchase agreements), securities of
other investment companies, and cash.
5
<PAGE>
Interest income from the short-term obligations described in paragraphs 3 and 4
above may be taxable to shareholders as ordinary income for federal and state
income tax purposes. The Fund may purchase Municipal Obligations, the interest
on which may be subject to the alternative minimum tax (for purposes of this
Prospectus, the interest thereon is nonetheless considered to be tax-exempt).
For a general discussion of Municipal Obligations, the risks associated with an
investment therein, and descriptions of the ratings of Municipal Obligations and
short-term 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.
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 Fund with a resultant decrease
in yield or increase in the proportion of taxable income.
The Fund will not invest more than 10% of its total assets in securities of
other investment companies nor (with affiliates) hold more than 3% of securities
of one investment company. Any such investment would involve duplication of
expenses, particularly investment advisory fees.
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.
The Fund may invest from time to time a portion of the Fund's assets in
industrial revenue bonds (referred to under current tax law as private activity
bonds), and also may invest a portion of the Fund's assets in revenue bonds
issued for housing, including multi-family housing, health care facilities or
electric utilities, at times when the relative value of issues of such a type is
considered, in the judgment of the Advisor, to be more favorable than that of
other available types of issues, taking into consideration the particular
restrictions on investment flexibility arising from the investment objective of
the Fund of providing current income exempt from personal income taxes of
Alabama (as well as federal income taxes). Therefore, investors should also be
aware of the risks which these investments may entail. Industrial revenue bonds
are issued by various state and local agencies to finance various projects.
6
<PAGE>
Housing revenue bonds typically are issued by a state, county or local housing
authority and are secured only by the revenues of mortgages originated by the
authority using the proceeds of the bond issue. Because of the impossibility of
precisely predicting demand for mortgages from the proceeds of such an issue,
there is a risk that the proceeds of the issue will be in excess of demand,
which would result in early retirement of the bonds by the issuer. Moreover,
such housing revenue bonds depend for their repayment upon the cash flow from
the underlying mortgages, which cannot be precisely predicted when the bonds are
issued. Any difference in the actual cash flow from such mortgages from the
assumed cash flow could have an adverse impact upon the ability of the issuer to
make scheduled payments of principal and interest on the bonds, or could result
in early retirement of the bonds. Additionally, such bonds depend in part for
scheduled payments of principal and interest upon reserve funds established from
the proceeds of the bonds, assuming certain rates of return on investment of
such reserve funds. If the assumed rates of return are not realized because of
changes in interest rate levels or for other reasons, the actual cash flow for
scheduled payments of principal and interest on the bonds may be inadequate. The
financing of multi-family housing projects is affected by a variety of factors,
including satisfactory completion of construction within cost constraints, the
achievement and maintenance of a sufficient level of occupancy, sound management
of the developments, timely and adequate increases in rents to cover increases
in operating expenses, including taxes, utility rates and maintenance costs,
changes in applicable laws and governmental regulations and social and economic
trends.
Electric utilities face problems in financing large construction programs in an
inflationary period, cost increases and delay occasioned by environmental
considerations (particularly with respect to nuclear facilities), difficulty in
obtaining fuel at reasonable prices, the cost of competing fuel sources,
difficulty in obtaining sufficient rate increases and other regulatory problems,
the effect of energy conservation and difficulty of the capital market to absorb
utility debt.
Health care facilities include life care facilities, nursing homes and
hospitals. Life care facilities are alternative forms of long-term housing for
the elderly which offer residents the independence of condominium life style
and, if needed, the comprehensive care of nursing home services. Bonds to
finance these facilities have been issued by various state industrial
development authorities. Because the bonds are secured only by the revenues of
each facility, and not by state or local government tax payments, they are
subject to a wide variety of risks. Primarily, the projects must maintain
adequate occupancy levels to be able to provide revenues adequate to maintain
debt service payments. Moreover, in the case of life care facilities, because a
portion of housing, medical care and other services may be financed by an
initial deposit, there may be risk if the facility does not maintain adequate
financial reserves to secure estimated actuarial liabilities. The ability of
management to accurately forecast inflationary cost pressures weighs importantly
in this process. The facilities may also be affected by regulatory cost
restrictions applied to health care delivery in general, particularly state
regulations or changes in Medicare and Medicaid payments or qualifications, or
restrictions imposed by medical insurance companies. They may also face
competition from alternative health care or conventional housing facilities in
the private or public sector. Hospital bond ratings are often based on
feasibility studies which contain projections of expenses, revenues and
occupancy levels. A hospital's gross receipts and net income available to
service its debt are influenced by demand for hospital services, the ability of
the hospital to provide the services required, management capabilities, economic
developments in the service area, efforts
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by insurers and government agencies to limit rates and expenses, confidence in
the hospital, service area economic developments, competition, availability and
expense of malpractice insurance, Medicaid and Medicare funding, and possible
federal legislation limiting the rates of increase of hospital charges.
The Fund may also invest in bonds for industrial and other projects, such as
sewage or solid waste disposal or hazardous waste treatment facilities.
Financing for such projects will be subject to inflation and other general
economic factors as well as construction risks including labor problems,
difficulties with construction sites and the ability of contractors to meet
specifications in a timely manner. Because some of the materials, processes and
wastes involved in these projects may include hazardous components, there are
risks associated with their production, handling and disposal.
VARIABLE RATE SECURITIES. The Fund may invest in tax-exempt securities that bear
interest at rates which are adjusted periodically to market rates. The market
value of fixed coupon securities fluctuates with changes in prevailing interest
rates, increasing in value when interest rates decline and decreasing in value
when interest rates rise. The value of variable rate securities, however, is
less affected by changes in prevailing interest rates because of the periodic
adjustment of their coupons to a market rate. The shorter the period between
adjustments, the smaller the impact of interest rate fluctuations on the value
of these securities. The market value of tax exempt variable rate securities
usually tends toward par (100% of face value) at interest rate adjustment time.
PUT BONDS. The Fund may invest in tax-exempt securities (including securities
with variable interest rates) which may be redeemed or sold back (put) to the
issuer of the security or a third party at face value prior to stated maturity.
This type of security will normally trade as if maturity is the earlier put
date, even though stated maturity is longer.
ZERO COUPON BONDS. Municipal Obligations in which the Fund may invest also
include zero coupon bonds and deferred interest bonds. Zero coupon bonds and
deferred interest bonds are debt obligations which are issued at a significant
discount from face value. While zero coupon bonds do not require the periodic
payment of interest, deferred interest bonds provide for a period of delay
before the regular payment of interest begins. The discount approximates the
total amount of interest the bonds will accrue and compound over the period
until maturity or the first interest payment date at a rate of interest
reflecting the market rate of the security at the time of issuance. Zero coupon
bonds and deferred interest bonds benefit the issuer by mitigating its need for
cash to meet debt service, but they also require a higher rate of return to
attract investors who are willing to defer receipt of such cash. Such
investments may experience greater volatility in market value than debt
obligations which make regular payments of interest. The Fund will accrue income
on such investments for tax and accounting purposes, which is distributable to
shareholders.
MUNICIPAL LEASE OBLIGATIONS. The Fund may also invest in municipal lease
obligations, installment purchase contract obligations, and certificates of
participation in such obligations (collectively, "lease obligations"). A lease
obligation does not constitute a general obligation of the municipality for
which the municipality's taxing power is pledged, although the lease obligation
is ordinarily backed by the municipality's covenant to budget for the payments
due under the lease obligation. Certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease obligation payments in future years unless money is
appropriated for such purpose on a yearly basis. A risk peculiar to these
municipal lease obligations is the possibility that a municipality will not
appropriate funds for
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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 Alabama municipal
securities, the Fund is more susceptible to factors affecting Alabama 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 Alabama, see Appendix B. Yields on
Alabama municipal securities depend on a variety of factors, 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 State of Alabama
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 Alabama municipal securities and participation interests, or the
guarantors of either, to meet their obligations for the payment of interest and
principal when due. Certain Alabama constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives
could result in adverse consequences affecting Alabama municipal securities.
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.
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BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 15% of its total assets to
meet redemption requests which might otherwise require untimely disposition of
portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
PORTFOLIO TURNOVER. Portfolio turnover will not be a limiting factor when the
Advisor deems changes appropriate. While portfolio turnover is difficult to
predict in an active fixed income portfolio, it is expected that annual
portfolio turnover will generally not exceed 100%. Market conditions may
dictate, however, a higher rate of turnover in a particular year. The degree of
portfolio turnover affects the brokerage costs of the Fund and may have an
impact on the amount of taxable distributions to shareholders.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. Each month the Fund distributes to the
shareholders of the Fund dividends substantially equal to all the net investment
income of the Fund. The Fund's net investment income consists of non-capital
gain income, less expenses. The Fund will declare one or more long-term capital
gain distributions to the shareholders of the Fund during the calendar year if
the Fund's profits from the sale of securities held for longer than the
applicable period exceed losses from these transactions together with any net
capital losses carried forward from prior years (to the extent not used to
offset short-term capital gains). If the Fund realizes net short-term capital
gains, they will also be distributed at that time. Shareholders may elect to
receive dividends and capital gain distributions in either cash or additional
shares. (See "Tax Status" and "Dividends, Distributions, Taxes and Other
Information.")
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to risk,
the Fund has adopted certain limitations which, together with its investment
objectives, are considered fundamental policies which may not be changed without
shareholder approval. The 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 the Fund's total assets, or (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities, in amounts
not exceeding 15% of its total assets, and may pledge its assets to secure all
such borrowings; (2) make loans of money or securities, except that the Fund may
invest in repurchase agreements; (3) invest more than 15% of its net assets in
securities subject to legal or contractual restrictions on resale or for which
there are no readily available market quotations or in other illiquid
securities; and (4) write, acquire or sell commodities, commodities contracts,
futures contracts or related options. Other fundamental investment limitations
are listed in the Statement of Additional Information.
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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 Fund at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Fund. Such broker-dealer may charge you a fee for its services. Payment
for shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. Your investment will purchase
shares at the Fund's net asset value next determined after your order is
received by the Fund in proper order as indicated herein. The minimum initial
investment in the Fund, unless stated otherwise herein, is $5,000. The Fund may,
in the Advisor's sole discretion, accept certain accounts with less than the
stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Administrator, whether by mail, bank
wire or facsimile order from a qualified broker-dealer, prior to 4:00 p.m.
Eastern time will purchase shares at the net asset value next determined on that
business day. If your order is not received by 4:00 p.m. Eastern time, your
order will purchase shares at the net asset value determined on the next
business day. (See "How Net Asset Value is Determined.")
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Fund or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to The
Alabama Tax Free Bond Fund, and mail it to:
The Alabama Tax Free Bond Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Fund, at
1-800-443-4249, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
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Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For The Alabama Tax Free Bond Fund
(Shareholder name and account number or tax identification number)
It is important that the wire contain all the information and that the Fund
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 Fund 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 Fund at 1-800-443-4249 to alert the Fund that your
wire is to be sent. Follow the wire instructions above to send your wire. When
calling for any reason, please have your account number ready, if known. Mail
orders should include, when 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.
EMPLOYEES AND AFFILIATES OF THE FUND. The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Fund or certain
parties related thereto. The minimum initial investment for such accounts is
$1,000. See the Statement of Additional Information for further details.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares of the Fund may be redeemed on each day that the Fund is open for
business by sending a written request to the Fund. The Fund is open for business
on each day the New York Stock Exchange (the "Exchange") is open for business.
Any redemption may be for more or less than the purchase price of your shares
depending on the market value of the Fund's portfolio securities. All redemption
orders received in proper form, as indicated herein, by the Administrator prior
to 4:00 p.m. Eastern time will redeem shares at the net asset value determined
as of that business day's close of trading. Otherwise, your order will redeem
shares on the next business day. You may also redeem your shares through a
broker-dealer who may charge you a fee for its services.
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The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $1,000 (due to redemptions or transfers,
and not due to market action) upon 60 days' written notice. If the shareholder
brings his account value up to $1,000 or more during the notice period, the
account will not be redeemed.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-443-4249, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Alabama Tax
Free Bond Fund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request for
redemption must include:
1) your letter of instruction or a stock assignment specifying the account
number, and the number of shares or dollar amount to be redeemed. This
request must be signed by all registered shareholders in the exact names in
which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, and
other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Fund may
not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Fund. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Fund. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
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SIGNATURE GUARANTEES. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
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 the 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 Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by writing the Fund. See the Statement of Additional Information for further
details.
HOW NET ASSET VALUE IS DETERMINED
- --------------------------------------------------------------------------------
The net asset value of the Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m., Eastern time). 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. Municipal Obligations
will ordinarily be traded in the over-the-counter market. When market quotations
are not readily available, Municipal Obligations 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.
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MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The Fund is a non-diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Fund under
the laws of Massachusetts governing the responsibilities of trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Fund and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, T.
Leavell & Associates, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
Investment Advisory Agreement with the Trust. The Advisor is also responsible
for the selection of broker-dealers through which the Fund executes portfolio
transactions, subject to brokerage policies established by the Trustees, and
provides certain executive personnel to the Fund.
The Advisor, organized as an Alabama corporation in 1979, is controlled by
Thomas W. Leavell, Richard Mitchell, Dorothy G. Gambill and Timothy S. Healey.
In addition to acting as Advisor to the Fund, the Advisor also provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals. The Advisor also
serves as investment advisor to The Government Street Bond Fund and The
Government Street Equity Fund (two series of the Trust), the subjects of
separate prospectuses.
Timothy S. Healey is primarily responsible for managing the portfolio of the
Fund and also acted in this capacity for the Predecessor Fund. Mr. Healey is a
Vice President of the Advisor and has been a portfolio manager with the firm
since 1986. Prior to joining the Advisor, Mr. Healey served as second Vice
President at Torchmark Advisory Co., Inc. in Birmingham, Alabama. He holds a
B.S., Finance from the University of Alabama and has been continuously engaged
in the investment management business since 1975.
Compensation of the Advisor with respect to the Fund, based upon the Fund's
average daily net assets, is at the following annual rates: On the first $100
million, 0.35%; on assets over $100 million, 0.25%. For the fiscal year ended
March 31, 1998, the Advisor received $46,538 in investment advisory fees from
the Fund (net of fee waivers), which represented 0.25% of the Fund's average
daily net assets.
The Advisor currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of the Fund to 0.65% per
annum of its average daily net assets. However, there is no assurance that any
voluntary fee waivers will continue in the current or future fiscal years, and
expenses of the Fund may therefore exceed 0.65% of its average daily net assets.
The Advisor's address is 150 Government Street, Post Office Box 1307, Mobile,
Alabama 36633.
ADMINISTRATOR. The Fund has 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
15
<PAGE>
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.
The 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 Fund for certain
costs involved with the daily valuation of investment securities and is
reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Fund pays all expenses not assumed by the Advisor,
including its fees. Fund expenses include, among others, the fees and expenses,
if any, of the Trustees and officers who are not "affiliated persons" of the
Advisor, fees of the Fund's Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Fund's shareholder servicing
operations, fees and expenses of qualifying and registering the Fund's shares
under federal and state securities laws, expenses of preparing, printing and
distributing prospectuses and reports to existing shareholders, auditing and
legal expenses, insurance expenses, association dues, and the expense of
shareholders' meetings and proxy solicitations. The Fund is also liable for any
nonrecurring expenses as may arise such as litigation to which the Fund may be a
party. The Fund may be obligated to indemnify the Trustees and officers with
respect to such litigation. All expenses of the Fund are accrued daily on the
books of the Fund at a rate which, to the best of its belief, is equal to the
actual expenses expected to be incurred by the Fund in accordance with generally
accepted accounting practices. For the fiscal year ended March 31, 1998, the
expense ratio of the Fund was 0.65% of its average daily net assets after
expense reimbursements.
BROKERAGE. The Fund has adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Fund. In all cases, the primary consideration for selection of
broker-dealers through which to execute brokerage transactions will be to obtain
the most favorable price and execution for the Fund. Research services obtained
through the Fund's brokerage transactions may be used by the Advisor for its
other clients; conversely, the Fund may benefit from research services obtained
through the brokerage transactions of the Advisor's other clients. The Statement
of Additional Information contains more information about the management and
brokerage practices of the Fund. It is anticipated that most securities
transactions of the Fund will be handled on a principal, rather than agency,
basis. Municipal Obligations, including Alabama 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.
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TAX STATUS
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FEDERAL INCOME TAXES. Each series of the Trust is a separate entity for tax
purposes, and the Trust intends to qualify the Fund each year as a separate
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986 (the "Code"). Because the Fund intends to distribute to shareholders
substantially all of its net investment income and net realized capital gains in
accordance with the timing requirements imposed by the Code, it is expected that
the Fund will not be required to pay any federal income or excise taxes. The
Fund also expects the dividends it pays to shareholders of the Fund from
interest on Municipal Obligations generally to be exempt from federal income tax
because the Trust intends the Fund to satisfy certain requirements of the Code.
One such requirement is that at the close of each quarter of the taxable year of
the Fund, at least 50% of the value of its total assets consists of obligations
whose interest is exempt from federal income tax. Distributions of income from
investments in taxable securities and from certain other investments of the Fund
(including capital gains from the sale of 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 taxes as "exempt-interest dividends;" the portion, if any, that is a tax
preference item under the federal alternative minimum tax; the portion taxable
as ordinary income; the portion taxable as capital gains; and the portion
representing a return of capital (which is free of current taxes but results in
a basis reduction). The Fund intends to withhold 30% on taxable dividends and
any other payments that are subject to such withholding and are made to persons
who are neither citizens nor residents of the U.S.
Current federal tax law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest and makes interest on certain
tax-exempt bonds and distributions by the Fund of such interest a tax preference
item for purposes of the individual and corporate alternative minimum tax. In
addition, all exempt-interest dividends may affect a corporate shareholder's
alternative minimum tax liability. Applicable tax law and changes therein may
also affect the availability of Municipal Obligations for investment by the Fund
and the value of the Fund's portfolio. 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. Set forth below is a brief description of the
personal income tax status of an investment in the Fund under Alabama 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.
Under existing Alabama tax laws, as long as the Fund qualifies as a "regulated
investment company" under the Code, and provided the Fund is invested in
obligations the interest on which would be exempt from Alabama personal income
taxes if held directly by an individual shareholder (such as obligations of
Alabama or its political
17
<PAGE>
subdivisions, of the United States or of certain territories or possessions of
the United States), dividends received from the Fund that represent interest
received by the Fund on such obligations will be exempt from Alabama personal
income taxes. To the extent that distributions by the Fund are derived from
long-term or short-term capital gains on such obligations, or from dividends or
capital gains on other types of obligations, such distributions will not be
exempt from Alabama personal income tax.
Capital gains or losses realized from a redemption of shares of the Fund by an
Alabama resident will be taxable for Alabama personal income tax purposes.
Interest on indebtedness incurred (directly or indirectly) by a shareholder of
the Fund to purchase or carry shares of the Fund will not be deductible for
Alabama income tax purposes.
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code, Treasury regulations, and Alabama 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
Alabama tax laws. The Code, Treasury regulations, and Alabama 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 Fund in general and,
particularly, with respect to dividends and distributions and other matters. The
discussion herein of the federal and state income tax consequences of an
investment in the Fund is not exhaustive on the subject. Consequently, investors
should seek qualified tax advice.
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Code and will distribute all of its net income and realized
capital gains to shareholders. The Fund intends to declare dividends on each
business day and to pay such dividends monthly. In addition, distributions may
be made annually in December out of any net short-term or long-term capital
gains derived from the sale of securities realized through October 31 of that
year. The Fund may make a supplemental distribution of capital gains at the end
of its fiscal year. The nature and amount of all dividends and distributions
will be identified separately when tax information is distributed by the Fund at
the end of each year.
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. All dividends and capital
gains distributions are reinvested in additional shares of the Fund unless the
shareholder requests in writing to receive dividends and/or capital gains
distributions in cash. That request must be received by the Fund prior to the
record date to be effective as to the next dividend. Tax consequences to
shareholders of dividends and distributions are the same if received in cash or
if received in additional shares of the Fund.
18
<PAGE>
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the Fund, see "Additional
Tax Information" in the Statement of Additional Information.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Fund: shares of the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund, which are managed by Flippin, Bruce & Porter, Inc. of
Lynchburg, Virginia; shares of The Jamestown Balanced Fund, The Jamestown Equity
Fund, The Jamestown International Equity Fund and The Jamestown Tax Exempt
Virginia Fund, which are managed by Lowe, Brockenbrough & Tattersall, Inc. of
Richmond, Virginia; shares of The Jamestown Bond Fund and The Jamestown Short
Term Bond Fund, which are managed by Tattersall Advisory Group, Inc. of
Richmond, Virginia; shares of The Davenport Equity Fund, which is managed by
Davenport & Company LLC of Richmond, Virginia; and shares of The Government
Street Equity Fund and The Government Street Bond Fund, which are managed by T.
Leavell & Associates, Inc. The Trustees are permitted to create additional
series, or funds, at any time.
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 Investment Company Act of 1940 (the "1940 Act"),
shares shall be voted by individual Fund; and (ii) when the matter does not
affect any interest of a particular Fund, then only shareholders of the affected
Fund or Funds shall be entitled to vote thereon. Examples of matters which
affect only a particular Fund could be a proposed change in the fundamental
investment objectives or policies of that Fund or a proposed change in the
investment advisory agreement for a particular Fund. The shares of the Fund will
have noncumulative voting rights, which means that the holders of more than 50%
of the shares voting for the election of Trustees can elect all of the Trustees
if they so choose.
The Declaration of Trust provides that the Trustees may hold office
indefinitely, except that: (1) any Trustee may resign or retire; and (2) any
Trustee may be removed with or without cause at any time: (a) by a written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal; (b) by vote of shareholders holding not less than two-thirds of
the outstanding shares of the Trust, cast in person or by proxy at a meeting
called for that purpose; or (c) by a written declaration signed by shareholders
holding not less than two-thirds of the outstanding shares of the Trust and
filed with the Trust's custodian. In case a vacancy or an anticipated vacancy
shall for any reason exist, the vacancy shall be filled by the affirmative vote
of a majority of the remaining Trustees, subject to the provisions of Section
16(a) of the 1940 Act.
19
<PAGE>
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the Statement of Additional Information for more information.
Shareholder inquiries may be made in writing, addressed to the Fund at the
address shown on the cover.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See the Statement of Additional Information
for further information about the Trust and its shares.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield and tax-equivalent yield. The
Fund's yield, tax-equivalent yield and total return figures are based on
historical earnings and are not intended to indicate future performance.
The "total return" of the Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If the Fund has been operating less than 1, 5 or 10 years, the time
period during which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same or
different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative percentage rate of return,
actual year-by-year rates or any combination thereof.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated. The "tax-equivalent yield" of the
Fund is computed by using the tax-exempt yield figure and dividing by one minus
the tax rate.
20
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
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
21
<PAGE>
that a governmental issuer will not appropriate funds for lease payments.
Although the obligations will be secured by the leased equipment or facilities,
the disposition of the property in the event of non-appropriation or foreclosure
might, in some cases, prove difficult. There are, of course, variations in the
security of Municipal Obligations, both within a particular classification and
between classifications, depending on numerous factors.
Municipal Obligation notes generally are used to provide for short-term capital
needs and generally have maturities of one year or less. Municipal Obligation
notes include:
1. TAX ANTICIPATION NOTES. Tax Anticipation Notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various tax revenues, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
2. REVENUE ANTICIPATION NOTES. Revenue Anticipation Notes are issued in
expectation of receipt of other kinds of revenue, such as federal revenues
available under Federal Revenue Sharing Programs.
3. BOND ANTICIPATION NOTES. Bond Anticipation Notes are issued to provide
interim financing until long-term bond financing can be arranged. In most
cases, the long-term bonds then provide the money for the repayment of the
Notes.
Issues of commercial paper typically represent short-term, unsecured, negotiable
promissory notes. These obligations are issued by agencies of state and local
governments to finance seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general revenues of
municipalities or are refinanced with long-term debt. In most cases, Municipal
Obligation commercial paper is backed by letters of credit, lending agreements,
note repurchase agreements or other credit facility agreements offered by banks
or other institutions.
The yields on Municipal Obligations are dependent on a variety of factors,
including general market conditions, supply and demand and general conditions of
the Municipal Obligation market, size of a particular offering, the maturity of
the obligation and rating (if any) of the issue.
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.
22
<PAGE>
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.
23
<PAGE>
APPENDIX B
- --------------------------------------------------------------------------------
FACTORS AFFECTING ALABAMA MUNICIPAL OBLIGATIONS
The following information regarding certain economic, financial and legal
matters pertaining to Alabama is drawn primarily from official statements
relating to securities offerings of Alabama and other publicly available
documents, dated as of various dates prior to the date of this Prospectus, and
do not purport to be complete descriptions. Data regarding the financial
condition of Alabama state government may not be relevant to Municipal
Obligations issued by political subdivisions of Alabama. Moreover, the general
economic conditions discussed may or may not affect issuers of the obligations.
Real Gross State Product (RGSP) is a comprehensive measure of economic
performance for the State of Alabama. Alabama's RGSP is defined as the total
value of all final goods and services produced in the State in constant dollar
terms. Hence, changes in RGSP reflect changes in final output. From 1993-1997,
RGSP originating in manufacturing increased by 5.2% per year while the RGSP
originating in all non-manufacturing sectors grew by 4.0% per year.
Those non-manufacturing sectors exhibiting large percentage increases in RGSP
originating between 1993 and 1997 were trade and construction. From 1993 to
1997, trade grew by 5.8% per year, and construction grew by 7.8% per year. The
current movement toward diversification of the State's manufacturing base and a
similar trend toward enlargement and diversification of the trade, construction,
and service industries in the State are expected to lead to increased economic
stability.
The Alabama economy created almost 21,000 new jobs in 1997. Preliminary figures
announced by the Alabama Development Office indicate that there will be
approximately $2.8 billion in announced capital investment in 1997.
In recent years, the importance of service industries to the State's economy has
increased significantly. The major service industries in the State are the
general health care industries, most notably represented by the University of
Alabama medical complex in Birmingham, and the high technology research and
development industries concentrated in the Huntsville area. The financial,
insurance and real estate sectors have also shown strong growth over the last
several years.
Among the leading manufacturing industries have been pulp and paper and
chemicals, the development and growth of which have been made possible by
abundant rainfall. In recent years Alabama has ranked as the fifth largest
producer of timber in the nation. The State's growing chemical industry has been
the natural complement of production of wood pulp and paper.
Coal mining; oil and gas production; textiles and apparel; rubber and plastics;
printing and publishing; and steel are also important to Alabama's economy.
The continued movement toward diversification of Alabama's manufacturing base
and the enlargement and diversification of the transportation, communication,
and service industries in the State are expected to lead to increased economic
stability.
24
<PAGE>
THE ALABAMA TAX FREE BOND FUND
Send completed application to:
THE ALABAMA TAX FREE BOND FUND
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $5,000)
o Enclosed is a check payable to THE ALABAMA TAX FREE BOND FUND for $__________
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 FUND AT 1-800-443-4249 SO THAT YOUR WIRE TRANSFER IS
PROPERLY CREDITED TO YOUR ACCOUNT. Please forward your completed
application by mail immediately thereafter to the Fund. The wire
should be routed as follows:
Star Bank, N.A.
ABA #042000013
For credit Williamsburg Investment Trust #485777056
For The Alabama Tax Free Bond 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 or savings account.
PLEASE ATTACH A VOIDED CHECK.
25
<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
ALABAMA TAX FREE BOND FUND for the Registered Owner and to execute and deliver
any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE ALABAMA TAX FREE BOND FUND, or any agent of the Fund may, without inquiry,
rely upon the instruction of any person(s) purporting to be an authorized person
named above, or in any Amendment received by the Fund or their agent. The Fund
and its Agent shall not be liable for any claims, expenses or losses resulting
from having acted upon any instruction reasonably believed to be genuine.
- --------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
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 The Government Street Bond 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
is hereby authorized to charge to my o both the 15th and last business day
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 accountsignature card.
______________________________________
(Signature as your name appears on the
bank account to be drafted)
Name as it appears on the account_______________________________________________
Commercial bank account #_______________________________________________________
ABA Routing #___________________________________________________________________
City, State and Zip in which bank is located____________________________________
For AUTOMATIC INVESTMENT or SYSTEMATIC WITHDRAWAL please attach a voided check
from the above account.
- --------------------------------------------------------------------------------
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Fund and affirm that I have received a current prospectus and
understand the investment 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, T. Leavell & Associates, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The 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
26
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
27
<PAGE>
THE ALABAMA TAX FREE BOND FUND
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, Alabama 36633
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Richard Mitchell, President
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
PORTFOLIO MANAGER
Timothy S. Healey
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
<PAGE>
Davenport
Equity Fund
PROSPECTUS
August 1, 1998
<PAGE>
PROSPECTUS
August 1, 1998
THE DAVENPORT EQUITY FUND
- --------------------------------------------------------------------------------
A No-Load Fund
The investment objective of The Davenport Equity Fund is long term growth of
capital through investment in a diversified portfolio of common stocks. Current
income is incidental to this objective and may not be significant.
INVESTMENT ADVISOR
Davenport & Company LLC
Richmond, Virginia
The Davenport Equity Fund (the "Fund") is a NO-LOAD, diversified, open-end
series of the Williamsburg Investment Trust, a registered management investment
company. This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this Prospectus.
A Statement of Additional Information, dated August 1, 1998, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is One James Center, 901 East Cary Street,
Richmond, Virginia 23219, and its telephone number is 1-800-281-3217. A copy of
the Statement of Additional Information may be obtained at no charge by calling
or writing the Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Prospectus Summary ........................................................ 2
Synopsis of Costs and Expenses ............................................ 3
Financial Highlights ...................................................... 4
Investment Objective, Investment Policies and Risk Considerations ......... 5
How to Purchase Shares .................................................... 8
How to Redeem Shares ...................................................... 10
How Net Asset Value is Determined ......................................... 11
Management of the Fund .................................................... 12
Dividends, Distributions, Taxes and Other Information ..................... 14
Application ............................................................... 17
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
THE FUND. The Davenport Equity Fund (the "Fund") is a No-Load, diversified,
open-end series of the Williamsburg Investment Trust, a registered management
investment company commonly known as a "mutual fund." It represents a separate
mutual fund with its own investment objective and policies. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the investment policies described in this Prospectus.
INVESTMENT OBJECTIVE. The Fund's investment objective is long term growth of
capital through investment in a diversified portfolio of common stocks. Current
income is incidental to this objective and may not be significant.
INVESTMENT APPROACH. Equity investments are made primarily for growth with
investment decisions based upon fundamental factors specific to individual
companies and sector fundamentals specific to individual industries. (See
"Investment Objective, Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR. Davenport & Company LLC (the "Advisor") serves as investment
advisor to the Fund. For its services, the Advisor receives compensation at the
annual rate of 0.75% of the average daily net assets of the Fund. (See
"Management of the Fund.")
PURCHASE OF SHARES. Shares are offered "No-Load," which means they may be
purchased directly from the Fund without the imposition of any sales or 12b-1
charges. The minimum initial purchase for the Fund is $10,000 ($2,000 for
tax-deferred retirement plans). Subsequent investments in the Fund must be
$1,000 or more. Shares may be purchased by individuals or organizations and may
be appropriate for use in Tax Sheltered Retirement Plans and Systematic
Withdrawal Plans. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions from the
Fund. Shares may be redeemed at any time in which the Fund is open for business
at the net asset value next determined after receipt of a redemption request by
the Fund. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is distributed
quarterly. Net capital gains, if any, are distributed at least annually.
Shareholders may elect to receive dividends and capital gain distributions in
cash or the dividends and capital gain distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Fund is a series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Fund.")
2
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
Investment Advisory Fees ........................................ 0.75%
Administrator's Fees ............................................ 0.20%
Other Expenses .................................................. 0.20%
-----
Total Fund Operating Expenses ................................... 1.15%
=====
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
------ -------
$ 12 $ 37
The purpose of the foregoing tables is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees and
costs of operating the Fund. The Annual Fund Operating Expenses shown above are
based upon estimated amounts for the current fiscal year. THE EXAMPLE SHOWN
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following audited financial information has been audited by Tait, Weller &
Baker, independent accountants, whose report covering the fiscal period ended
March 31, 1998 is contained in the Statement of Additional Information. This
information should be read in conjunction with the Fund's 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 Fund.
Selected Per Share Data and Ratios for a Share Outstanding Throughout the Period
Period
Ended
March 31,
1998 (a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period ......................... $ 10.00
--------
Income from investment operations:
Net investment income ....................................... 0.01
Net realized and unrealized gains on investments ............ 1.13
--------
Total from investment operations ............................... 1.14
--------
Net asset value at end of period ............................... $ 11.14
========
Total return ................................................... 11.40%
========
Net assets at end of period (000's) ............................ $ 24,694
========
Ratio of net expenses to average net assets(b) ................. 1.15%(c)
Ratio of net investment income to average net assets ........... 0.76%(c)
Portfolio turnover rate ........................................ 17%(c)
Average commission rate per share .............................. $ 0.0000
(a) Represents the period from the commencement of operations (January 15,
1998) through March 31, 1998.
(b) Absent investment advisory fees waived and expenses reimbursed by the
Adviser, the ratio of expenses to average net assets would have been
2.13%(c).
(c) Annualized.
Further information about the performance of the Fund is contained in the Annual
Report, a copy of which may be obtained at no charge by calling the Fund.
4
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The investment objective of the Fund is long term growth of capital through
investment in a well-diversified portfolio composed primarily of common stocks.
Current income is incidental to this objective and may not be significant.
Any investment involves risk, and there can be no assurance that the Fund will
achieve its investment objective. The investment objective of the Fund may not
be altered without the prior approval of a majority (as defined by the
Investment Company Act of 1940) of the Fund's shares.
EQUITY SELECTION. Under normal market conditions, the Fund will be primarily
invested (i.e., at least 65% of its total assets) in common stocks, which by
definition entail risk of loss of principal. The Fund's investments are made
primarily for long term growth of capital. Selection of equity securities is
made on the basis of several criteria, including, among other things:
1. The price-earnings ratio;
2. The rate of earnings growth;
3. The depth of management;
4. The company's past financial stability;
5. The company's present and projected position within its industry; and
6. The dividend record.
Selection of equity securities is made by the Investment Policy Committee and
the portfolio manager. The Investment Policy Committee is comprised of five
individuals who are responsible for the formalized investment approach upon
which the Advisor's Asset Management division is based. Committee members and
the portfolio manager meet formally on a weekly basis. Decisions to buy or sell
a security require a majority vote of the Committee. The Committee's approach is
to insist on value in every stock purchased, to control risk through
diversification, and to establish price targets at the time a specific stock is
purchased.
Although the Fund invests primarily in common stocks, the Fund may also invest a
portion of its assets in straight preferred stocks, convertible preferred
stocks, convertible bonds and warrants. The Fund may invest in preferred stocks
and convertible bonds which are rated at the time of purchase in the four
highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa)
or Standard & Poor's Rating Group (AAA, AA, A or BBB) or unrated securities
determined by the Advisor to be of comparable quality. Preferred stocks and
bonds rated Baa or BBB have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to pay principal and interest or to pay the preferred stock obligations than is
the case with higher grade securities. Subsequent to its purchase by the Fund, a
security's rating may be reduced below Baa or BBB and the Advisor will sell such
security, subject to market conditions and the Advisor's assessment of the most
opportune time for sale.
The Fund may from time to time invest a portion of its assets in small,
unseasoned companies. While smaller companies generally have potential for rapid
growth, they often involve higher risks because they lack the management
experience, financial resources, product diversification and competitive
strengths of larger
5
<PAGE>
corporations. In addition, in many instances, the securities of smaller
companies are traded only over-the-counter or on a regional securities exchange,
and the frequency and volume of their trading is substantially less than is
typical of larger companies. Therefore, the securities of smaller companies may
be subject to wider price fluctuations. When making large sales, the Fund may
have to sell portfolio holdings at discounts from quoted prices or may have to
make a series of small sales over an extended period of time.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may not increase
as much as the market as a whole and some undervalued securities may continue to
be undervalued for long periods of time. Some securities may be inactively
traded, i.e., not quoted daily in the financial press, and thus may not be
readily bought or sold. Although profits in some Fund holdings may be realized
quickly, it is not expected that most investments will appreciate rapidly.
FOREIGN COMPANIES. The Fund may invest up to 10% of its total assets at the time
of purchase in securities of foreign issuers. When selecting foreign
investments, the Advisor will seek to invest in securities that have investment
characteristics and qualities comparable to the kinds of domestic securities in
which the Fund invests. The Fund may invest in securities of foreign issuers
directly or in the form of sponsored American Depository Receipts. American
Depository Receipts are receipts typically issued by an American bank or trust
company that evidence ownership of underlying securities issued by a foreign
corporation. Foreign investments may be subject to special risks, including
future political and economic developments and the possibility of seizure or
nationalization of companies, the imposition of withholding taxes on income,
establishment of exchange controls or adoption of other restrictions, that might
affect an investment adversely. The Fund will not invest in securities of
foreign issuers which are not listed on a recognized domestic or foreign
exchange.
SHARES OF OTHER INVESTMENT COMPANIES. The Fund may invest in shares of other
investment companies, including shares of the DIAMONDS Trust ("DIAMONDs") and
Standard & Poor's Depository Receipts ("SPDRs"). DIAMONDs and SPDRs are
exchange-traded securities that represent ownership in long-term unit investment
trusts established to accumulate and hold a portfolio of common stocks that is
intended to track the price performance and dividend yield of the Dow Jones
Industrial Average and the Standard & Poor's Composite Stock Price Index,
respectively. To the extent the Fund invests in securities of other investment
companies, Fund shareholders would indirectly pay a portion of the operating
costs of such companies. These costs include management, brokerage, shareholder
servicing and other operational expenses. Indirectly, then, shareholders may pay
higher operational costs than if they owned the underlying investment companies
directly. The Fund does not presently intend to invest more than 5% of its net
assets in securities of other investment companies.
MONEY MARKET INSTRUMENTS. Money market instruments will typically represent a
portion of the Fund's portfolio, as funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operational expenses of the Fund. For temporary
defensive purposes, when the Advisor determines that market conditions warrant,
the Fund may depart from its normal investment objective and money market
instruments may be emphasized, even to the point that 100% of the Fund's assets
may be so invested. Money market instruments mature in thirteen months or less
from the date of purchase and include U.S. Government Securities and corporate
debt securities (including those subject to
6
<PAGE>
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.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its investment
objective. To the extent that the Fund's portfolio is fully invested in equity
securities, it may be expected that the net asset value of the Fund will be
subject to greater fluctuation than a portfolio containing mostly fixed income
securities. The Fund may borrow using its assets as collateral, but only under
certain limited conditions. Borrowing, if done, would tend to exaggerate the
effects of market fluctuations on the Fund's net asset value until repaid. (See
"Borrowing.")
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 33.3% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
PORTFOLIO TURNOVER. By utilizing the approach to investing described herein, it
is expected that annual portfolio turnover will generally not exceed 50%. Market
conditions may dictate, however, a higher rate of portfolio turnover in a
particular year. The degree of portfolio activity affects the brokerage costs of
the Fund and may have an impact on the amount of taxable distributions to
shareholders.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously 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 Fund effective for the
period of time during which the repurchase agreement is in effect. Delivery
pursuant to the resale typically will occur within one to five days of the
purchase. For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is considered to be a loan collateralized by the securities
subject to the repurchase agreement. The Fund will not enter into a repurchase
agreement which will cause more than 10% of its assets to be invested in
repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to risk,
the Fund has adopted certain limitations which, together with its investment
objective, are considered fundamental policies which may not be changed without
shareholder approval. The 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 the Fund's total assets, or (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities if,
immediately
7
<PAGE>
after such borrowing, the value of the Fund's assets, including all borrowings
then outstanding, less its liabilities (excluding all borrowings), is equal to
at least 300% of the aggregate amount of borrowings then outstanding, and may
pledge its assets to secure all such borrowings; (2) invest in restricted
securities, or invest more than 15% of the Fund's net assets in other illiquid
securities, including repurchase agreements maturing in over seven days, and
other securities for which there is no established market or for which market
quotations are not readily available; (3) write, acquire or sell puts, calls or
combinations thereof, or purchase or sell commodities, commodities contracts,
futures contracts or related options; and (4) 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 the
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.
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
There are NO SALES COMMISSIONS CHARGED TO INVESTORS. Assistance in opening
accounts may be obtained from the Administrator by calling 1-800-281-3217, or by
writing to the Fund at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Fund. Such broker-dealer may charge you a fee for its services. Payment
for shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. Your investment will purchase
shares at the Fund's net asset value next determined after your order is
received by the Fund in proper order as indicated herein. The minimum initial
investment in the Fund, unless stated otherwise herein, is $10,000 ($2,000 for
tax-deferred retirement plans). The Fund may, in the Advisor's sole discretion,
accept certain accounts with less than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Administrator, whether by mail, bank
wire or facsimile order from a qualified broker-dealer, prior to 4:00 p.m.
Eastern time will purchase shares at the net asset value next determined on that
business day. If your order is not received by 4:00 p.m. Eastern time, your
order will purchase shares at the net asset value determined on the next
business day. (See "How Net Asset Value is Determined.")
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Fund or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
Fund, and mail it to:
8
<PAGE>
The Davenport Equity Fund
c/o Davenport & Company LLC
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: John P. Ackerly
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Fund, at
1-800-281-3217, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
Star Bank, N.A.
ABA# 042000013
For Davenport Equity Fund #485777056
(Shareholder name and account number or tax identification number)
It is important that the wire contain all the information and that the Fund
receives prior telephone notification to ensure proper credit. Once your wire is
sent you should, as soon as possible thereafter, complete and mail your Account
Application to the Fund as described under "Regular Mail Orders," above.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire (minimum
additional investment of $1,000) at any time by purchasing shares at the then
current net asset value as aforementioned. Before making additional investments
by bank wire, please call the Fund at 1-800-281-3217 to alert the Fund that your
wire is to be sent. Follow the wire instructions above to send your wire. When
calling for any reason, please have your account number ready, if known. Mail
orders should include, when 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.
EMPLOYEES AND AFFILIATES OF THE FUND. The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Fund or certain
parties related thereto. The minimum initial investment for such accounts is
$1,000. See the Statement of Additional Information for further details.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
9
<PAGE>
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares of the Fund may be redeemed on each day that the Fund is open for
business by sending a written request to the Fund. The Fund is open for business
on each day the New York Stock Exchange (the "Exchange") is open for business.
Any redemption may be for more or less than the purchase price of your shares
depending on the market value of the Fund's portfolio securities. All redemption
orders received in proper form, as indicated herein, by the Administrator prior
to 4:00 p.m. Eastern time will redeem shares at the net asset value determined
as of that business day's close of trading. Otherwise, your order will redeem
shares on the next business day. You may also redeem your shares through a
broker-dealer who may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $10,000 (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 $10,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-281-3217, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Davenport
Equity Fund, c/o Davenport & Company LLC, One James Center, 901 East Cary
Street, Richmond, Virginia 23219. Your request for redemption must include:
1) your letter of instruction or a stock assignment specifying the account
number, and the number of shares or dollar amount to be redeemed. This
request must be signed by all registered shareholders in the exact names in
which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Fund may
not be redeemed by wire on days in which your bank is not open for business.
10
<PAGE>
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Fund. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Fund. (See "Signature Guarantees.")
If your instructions request a redemption by wire, you will be charged a $9
processing fee by the Fund's Custodian. The Administrator reserves the right,
upon thirty days' written notice, to change the processing fee. All charges will
be deducted from your account by redemption of shares in your account. Your bank
or brokerage firm may also impose a charge for processing the wire. In the event
that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, and (2)
requests to establish or change redemption services other than through your
initial account application. Signature guarantees are acceptable from a member
bank of the Federal Reserve System, a savings and loan institution, credit
union, registered broker-dealer or a member firm of a U.S. Stock Exchange, and
must appear on the written request for redemption, or change of registration.
SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of the Fund valued at
$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 Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by writing the Fund. See the Statement of Additional Information for further
details.
HOW NET ASSET VALUE IS DETERMINED
- --------------------------------------------------------------------------------
The net asset value of the Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m. Eastern time). 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.
Obligations held by the Fund may be primarily listed on foreign exchanges or
traded in foreign markets which are open on days (such as Saturdays and U.S.
holidays) when the New York Stock Exchange is not open for business; as a
result, the net asset value per share of the Fund may be significantly affected
by trading on days when the Fund is not open for business. 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.
11
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The Fund is a diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Fund under
the laws of Massachusetts governing the responsibilities of trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Fund and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, Davenport
& Company LLC (the "Advisor") provides the Fund with a continuous program of
supervision of its 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 an Investment
Advisory Agreement with the Trust. The Advisor is also responsible for the
selection of broker-dealers through which the Fund executes portfolio
transactions, subject to brokerage policies established by the Trustees, and
provides certain executive personnel to the Fund.
Davenport & Company LLC was originally organized in 1863, re-organized as a
Virginia corporation in 1972, and subsequently converted to a Limited Liability
Company in 1997. Through two Sub-S corporation unitholders, the Advisor has 99
owners all of whom are employees of the Advisor and none of whom own in excess
of 10% of the Advisor. In addition to acting as Adviser to the Fund, the Advisor
also provides investment advice to corporations, trusts, pension and profit
sharing plans, other business and institutional accounts and individuals.
Joseph L. Antrim is primarily responsible for managing the portfolio of the Fund
in consultation with the Advisor's Investment Policy Committee. The members of
the Advisor's Investment Policy Committee are:
JOSEPH L. ANTRIM, CFA, 53, is a graduate of the University of Virginia and began
his investment career with Chemical Bank in New York City in 1968. Subsequently
he joined Branch & Co., a Richmond brokerage firm, as a securities analyst. Mr.
Antrim became associated with the Advisor when Branch & Co. was merged with the
Advisor in 1975. Mr. Antrim is an Executive Vice President, member of the
Executive Committee, and Director of the Advisor and manages the Advisor's
Investment Advisory division.
MICHAEL S. BEALL, CFA, CPA, 44, graduated from the University of Virginia with
undergraduate and masters degrees in accounting. Prior to joining the Advisor in
1980, he was employed by a "Big Six" accounting firm. Mr. Beall is an Executive
Vice President, member of the Executive Committee and a Director of the Advisor.
JAMES C. HAMILTON, JR., 66, graduated from Yale University in 1954 and after
serving three years as an officer in the United States Air Force he began his
career with a New York investment firm. Mr. Hamilton joined the Advisor in 1968
and is a First Vice President and a Director of the Advisor.
12
<PAGE>
BEVERLEY B. MUNFORD III, CFA, 71 graduated from the University of Virginia in
1950 and has spent his entire career with the Advisor. Mr. Munford is Vice
Chairman of the Advisor and a former member of the Executive Committee. Mr.
Munford also serves as a Trustee of the Advisor's Employee Profit-Sharing Plan.
HUNTER R. PETTUS, JR., 70, is a graduate of the University of Virginia and
joined the Advisor in 1960. Mr. Pettus is a Senior Vice President and Director
of the Advisor and is a former member of the Executive Committee. Mr. Pettus
also serves as a Trustee of the Advisor's Employee Profit-Sharing Plan.
Compensation of the Advisor is at the annual rate of 0.75% of the Fund's average
daily net assets. For the fiscal period ended March 31, 1998, the Advisor waived
its entire investment advisory fee from the Fund and reimbursed the Fund for
$7,571 of other operating expenses. The Advisor intends to waive its advisory
fees to the extent necessary to limit the total operating expenses of the Fund
to 1.15% per annum of its average daily net assets. However, there is no
assurance that any voluntary fee waivers will continue in the current or future
fiscal years and expenses of the Fund may therefore exceed 1.15% of its average
daily net assets.
The Advisor's address is One James Center, 901 East Cary Street, Richmond,
Virginia 23219.
ADMINISTRATOR. The Fund has 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 an indirect wholly-owned 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.
The 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. The
Administrator also charges the Fund for certain costs involved with the daily
valuation of investment securities and is reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Fund pays all expenses not assumed by the Advisor,
including its fees. Fund expenses include, among others, the fees and expenses,
if any, of the Trustees and officers who are not "affiliated persons" of the
Advisor, fees of the Fund's Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Fund's shareholder servicing
operations, fees and expenses of qualifying and registering the Fund's shares
under federal and state securities laws, expenses of preparing, printing and
distributing prospectuses and reports to existing shareholders, auditing and
legal expenses, insurance expenses, association dues, and the expense of
shareholders' meetings and proxy solicitations. The Fund is also liable for any
nonrecurring expenses that may arise such as litigation to which the Fund may be
a party. The Fund may be obligated to indemnify the Trustees and officers with
respect to such litigation. All expenses of the Fund are accrued daily on the
books of the Fund at a rate which, to the best of its belief, is equal to the
actual expenses expected to be incurred by the Fund in accordance with generally
accepted accounting practices.
13
<PAGE>
BROKERAGE. The Fund has adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Fund. In all cases, the primary consideration for selection of
broker-dealers through which to execute brokerage transactions will be to obtain
the most favorable price and execution for the Fund. Research services obtained
through the Fund's brokerage transactions may be used by the Advisor for its
other clients; conversely, the Fund may benefit from research services obtained
through the brokerage transactions of the Advisor's other clients. Subject to
the requirements of the 1940 Act and procedures adopted by the Board of
Trustees, the Fund may execute portfolio transactions through any broker or
dealer and pay brokerage commissions to a broker (i) which is an affiliated
person of the Trust, or (ii) which is an affiliated person of such person, or
(iii) an affiliated person of which is an affiliated person of the Trust or the
Advisor. It is anticipated that a substantial portion of the Fund's portfolio
transactions may be executed by the Advisor, for which it will receive brokerage
commissions. The Statement of Additional Information contains more information
about the management and brokerage practices of the Fund.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general and,
particularly, with respect to dividends and distributions and other matters.
Shareholders should be aware that dividends from the Fund which are derived in
whole or in part from interest on U.S. Government Securities may not be taxable
for state income tax purposes. Other state income tax implications are not
covered, nor is this discussion exhaustive on the subject of federal income
taxation. Consequently, investors should seek qualified tax advice.
The Fund intends to qualify as a "regulated investment company" under Subchapter
M of the Internal Revenue Code of 1986 (the "Code") and will distribute all of
its net income and realized capital gains to shareholders. Shareholders are
liable for taxes on distributions of net income and realized capital gains of
the Fund but, of course, shareholders who are not subject to tax on their income
will not be required to pay taxes on amounts distributed to them. The Fund
intends to declare and pay dividends from net investment income quarterly. Net
capital gains, if any, are distributed annually.
The Fund will 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 Fund at the
end of each year. The Fund intends to withhold 30% on taxable dividends and any
other payments that are subject to such withholding and are made to persons who
are neither citizens nor residents of the U.S.
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 the Fund. Current practice
of the Fund, subject to the discretion of the Board of Trustees, is for
declaration and payment of income dividends during the last week of each
calendar quarter. All dividends and capital gains distributions are reinvested
in additional shares of the Fund unless the shareholder requests in writing to
receive dividends and/or capital gains distributions in cash. That request must
be received by the Fund prior to the record date to be effective as to the next
dividend. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or if received in additional shares of the Fund.
14
<PAGE>
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the Fund, see "Additional
Tax Information" in the Statement of Additional Information.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Fund: shares of the FBP Contrarian Balanced Fund and the FBP
Contrarian Equity Fund, which are managed by Flippin, Bruce & Porter, Inc. of
Lynchburg, Virginia; shares of The Government Street Equity Fund, The Government
Street Bond Fund and The Alabama Tax Free Bond Fund, which are managed by T.
Leavell & Associates, Inc. of Mobile, Alabama; The Jamestown Equity Fund, The
Jamestown Balanced Fund, The Jamestown International Equity Fund and The
Jamestown Tax Exempt Virginia Fund, which are managed by Lowe, Brockenbrough &
Tattersall, Inc. of Richmond, Virginia; and shares of The Jamestown Bond Fund
and The Jamestown Short Term Bond Fund, which are managed by Tattersall Advisory
Group, Inc. 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 objective or policies of that Fund
or a proposed change in the investment advisory agreement for a particular Fund.
The shares of the Fund have noncumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of Trustees can
elect all of the Trustees if they so choose.
The Declaration of Trust provides the Trustees may hold office indefinitely,
except that: (1) any Trustee may resign or retire; (2) any Trustee may be
removed with or without cause at any time: (a) by a written instrument, signed
by at least two-thirds of the number of Trustees prior to such removal; (b) by
vote of shareholders holding not less than two-thirds of the outstanding shares
of the Trust, cast in person or by proxy at a meeting called for that purpose;
or (c) by a written declaration signed by shareholders holding not less than
two-thirds of the outstanding shares of the Trust and filed with the Trust's
custodian. In case a vacancy or an anticipated vacancy shall for any reason
exist, the vacancy shall be filled by the affirmative vote of a majority of the
remaining Trustees, subject to the provisions of Section 16(a) of the 1940 Act.
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the
15
<PAGE>
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 the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance.
The "total return" of the Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If the Fund has been operating less than 1, 5 or 10 years, the time
period during which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same or
different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative percentage rate of return,
actual year-by-year rates or any combination thereof.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated.
16
<PAGE>
Rep Name and Number__________________________ Account No.___________________
(For Fund Use Only)
THE DAVENPORT EQUITY FUND
Send completed application to:
THE DAVENPORT EQUITY FUND
c/o Davenport & Company LLC
One James Center
901 East Cary Street
FUND SHARES APPLICATION Richmond, VA 23219
(Please type or print clearly) Attention: John P. Ackerly
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $10,000)
o Enclosed is a check payable to THE DAVENPORT EQUITY FUND for $_______________
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 FUND AT 1-800-443-4249 SO THAT YOUR WIRE TRANSFER IS
PROPERLY CREDITED TO YOUR ACCOUNT. Please forward your completed
application by mail immediately thereafter to the Fund. The wire
should be routed as follows:
Star Bank, N.A.
ABA #042000013
For credit Davenport Equity Fund #485777056
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 or savings account.
PLEASE ATTACH A VOIDED CHECK.
17
<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 DAVENPORT EQUITY FUND for the Registered Owner and to execute and deliver
any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE DAVENPORT EQUITY FUND, or any agent of the Fund may, without inquiry, rely
upon the instruction of any person(s) purporting to be an authorized person
named above, or in any Amendment received by the Fund or their agent. The Fund
and its Agent shall not be liable for any claims, expenses or losses resulting
from having acted upon any instruction reasonably believed to be genuine.
- --------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
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 The Davenport Equity 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
is hereby authorized to charge to my o both the 15th and last business day
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 accountsignature card.
______________________________________
(Signature as your name appears on the
bank account to be drafted)
Name as it appears on the account_______________________________________________
Commercial bank account #_______________________________________________________
ABA Routing #___________________________________________________________________
City, State and Zip in which bank is located____________________________________
For AUTOMATIC INVESTMENT or SYSTEMATIC WITHDRAWAL please attach a voided check
from the above account.
- --------------------------------------------------------------------------------
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Fund and affirm that I have received a current prospectus and
understand the investment 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, Davenport & Company LLC, 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
18
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
19
<PAGE>
THE DAVENPORT EQUITY FUND
INVESTMENT ADVISOR
Davenport & Company LLC
One James Center
901 East Cary Street
Richmond, Virginia 23219-4037
1-800-281-3217
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Austin Brockenbrough III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt III
OFFICERS
Joseph L. Antrim III, President
Coleman Wortham III, Vice President
J. Lee Keiger III, Vice President
John P. Ackerly IV, Vice President
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
<PAGE>
THE JAMESTOWN
BOND FUNDS
NO-LOAD FUNDS
Institutional Shares
PROSPECTUS
AUGUST 1, 1998
Investment Advisor
Tattersall Advisory Group, Inc.
Richmond, Virginia
<PAGE>
PROSPECTUS
August 1, 1998
THE JAMESTOWN BOND FUNDS
INSTITUTIONAL SHARES
NO-LOAD FUNDS
The investment objective of THE JAMESTOWN BOND FUND (the "Bond Fund") is to
maximize total return, consisting of current income and capital appreciation
(both realized and unrealized), consistent with the preservation of capital
through active management of investment grade fixed income securities.
The investment objective of THE JAMESTOWN SHORT TERM BOND FUND (the "Short Term
Fund") is identical to that of the Bond Fund, with the distinction that the
Short Term Fund intends to achieve this objective by investing in a portfolio of
investment grade fixed income securities having a shorter average duration.
The Jamestown Bond Fund and The Jamestown Short Term Bond Fund are designed
primarily for institutional investors who wish to take advantage of the
professional investment management expertise of Tattersall Advisory Group, Inc.,
which serves as investment advisor to the Funds.
The Funds offer two classes of shares: Service Group Shares, sold subject to a
12b-1 fee up to .15% of average daily net assets, and Institutional Shares, sold
without a 12b-1 fee. Each Service Group and Institutional Share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except that (i) Service Group Shares bear the expenses of
distribution fees, which will cause Service Group Shares to have a higher
expense ratio and to pay lower dividends than Institutional Shares; (ii) certain
class specific expenses will be borne solely by the class to which such expenses
are attributable; and (iii) each class has exclusive voting rights with respect
to matters affecting only that class.
INVESTMENT ADVISOR
TATTERSALL ADVISORY GROUP, INC.
RICHMOND, VIRGINIA
The Jamestown Bond Fund and the Jamestown Short Term Bond Fund (the "Funds") are
NO-LOAD, diversified, open-end series of the Williamsburg Investment Trust, a
registered management investment company. This Prospectus provides you with the
basic information you should know before investing in the Funds. You should read
it and keep it for future reference. While there is no assurance that the Funds
will achieve their investment objectives, they endeavor to do so by following
the investment policies described in this Prospectus. Service Group Shares are
offered in a separate prospectus and additional information about Service Group
Shares may be obtained by calling 1-800-443-4249.
A Statement of Additional Information, dated August 1, 1998 containing
additional information about the Funds, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Funds' address is P.O. Box 5354, Cincinnati, Ohio 45201-5354, and
their telephone number is 1-800-443-4249. A copy of the Statement of Additional
Information may be obtained at no charge by calling or writing the Funds.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
1
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Prospectus Summary ......................................................... 3
Synopsis of Costs and Expenses ............................................. 4
Financial Highlights ....................................................... 5
Investment Objectives, Investment Policies and Risk Considerations ......... 7
How to Purchase Shares ..................................................... 12
How to Redeem Shares ....................................................... 13
How Net Asset Value is Determined .......................................... 15
Management of the Funds .................................................... 15
Dividends, Distributions, Taxes and Other Information ...................... 17
Application ................................................................ 21
2
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS. The Jamestown Bond Fund (the "Bond Fund") and the Jamestown Short
Term Bond Fund (the "Short Term Fund") are NO-LOAD, diversified, open-end series
of the Williamsburg Investment Trust, a registered management investment company
commonly known as a "mutual fund." Each represents a separate mutual fund with
its own objectives and policies. An investor may elect one or both of the Funds
to meet individual investment objectives, and may switch from one Fund to the
other without charge when a shareholder's investment objectives or plans change.
While there is no assurance that the Funds will achieve their investment
objectives, they each endeavor to do so by following the investment policies
described in this Prospectus. The Funds are primarily designed for tax exempt
institutional investors such as pension and profit-sharing plans, endowments,
foundations, and employee benefit trusts. Corporations and individual investors
may invest in either Fund, although it should be noted that investment decisions
of the Funds will not be influenced by any federal tax considerations, other
than those considerations which apply to the Funds themselves.
INVESTMENT OBJECTIVES. The Bond Fund and the Short Term Fund are governed by
virtually identical investment objectives and policies, WITH THE EXCEPTION of
the average duration range of the individual Funds. Each Fund seeks to maximize
total return, consisting of current income and capital appreciation (both
realized and unrealized), consistent with the preservation of capital through
active management of investment grade fixed income securities. For a more
detailed explanation of the definition of "investment grade" securities, see
"Investment Objectives, Investment Policies and Risk Considerations."
INVESTMENT APPROACH. The Advisor's philosophy in managing fixed income
portfolios is to emphasize a disciplined balance between sector selection and
moderate portfolio duration shifts to maximize total return. Duration is an
important concept in the Advisor's fixed income management philosophy and, in
the Advisor's opinion, provides a better measure of interest rate sensitivity
than maturity for many fixed income securities. Each Fund intends to invest only
in investment grade securities. Due to their controlled duration and quality
standards, the Funds expect to exhibit less volatility than would mutual funds
with longer average maturities and lower quality portfolios.
INVESTMENT ADVISOR. Tattersall Advisory Group, Inc. (the "Advisor") serves as
investment advisor to each of the Funds. For its services, the Advisor receives
compensation of 0.375% of the average daily net assets of each Fund. (See
"Management of the Funds.")
PURCHASE OF SHARES. Institutional Shares are offered "No-Load," which means they
may be purchased directly from the Funds without the imposition of any sales or
12b-1 charges.
The minimum initial purchase for the Bond Fund is $500,000.
The minimum initial purchase for the Short Term Fund is $100,000.
Subsequent investments in both Funds must be $1,000 or more. Shares may be
purchased by individuals or organizations and may be appropriate for use in Tax
Sheltered Retirement Plans. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions from either
Fund. Shares may be redeemed at any time in which the Funds are open for
business at the net asset value next determined after receipt of a redemption
request by the Funds. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Funds is distributed
quarterly. Net capital gains, if any, are distributed at least annually.
Shareholders may elect to receive dividends and capital gain distributions in
cash or the dividends and capital gain distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Funds are series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Funds. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Funds.")
3
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
- --------------------------------------------------------------------------------
THE JAMESTOWN BOND FUND
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES: ............................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ........................ 0.36%
Administrator's Fees ............................................ 0.08%
Other Expenses .................................................. 0.07%
-----
Total Fund Operating Expenses ................................... 0.51%
=====
EXAMPLE: You would pay the following expenses on a $1,000 investment, whether or
not you redeem at the end of the period, assuming 5% annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$ 5 $ 16 $ 29 $ 64
THE JAMESTOWN SHORT TERM BOND FUND
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES: ................................ None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ......................... 0.00%
Administrator's Fees ............................................. 0.24%
Other Expenses (after expense reimbursements) .................... 0.26%
-----
Total Fund Operating Expenses .................................... 0.50%
=====
EXAMPLE: You would pay the following expenses on a $1,000 investment, whether or
not you redeem at the end of the period, assuming 5% annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$ 5 $ 16 $ 28 $ 63
The purpose of the foregoing tables is to assist investors in the Funds in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Funds" for more information about the fees
and costs of operating the Funds. The Annual Fund Operating Expenses shown above
are based upon actual operating history for the fiscal year ended March 31,
1998. Absent the fee waivers by the Advisor, the Bond Fund's investment advisory
fees would have been 0.375% of average daily net assets and total fund operating
expenses would have been 0.53% of average daily net assets. Absent the fee
waivers and expense reimbursements by the Advisor, the Short Term Fund's
investment advisory fees would have been 0.375% of average daily net assets,
other expenses would have been 0.33% of average net assets and total fund
operating expenses would have been 0.95% of average daily net assets. THE
EXAMPLES SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
The footnotes to the Financial Highlights table contain information concerning a
decrease in the Bond Fund's expense ratio as a result of a directed brokerage
arrangement.
4
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following audited financial information with respect to Institutional Shares
of the Fund has been audited by Tait, Weller & Baker, independent accountants,
whose report covering the fiscal year ended March 31, 1998 is contained in the
Statement of Additional Information. This information should be read in
conjunction with the Funds' latest audited annual financial statements and notes
thereto, which are also contained in the Statement of Additional Information, a
copy of which may be obtained at no charge by calling the Funds.
<TABLE>
<CAPTION>
THE JAMESTOWN BOND FUND
Institutional Shares
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
PERIOD
YEARS ENDED MARCH 31, ENDED
------------------------------------------------------------------- MARCH 31,
1998 1997 1996 1995 1994 1993 1992 1991(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 10.26 $ 10.39 $ 9.97 $ 10.15 $ 10.82 $ 10.42 $ 9.97 $ 10.00
------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ....................... 0.58 0.68 0.70 0.62 0.55 0.64 0.54 0.20
Net realized and unrealized gains (losses)
on investments ........................... 0.63 (0.12) 0.41 (0.18) (0.30) 0.55 0.48 (0.03)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations ............... 1.21 0.56 1.11 0.44 0.25 1.19 1.02 0.17
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ........ (0.64) (0.69) (0.69) (0.62) (0.55) (0.64) (0.54) (0.20)
Distributions from net realized gains ....... -- -- -- -- (0.19) (0.15) (0.03) --
Distributions in excess of net realized gains -- -- -- -- (0.18) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total distributions ............................ (0.64) (0.69) (0.69) (0.62) (0.92) (0.79) (0.57) (0.20)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ............... $ 10.83 $ 10.26 $ 10.39 $ 9.97 $ 10.15 $ 10.82 $ 10.42 $ 9.97
======= ======= ======= ======= ======= ======= ======= =======
Total return ................................... 12.06% 5.52% 11.23% 4.56% 2.12% 11.69% 10.33% 5.70%(c)
======= ======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) ............ $96,250 $76,499 $74,774 $72,029 $64,029 $55,718 $29,727 $ 794
======= ======= ======= ======= ======= ======= ======= =======
Ratio of gross expenses to average net assets .. 0.53% 0.53% 0.56% 0.57% 0.60% 0.59% 0.80% 3.08%(c)
Ratio of net expenses to average net assets (b) 0.50% 0.50% 0.53% 0.53% 0.60% 0.59% 0.60% 0.90%(c)
Ratio of net investment income to
average net assets .......................... 6.06% 6.48% 6.54% 6.28% 5.03% 6.09% 6.67% 7.07%(c)
Portfolio turnover rate ........................ 235% 207% 268% 381% 381% 454% 484% 54%
</TABLE>
(a) Represents the period from the commencement of operations (December 13,
1990) through March 31, 1991.
(b) Ratios were determined based on net expenses after reimbursements through a
directed brokerage arrangement for periods after March 31, 1994 and
investment advisory fees waived for the periods ended March 31, 1998, 1992
and 1991.
(c) Annualized.
5
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN SHORT TERM BOND FUND
Institutional Shares
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
Period
YEARS ENDED MARCH 31, ENDED
-------------------------------------------------------------- MARCH 31,
1998 1997 1996 1995 1994 1993 1992(A)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93 $ 10.00
------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ........................... 0.54 0.58 0.62 0.60 0.51 0.50 0.09
Net realized and unrealized gains (losses)
on investments ............................... 0.00 (0.11) 0.08 (0.17) (0.23) 0.13 (0.07)
------- ------- ------- ------- ------- ------- -------
Total from investment operations ................... 0.54 0.47 0.70 0.43 0.28 0.63 0.02
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ............ (0.54) (0.58) (0.62) (0.61) (0.51) (0.49) (0.09)
Distributions from net realized gains ........... -- -- -- -- (0.02) -- --
------- ------- ------- ------- ------- ------- -------
Total distributions ................................ (0.54) (0.58) (0.62) (0.61) (0.53) (0.49) (0.09)
------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ................... $ 9.61 $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93
======= ======= ======= ======= ======= ======= =======
Total return ....................................... 5.76% 5.01% 7.38% 4.53% 2.76% 6.40% 0.99%(c)
======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) ................ $10,212 $ 9,924 $ 9,426 $14,122 $18,715 $15,580 $ 5,320
======= ======= ======= ======= ======= ======= =======
Ratio of net expenses to average net assets (b) .... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%(c)
Ratio of net investment income to average net assets 5.64% 5.96% 6.27% 6.04% 5.22% 5.24% 4.86%(c)
Portfolio turnover rate ............................ 109% 62% 157% 144% 324% 289% 97%
</TABLE>
(a) Represents the period from the commencement of operations (January 21,
1992) through March 31, 1992.
(b) Absent investment advisory fees waived and expenses reimbursed by the
Advisor, the ratios of expenses to average net assets would have been
0.95%, 0.94%, 0.85%, 0.85%, 0.81%, 0.82% and 0.81%(c) for the periods ended
March 31, 1998, 1997, 1996, 1995, 1994, 1993 and 1992, respectively.
(c) Annualized.
FURTHER INFORMATION ABOUT THE PERFORMANCE OF THE FUNDS IS CONTAINED IN THE
ANNUAL REPORT, A COPY OF WHICH MAY BE OBTAINED AT NO CHARGE BY CALLING THE
FUNDS.
6
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The investment objective of each Fund is to maximize total return, consisting of
current income and capital appreciation, both realized and unrealized, through
active management of a portfolio of investment grade fixed income securities.
Any investment involves risk, and there can be no assurance that the Funds will
achieve their investment objectives. The investment objective of each Fund may
not be altered without the prior approval of a majority (as defined by the
Investment Company Act of 1940) of the Fund's shares.
The Advisor's philosophy in the management of fixed income securities utilizes a
disciplined balance between sector selection and moderate portfolio duration
shifts to maximize total return. The Advisor's determination of optimal duration
for each Fund is based on economic indicators, inflation trends, credit demands,
monetary policy and global influences as well as psychological and technical
factors. The Funds endeavor to invest in securities and market sectors which the
Advisor believes are undervalued by the marketplace. The selection of
undervalued bonds by the Advisor is based on, among other things, historical
yield relationships, credit risk, market volatility and absolute levels of
interest rates, as well as supply and demand factors.
The Funds are designed primarily to allow institutional investors to take
advantage of the professional investment management expertise of Tattersall
Advisory Group, Inc. Each Fund will be managed in a manner that closely
resembles that of other bond portfolios of similar maturity and duration managed
by the Advisor. The Advisor uses a wide variety of securities and techniques in
managing fixed income portfolios. As the fixed income markets evolve, the
Advisor may invest in other types of securities than those specifically
identified in this Prospectus if the Advisor views these investments to be
consistent with the overall investment objectives and policies of the Funds. The
securities and techniques the Advisor currently expects to utilize are described
below.
DURATION. Duration is an important concept in the Advisor's fixed income
management philosophy. "Duration" and "maturity" are different concepts and
should not be substituted for one another for purposes of understanding the
investment philosophy of either Fund. The Advisor believes that for most fixed
income securities "duration" provides a better measure of interest rate
sensitivity than maturity. Whereas maturity takes into account only the final
principal payments to determine the risk of a particular bond, duration weights
all potential cash flows (principal, interest and reinvestment income) on an
expected present value basis, to determine the "effective life" of the security.
The Advisor intends to limit the portfolio duration of the Bond Fund to a 2 year
minimum and a 6 year maximum. The Advisor intends to maintain a portfolio
duration for the Short Term Fund of less than 3 years. In addition, the Advisor
intends to limit the duration of any one single security of the Short Term Fund
to a maximum duration of 5 years. The precise point of each Fund's duration
within these ranges will depend on the Advisor's view of the market. For the
purposes of the Funds, the duration calculation used is Macaulay duration
adjusted for option features (such as call features or prepayment options).
Adjusting for option features requires assumptions with respect to the
probability of that option being exercised. These assumptions will be determined
by the Advisor based on then current market conditions.
The Funds expect the average maturity of their portfolios to be longer than the
average duration. How much longer will depend upon, among other factors, the
composition of coupons (higher coupons imply shorter duration), as well as
overall interest rate levels (higher interest rates generally will result in
shorter duration relative to maturity). It should be noted that for some
securities the standard duration calculation does not accurately reflect
interest rate sensitivity. For example, mortgage pass-through securities,
Collateralized Mortgage Obligations and Asset Backed Securities require
estimates of principal prepayments which are critical in determining interest
rate sensitivity. Floating rate securities, because of the interest rate
adjustment feature, are not appropriate for the standard duration calculation.
In these and other similar situations, the Advisor will use more sophisticated
techniques to determine interest rate sensitivity of securities of the Funds.
7
<PAGE>
INVESTMENT GRADE SECURITIES. Each Fund intends to limit its investment purchases
to investment grade securities. The Funds define investment grade securities as
those securities which, in the Advisor's opinion, have the characteristics
described by any of the nationally recognized statistical rating organizations
("NRSROs"), Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P"), in their four highest rating grades. For S&P, Fitch and D&P those
ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa, Aa, A and
Baa. For a description of each rating grade, see the Statement of Additional
Information.
Each Fund invests exclusively in those securities rated investment grade by one
or more of the NRSROs or, if not rated, are considered by the Advisor to have
essentially the same characteristics and quality as securities having such
ratings. There may also be instances where the Advisor purchases securities
which are rated investment grade by one NRSRO and which are not rated or rated
below investment grade by other NRSROs, and such securities would be eligible
for purchase by the Funds. Issues rated within the fourth highest grade (those
rated lower than A) are considered speculative in certain respects and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to pay principal and interest than is the case with higher
grade securities. The final determination of quality and value will remain with
the Advisor. Although the Advisor utilizes the ratings of various credit rating
services as one factor in establishing creditworthiness, it relies primarily
upon it own analysis of factors establishing creditworthiness. For as long as
the Funds hold a fixed income issue, the Advisor monitors the issuer's credit
standing. In the event a security's rating is reduced below a Fund's minimum
requirements, the Fund will sell the security, subject to market conditions and
the Advisor's assessment of the most opportune time for sale. Although lower
rated securities will generally provide higher yields than higher rated
securities of similar maturities, they are subject to a greater degree of market
fluctuation.
U.S. GOVERNMENT SECURITIES. U.S. Government Securities include direct
obligations of the U.S. Treasury, securities issued or guaranteed as to interest
and principal by agencies or instrumentalities of the U.S. Government, or any of
the foregoing subject to repurchase agreements (See "Repurchase Agreements.")
While obligations of some U.S. Government sponsored entities are supported by
the full faith and credit of the U.S. Government, several are supported by the
right of the issuer to borrow from the U.S. Government, and still others are
supported only by the credit of the issuer itself. The guarantee of the U.S.
Government does not extend to the yield or value of the U.S. Government
Securities held by the Funds or to either Fund's shares. See the Statement of
Additional Information for a more detailed description.
MORTGAGE PASS-THROUGH CERTIFICATES. Obligations of the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC") include direct
pass-through certificates representing undivided ownership interests in pools of
mortgages. Such certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the issuer. In the case of
securities issued by GNMA, the payment of principal and interest would be backed
by the full faith and credit of the U.S. Government. Mortgage pass-through
certificates issued by FNMA or FHLMC would be guaranteed as to payment of
principal and interest by the credit of the issuing U.S. Government agency.
Securities issued by other non-governmental entities (such as commercial banks
or mortgage bankers) may offer credit enhancement such as guarantees, insurance,
or letters of credit. Mortgage pass-through certificates are subject to more
rapid prepayment than their stated maturity date would indicate; their rate of
prepayment tends to accelerate during periods of declining interest rates or
increased property transfers and, as a result, the proceeds from such
prepayments may be reinvested in instruments which have lower yields. To the
extent such securities were purchased at a premium, such prepayments could
result in capital losses. The issuer of a pass-through mortgage certificate does
not guarantee premiums or market value of its issue.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Funds intend to invest in
collateralized mortgage obligations ("CMOs") which are generally backed by
mortgage pass-through securities or whole mortgage loans. CMOs are usually
structured into classes of varying maturities and principal payment priorities.
The prepayment sensitivity of each class may or may not resemble that of the
CMOs' collateral depending on the maturity and structure of
8
<PAGE>
that class. CMOs pay interest and principal (including prepayments) monthly,
quarterly or semiannually. Most CMOs are AAA rated, reflecting the credit
quality of the underlying collateral; however, some classes carry greater price
risk than that of their underlying collateral. The Advisor will invest in CMO
classes only if their characteristics and interest rate sensitivity fit the
investment objectives and policies of the individual Fund.
OTHER MORTGAGE RELATED SECURITIES. In addition to the mortgage pass-through
securities and the CMOs mentioned above, the Funds may also invest in other
mortgage derivative products if the Advisor views them to be consistent with the
overall policies and objectives of the Funds. Current offerings include
"principal only" (PO) and "interest only" (IO) Stripped Mortgage Backed
Securities ("SMBS"). POs and IOs are created when a mortgage pass-through
certificate is separated into two securities - one security representing a claim
to principal distributions and the other representing a claim to the
corresponding interest payments. As prepayments on the underlying mortgage loans
rise (typically when interest rates fall), the PO security holders receive their
principal sooner than expected, which serves to increase the POs' yield. The IO
security holders receive interest payments only on the outstanding principal
amount of the underlying mortgage loans. Therefore, if prepayments on the
notional principal of the IO rise, the IOs' price will fall. As POs generally
benefit from declining interest rates and IOs generally benefit from rising
interest rates, these securities can provide an effective way to stabilize
portfolio value.
SMBS are much more sensitive to prepayment fluctuations than are regular
mortgage-backed securities and therefore involve more risk. Due to the deep
discounted prices of SMBS, any mismatch in actual versus anticipated prepayments
of principal will significantly increase or decrease the yield to maturity. In
general, changes in interest rate levels will have the greatest effect on
prepayments. Sufficiently high prepayment rates could result in purchasers of
IOs not recovering the full amount of their initial investment. The Funds will
not invest more than 10% of their total assets in SMBS.
The Advisor expects that governmental, government related and private entities
may create other mortgage related securities offering mortgage pass-through and
mortgage collateralized instruments in addition to those described herein. As
new types of mortgage related securities are developed and offered to the
investment community, the Advisor will, consistent with the particular Fund's
investment objectives, policies and quality standards, consider making
investments in such new types of mortgage related securities.
ASSET BACKED SECURITIES. Other Asset Backed Securities have been offered to
investors backed by loans such as automobile loans, home equity loans, credit
card receivables, marine loans, recreational vehicle loans and manufactured
housing loans. Typically, Asset Backed Securities represent undivided fractional
interests in a fund whose assets consist of a pool of loans and security
interests in the collateral securing the loans. Payments of principal and
interest on Asset Backed Securities are passed through monthly to certificate
holders. In some cases Asset Backed Securities are divided into senior and
subordinated classes so as to enhance the quality of the senior class.
Underlying loans are subject to prepayment, which may reduce the overall return
to certificate holders. If the subordinated classes are exhausted and the full
amounts due on underlying loans are not received because of unanticipated costs,
depreciation, damage or loss of the collateral securing the contracts, or other
factors, certificate holders may experience delays in payment or losses on Asset
Backed Securities. The Funds may invest in other Asset Backed Securities that
may be developed in the future.
ZERO COUPON AND ORIGINAL ISSUE DISCOUNT ("OID") BONDS. Some securities may be
offered without coupons or with very low coupons. These bonds will typically be
more interest rate sensitive than a comparable maturity current coupon bond. The
majority of zero coupon bonds have been created when a qualified U.S. Government
Security is exchanged for a series of "Strips" through the Federal Reserve Bank.
Strips have been created from, among others, U.S. Treasury, Resolution Trust
Corporation and Financing Corporation securities. A number of U.S. Government
Securities have also been repackaged by broker-dealers or commercial banks into
trusts which issue zero coupon receipts such as U.S. Treasury Receipts ("TRs")
or Treasury Investment Growth Receipts ("TIGRs"). Zero coupon and original issue
discount bonds generate income under generally accepted
9
<PAGE>
accounting principles, but do not generate cash flow, resulting in the
possibility that the Funds may be required to sell portfolio securities to make
distributions as required under Subchapter M of the Internal Revenue Code.
CORPORATE BONDS. The Funds' investments in corporate debt securities will be
based on credit analysis and value determination by the Advisor. The Advisor's
selection of bonds or industries within the corporate bond sector is determined
by, among other factors, historical yield relationships between bonds or
industries, the current and anticipated credit of the borrower, and call
features, as well as supply and demand factors.
VARIABLE AND FLOATING RATE SECURITIES. The Funds may invest in variable or
floating rate securities which adjust the interest rate paid at periodic
intervals based on an interest rate index. Typically floating rate securities
use as their benchmark an index such as the 1, 3 or 6 month LIBOR, 3, 6 or 12
month Treasury bills, or the Federal Funds rate. Resets of the rates can occur
at predetermined intervals or whenever changes in the benchmark index occur.
MONEY MARKET INSTRUMENTS. Money market instruments will typically represent a
portion of each Fund's portfolio, as funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operational expenses of the Funds. Money market
instruments mature in thirteen months or less from the date of purchase and
include U.S. Government Securities (defined above) and corporate debt securities
(including those subject to repurchase agreements), bankers' acceptances and
certificates of deposit of domestic branches of U.S. banks, and commercial paper
(including variable amount demand master notes). At the time of purchase, money
market instruments will have a short-term rating in the highest category from
any NRSRO or, if not so rated, issued by a corporation having an outstanding
unsecured debt issue rated in the three highest categories of any NRSRO or, if
not so rated, of equivalent quality in the Advisor's opinion. See the Statement
of Additional Information for a further description of money market instruments.
INVESTMENT COMPANIES. Each Fund may invest in the securities of open-end and
closed-end investment companies which are generally authorized to invest in
securities eligible for purchase by the Funds. To the extent the Funds do so,
Fund shareholders would indirectly pay a portion of the operating costs of the
underlying investment companies. These costs include management, brokerage,
shareholder servicing and other operational expenses. Indirectly, then,
shareholders may pay higher operational costs than if they owned the underlying
investment companies directly. In addition, shares of closed-end investment
companies frequently trade at a discount from their net asset values. This
characteristic of shares of a closed-end investment company is a risk separate
and distinct from the risk that its net asset value will decrease.
Neither Fund presently intends to invest more than 10% of its total assets in
securities of other investment companies. In addition, neither Fund will invest
more than 5% of its total assets in securities of any single investment company,
nor will either Fund purchase more than 3% of the outstanding voting securities
of any investment company.
FACTORS TO CONSIDER. Neither Fund is intended to be a complete investment
program and there can be no assurance that the Funds will achieve their
investment objectives. The fixed income securities in which the Funds will
invest are subject to fluctuation in value. Such fluctuations may be based on
movements in interest rates or on changes in the creditworthiness of the
issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Funds' fixed income securities will generally
vary inversely with the direction of prevailing interest rate movements.
Consequently, should interest rates increase or the creditworthiness of an
issuer deteriorate, the value of the Funds' fixed income securities would
decrease in value, which would have a depressing influence on the Funds' net
asset values. The Funds may borrow using their assets as collateral, but only
under certain limited conditions. Borrowing, if done, would tend to exaggerate
the effects of market fluctuations on a Fund's net asset value until repaid.
(See "Borrowing.")
10
<PAGE>
SECURITIES LENDING. Each Fund may lend up to 33% of its portfolio securities to
broker-dealers or other institutional investors. Since there could be a delay in
the recovery of loaned securities or even a loss of rights in collateral
supplied should the borrower fail financially, loans will not be made unless, in
the judgment of the Advisor, the consideration to be earned from such loans
would justify the risk. Collateral will be maintained in excess of 100% of the
value of the underlying securities, determined by marking to market daily those
securities involved in the lending program. It is expected that the Funds will
use the cash portions of loan collateral to invest in short-term
income-producing securities. These practices may be amended from time to time as
regulatory provisions permit. Securities lending for purposes of discussion in
this Prospectus should not be confused with "Borrowing" below.
BORROWING. Each Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 15% of its total assets to
meet redemption requests which might otherwise require untimely disposition of
portfolio holdings. To the extent the Funds borrow for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If while such borrowing is in effect, the value of the particular
Fund's assets declines, the Fund would be forced to liquidate portfolio
securities when it is disadvantageous to do so. The Funds would incur interest
and other transaction costs in connection with such borrowing. A Fund will not
make any additional investments while its outstanding borrowings exceed 5% of
the current value of its total assets.
PORTFOLIO TURNOVER. Portfolio turnover will not be a limiting factor when the
Advisor deems changes appropriate. While portfolio turnover is difficult to
predict in an active fixed income portfolio, it is expected that annual
portfolio turnover will vary between 100% and 500% with respect to each Fund.
Market conditions may dictate, however, a higher rate of turnover in a
particular year. The degree of portfolio turnover affects the brokerage costs of
the Funds and may have an impact on the amount of taxable distributions to
shareholders.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Funds acquire a security and
simultaneously resell it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by the Funds effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. For purposes of the Investment Company Act of 1940 (the "1940
Act"), a repurchase agreement is considered to be a loan collateralized by the
securities subject to the repurchase agreement. Neither Fund will enter into a
repurchase agreement which will cause more than 10% of its assets to be invested
in repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Funds' exposure to risk,
each Fund has adopted certain limitations which, together with its investment
objective, are considered fundamental policies which may not be changed without
shareholder approval. Each Fund will not: (1) issue senior securities, borrow
money or pledge its assets, except that it may borrow from banks as a temporary
measure (a) for extraordinary or emergency purposes, in amounts not exceeding 5%
of either Fund's total assets, or (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities, in amounts
not exceeding 15% of either Fund's total assets, and may pledge its assets to
secure all such borrowings; (2) invest more than 10% of a Fund's assets in other
illiquid securities, including repurchase agreements maturing in over seven
days, and other securities for which there is no established market or for which
market quotations are not readily available; (3) write, acquire or sell puts,
calls or combinations thereof, or purchase or sell commodities, commodities
contracts, futures contracts or related options; and (4) invest more than 5% of
its total assets in the securities of any one issuer. Other fundamental
investment limitations are listed in the Statement of Additional Information.
11
<PAGE>
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
There are NO SALES COMMISSIONS CHARGED TO INVESTORS. Assistance in opening
accounts may be obtained from the Administrator by calling 1-800-443-4249, or by
writing to the Funds at the address shown below for regular mail orders.
Assistance is also available through any broker-dealer authorized to sell shares
of the Funds. Such broker-dealer may charge you a fee for its services. Payment
for shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. Your investment will purchase
shares at a Fund's net asset value next determined after your order is received
by the Funds in proper order as indicated herein.
The minimum initial investment in the Bond Fund is $500,000.
The minimum initial investment in the Short Term Fund is $100,000.
The Funds may, in the Advisor's sole discretion, accept certain accounts with
less than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Administrator, whether by mail, bank
wire or facsimile order from a qualified broker-dealer, prior to 4:00 p.m.,
Eastern time, will purchase shares at the net asset value next determined on
that business day. If your order is not received by 4:00 p.m. Eastern time, your
order will purchase shares at the net asset value determined on the next
business day. (See "How Net Asset Value is Determined.")
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Funds are required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Funds within 60 days.
Investors should be aware that the Funds' account application contains
provisions in favor of the Funds, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Funds or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
appropriate Fund, and mail it to:
The Jamestown Bond Funds
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Funds, at
1-800-443-4249, before wiring funds, to advise the Funds of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
12
<PAGE>
Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For either: The Jamestown Bond Fund or
The Jamestown Short Term Bond Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Funds
receive prior telephone notification to ensure proper credit. Once your wire is
sent you should, as soon as possible thereafter, complete and mail your Account
Application to the Funds as described under "Regular Mail Orders," above.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire (minimum
additional investment of $1,000) at any time by purchasing shares at the then
current net asset value as aforementioned. Before making additional investments
by bank wire, please call the Funds at 1-800-443-4249 to alert the Funds that
your wire is to be sent. Follow the wire instructions above to send your wire.
When calling for any reason, please have your account number ready, if known.
Mail orders should include, when possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, be sure to identify
your account in your letter.
EXCHANGE PRIVILEGE. You may use proceeds from the redemption of shares of either
Fund to purchase Institutional Shares of the other Fund offering shares for sale
in your state of residence. There is no charge for this exchange privilege.
Before making an exchange, you should read the portion of the Prospectus
relating to the Fund into which the shares are to be exchanged. The shares of
the Fund to be acquired will be purchased at the net asset value next determined
after acceptance of the exchange request in writing by the Administrator. The
exchange of shares of one Fund for shares of the other Fund is treated, for
federal income tax purposes, as a sale on which you may realize taxable gain or
loss. To prevent the abuse of the exchange privilege to the disadvantage of
other shareholders, each Fund reserves the right to terminate or modify the
exchange offer upon 60 days' notice to shareholders.
EMPLOYEES AND AFFILIATES OF THE FUNDS. The minimum purchase requirement is not
applicable to accounts of Trustees, officers or employees of the Funds or
certain parties related thereto. The minimum initial investment for such
accounts is $5,000. See the Statement of Additional Information for further
details.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares of the Funds may be redeemed on each day that the Funds are open for
business by sending a written request to the Funds. The Funds are open for
business on each day the New York Stock Exchange (the "Exchange") is open for
business. Any redemption may be for more or less than the purchase price of your
shares depending on the market value of the Funds' portfolio securities. All
redemption orders received in proper form, as indicated herein, by the
Administrator prior to 4:00 p.m. Eastern time will redeem shares at the net
asset value determined as of that business day's close of trading. Otherwise,
your order will redeem shares on the next business day. You may also redeem your
shares through a broker-dealer who may charge you a fee for its services.
13
<PAGE>
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $100,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 60 days' written notice. If the
shareholder brings his account value up to $100,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Funds, at 1-800-443-4249, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Jamestown Bond
Funds, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request for redemption
must include:
1) your letter of instruction or a stock assignment specifying the Bond Fund
or the Short Term Fund, the account number, and the number of shares or
dollar amount to be redeemed. This request must be signed by all registered
shareholders in the exact names in which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, a Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Funds may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Funds to dispose of securities owned by them, or
to fairly determine the value of their assets, and (iii) for such other periods
as the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Funds
may not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Funds. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Funds. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Funds from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a redemption in an amount over $25,000, or a change in registration
or standing instructions for your account. Signature guarantees are required for
(1) requests to redeem shares having a value of greater than $25,000, (2) change
of registration requests, and (3) requests to establish or change redemption
services other than through your initial account application. Signature
guarantees are acceptable from a member bank of the Federal Reserve System, a
savings and loan institution, credit union, registered broker-dealer or a member
firm of a U.S. Stock Exchange, and must appear on the written request for
redemption or change of registration.
14
<PAGE>
HOW NET ASSET VALUE IS DETERMINED
- --------------------------------------------------------------------------------
The net asset value of each Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m., Eastern time). Net asset value per share is determined by dividing the
total value of all Fund securities (valued at market value) and other assets,
less liabilities, by the total number of shares then outstanding. Net asset
value includes interest on fixed income securities, which is accrued daily. See
the Statement of Additional Information for further details.
Securities which are traded over-the-counter are priced at the last sale price,
if available, otherwise, at the last quoted bid price. Securities traded on a
national exchange will be valued based upon the closing price on the valuation
date on the principal exchange where the security is traded. It is expected that
fixed income securities will ordinarily be traded in the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service. The prices provided by the pricing service are determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities and developments related
to specific securities. The Trustees will satisfy themselves that such pricing
services consider all appropriate factors relevant to the value of such
securities in determining their fair value. Securities and other assets for
which no quotations are readily available will be valued in good faith at fair
value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
The Funds are diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Funds under
the laws of Massachusetts governing the responsibilities of trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Funds and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees,
Tattersall Advisory Group, Inc. (the "Advisor") provides the Funds with a
continuous program of supervision of each Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to Investment Advisory Agreements with the Trust. The
Advisor is also responsible for the selection of broker-dealers through which
the Funds execute portfolio transactions, subject to brokerage policies
established by the Trustees, and provides certain executive personnel to the
Funds.
The Advisor is a Virginia corporation controlled by Fred T. Tattersall. Prior to
February 28, 1997, the investment advisor to each Fund was Lowe, Brockenbrough &
Tattersall, Inc. ("LB&T"), of which Mr. Tattersall and Austin Brockenbrough III
were the controlling shareholders. On February 28, 1997, LB&T was reorganized by
means of a corporate restructuring into two separate legal entities: LB&T, owned
by Mr. Brockenbrough, and the Advisor, owned by Mr. Tattersall. The Advisor
manages the fixed-income accounts (including the Funds) formerly managed by
LB&T. In addition to acting as Advisor to the Funds, the Advisor provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals.
Both the Bond Fund and the Short Term Fund are managed on a day to day basis by
a committee comprised of the Advisor's fixed income portfolio management
professionals, with each portfolio professional responsible for designated
specific sectors of the fixed income market. Prior to February 28, 1997, the
Funds were managed by the same group of professionals, but such professionals
were employed by LB&T.
15
<PAGE>
Compensation of the Advisor is at the annual rate of 0.375% of each Fund's
average daily net assets. For the fiscal year ended March 31, 1998, the Advisor
received $310,227 in investment advisory fees from the Bond Fund (net of fee
waivers), which represented 0.36% of the Bond Fund's average daily net assets.
For the fiscal year ended March 31, 1998, the Advisor waived its entire
investment advisory fee from the Short Term Fund and reimbursed the Fund for
$6,909 of other operating expenses.
The Advisor currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of Institutional Shares
of each Fund to 0.50% per annum of its average daily net assets. However, there
is no assurance that any voluntary fee waivers will continue in the current or
future fiscal years, and expenses of Institutional Shares of each Fund may
therefore exceed 0.50% of its average daily net assets.
The Advisor's address is 6802 Paragon Place, Suite 200, Richmond, Virginia
23230.
ADMINISTRATOR. The Funds have retained Countrywide Fund Services, Inc. (the
"Administrator"), P.O. Box 5354, Cincinnati, Ohio 45201, to provide
administrative, pricing, accounting, dividend disbursing, shareholder servicing
and transfer agent services. The Administrator is a wholly-owned indirect
subsidiary of Countrywide Credit Industries, Inc., a New York Stock Exchange
listed company principally engaged in the business of residential mortgage
lending. The Administrator supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. In
addition, the Administrator calculates daily net asset value per share and
maintains such books and records as are necessary to enable it to perform its
duties.
Each Fund pays the Administrator a base fee for these services at the annual
rate of 0.075% of the average value of its daily net assets up to $200 million
and 0.05% of such assets in excess of $200 million (subject to a minimum fee of
$2,000 per month with respect to each Fund) plus a surcharge of $1,000 per
month. The Administrator also charges the Funds for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses.
CUSTODIAN. The Custodian of the Funds' assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Funds pay all expenses not assumed by the Advisor,
including its fees. Fund expenses include, among others, the fees and expenses,
if any, of the Trustees and officers who are not "affiliated persons" of the
Advisor, fees of the Funds' Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Funds' shareholder servicing
operations, fees and expenses of qualifying and registering the Funds' shares
under federal and state securities laws, expenses of preparing, printing and
distributing prospectuses and reports to existing shareholders, auditing and
legal expenses, insurance expenses, association dues, and the expense of
shareholders' meetings and proxy solicitations. The Funds are also liable for
any nonrecurring expenses that may arise such as litigation to which the Funds
may be a party. The Funds may be obligated to indemnify the Trustees and
officers with respect to such litigation. All expenses of a Fund are accrued
daily on the books of such Fund at a rate which, to the best of its belief, is
equal to the actual expenses expected to be incurred by the Fund in accordance
with generally accepted accounting practices. For the fiscal year ended March
31, 1998, the expense ratio of Institutional Shares of each Fund was 0.50% of
its average daily net assets after expense reimbursements.
BROKERAGE. The Funds have adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Funds. In all cases, the primary consideration for selection of
broker-dealers through which to execute brokerage transactions will be to obtain
the most favorable price and execution for the Funds. Research services obtained
through the Funds' brokerage transactions may be used by the Advisor for its
other clients; conversely, the Funds may benefit
16
<PAGE>
from research services obtained through the brokerage transactions of the
Advisor's other clients. The Statement of Additional Information contains more
information about the management and brokerage practices of the Funds. It is
anticipated that most securities transactions of the Funds will be handled on a
principal, rather than agency, basis. Fixed income securities are normally
traded on a net basis (without commission) through broker-dealers and banks
acting for their own account. Such firms attempt to profit from buying at the
bid price and selling at the higher asked price of the market, the difference
being referred to as the spread.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Funds in general
and, particularly, with respect to dividends and distributions and other
matters. Shareholders should be aware that dividends from the Funds which are
derived in whole or in part from interest on U.S. Government Securities may not
be taxable for state income tax purposes. Other state income tax implications
are not covered, nor is this discussion exhaustive on the subject of federal
income taxation. Consequently, investors should seek qualified tax advice.
Each Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Funds but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed to
them. The Funds intend to declare dividends quarterly, payable in March, June,
September and December, on a date selected by the Trustees. In addition,
distributions may be made annually in December out of any net short-term or
long-term capital gains derived from the sale of securities realized through
October 31 of that year. Each Fund may make a supplemental distribution of
capital gains at the end of its fiscal year. The nature and amount of all
dividends and distributions will be identified separately when tax information
is distributed by the Funds at the end of each year. The Funds intend to
withhold 30% on taxable dividends and any other payments that are subject to
such withholding and are neither citizens nor residents of the U.S.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains for either Fund. Current
practice of the Funds, subject to the discretion of the Board of Trustees, is
for declaration and payment of income dividends during the last week of each
calendar quarter. All dividends and capital gains distributions are reinvested
in additional shares of the Funds unless the shareholder requests in writing to
receive dividends and/or capital gains distributions in cash. That request must
be received by the Funds prior to the record date to be effective as to the next
dividend. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or if received in additional shares of the Funds.
TAX STATUS OF THE FUNDS. If a Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the Funds, see "Additional
Tax Information" in the Statement of Additional Information.
PRINCIPAL SHAREHOLDERS. Rockingham Health Care, Inc., 235 Cantrell Avenue,
Harrisonburg, Virginia, owned of record 36.6% of the Short Term Fund's
outstanding shares as of July 2, 1998 and may therefore be deemed to control the
Fund.
17
<PAGE>
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Bond Fund and the Short Term Fund described in this
Prospectus: shares of the FBP Contrarian Balanced Fund and the FBP Contrarian
Equity Fund, which are managed by Flippin, Bruce & Porter, Inc. of Lynchburg,
Virginia; shares of The Government Street Equity Fund, The Government Street
Bond Fund and The Alabama Tax Free Bond Fund, which are managed by T. Leavell &
Associates, Inc. of Mobile, Alabama; shares of The Jamestown Balanced Fund, The
Jamestown Equity Fund, The Jamestown International Equity Fund and The Jamestown
Tax Exempt Virginia Fund, which are managed by Lowe, Brockenbrough & Tattersall,
Inc. of Richmond, Virginia; and shares of The Davenport Equity Fund, which is
managed by Davenport & Company LLC of Richmond, Virginia. The Trustees are
permitted to create additional series at any time.
Shares are freely transferable, have no preemptive or conversion rights and,
when issued, are fully paid and non-assessable. Upon liquidation of the Trust or
a particular Fund of the Trust, holders of the outstanding shares of the Fund
being liquidated shall be entitled to receive, in proportion to the number of
shares of the Fund held by them, the excess of that Fund's assets over its
liabilities. Each outstanding share is entitled to one vote for each full share
and a fractional vote for each fractional share, on all matters which concern
the Trust as a whole. On any matter submitted to a vote of shareholders, all
shares of the Trust then issued and outstanding and entitled to vote,
irrespective of the Fund, shall be voted in the aggregate and not by Fund,
except (i) when required by the 1940 Act, shares shall be voted by individual
Fund; and (ii) when the matter does not affect any interest of a particular
Fund, then only shareholders of the affected Fund or Funds shall be entitled to
vote thereon. Examples of matters which affect only a particular Fund could be a
proposed change in the fundamental investment objectives or policies of that
Fund or a proposed change in the investment advisory agreement for a particular
Fund. Each class of shares of the Funds shall vote separately on matters
relating to its own distribution arrangements. The shares of the Funds have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect all of the Trustees if
they so choose.
The Declaration of Trust provides that the Trustees may hold office
indefinitely, except that: (1) any Trustee may resign or retire; and (2) any
Trustee may be removed with or without cause at any time: (a) by a written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal; (b) by vote of shareholders holding not less than two-thirds of
the outstanding shares of the Trust, cast in person or by proxy at a meeting
called for that purpose; or (c) by a written declaration signed by shareholders
holding not less than two-thirds of the outstanding shares of the Trust and
filed with the Trust's custodian. In case a vacancy or an anticipated vacancy
shall for any reason exist, the vacancy shall be filled by the affirmative vote
of a majority of the remaining Trustees, subject to the provisions of Section
16(a) of the 1940 Act.
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the Statement of Additional Information for more information.
Shareholder inquiries may be made in writing, addressed to the Funds at the
address shown on the cover.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See the Statement of Additional Information
for further information about the Trust and its shares.
CALCULATION OF PERFORMANCE DATA. From time to time each Fund may advertise its
total return. Each Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance. Total return and yield are computed separately for Service Group
and Institutional Shares. The yield of Institutional Shares is expected to be
higher than the yield of Service Group Shares due to the distribution fees
imposed on Service Group Shares.
18
<PAGE>
The "total return" of a Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If a Fund has been operating less than 1, 5 or 10 years, the time period
during which the Fund has been operating is substituted.
In addition, the Funds may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same or
different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative percentage rate of return,
actual year-by-year rates or any combination thereof.
The "yield" of a Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Funds all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated.
19
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20
<PAGE>
THE JAMESTOWN BOND FUNDS
INSTITUTIONAL SHARES
Send completed application to:
THE JAMESTOWN BOND FUNDS
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $500,000 for Bond Fund; $100,000
for Short Term Bond Fund)
o Enclosed is a check payable to the applicable Fund for $________________
(Please indicate Fund below)
o Jamestown Bond Fund (82) o Jamestown Short Term Bond Fund (83)
o Funds were wired to Star Bank on _____________ in the amount of $____________
By Mail: You may purchase shares by mail by completing and signing this
application. Please mail with your check to the address above.
By Wire: You may purchase shares by wire. PRIOR TO SENDING THE WIRE, PLEASE
CONTACT THE FUNDS AT 1-800-443-4249 SO THAT YOUR WIRE TRANSFER IS
PROPERLY CREDITED TO YOUR ACCOUNT. Please forward your completed
application by mail immediately thereafter to the Funds. The wire
should be routed as follows:
Star Bank, N.A.
ABA #042000013
For credit Williamsburg Investment Trust #485777056
For The Jamestown Bond Fund or The Jamestown Short Term Bond Fund
For (shareholder name and Social Security or Taxpayer ID Number)
21
<PAGE>
DIVIDEND AND DISTRIBUTION INSTRUCTIONS
o Reinvest all dividends and capital gains distributions
o Reinvest all capital gain distributions; dividends to be paid in cash
o Pay all dividends and capital gain distributions in cash
o By Check o By ACH to my bank or savings account.
PLEASE ATTACH A VOIDED CHECK.
- --------------------------------------------------------------------------------
SIGNATURE AUTHORIZATION - FOR USE BY CORPORATIONS, TRUSTS, PARTNERSHIPS AND
OTHER INSTITUTIONS
Please retain a copy of this document for your files. Any modification of the
information contained in this section will require an Amendment to this
Application Form.
o New Application o Amendment to previous Application dated ______________
Account No._________________
Name of Registered Owner________________________________________________________
The following named person(s) are currently authorized signatories of the
Registered Owner. Any ______ of them is/are authorized under the applicable
governing document to act with full power to sell, assign or transfer securities
of THE JAMESTOWN BOND FUNDS for the Registered Owner and to execute and deliver
any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE JAMESTOWN BOND FUNDS, or any agent of the Funds may, without inquiry, rely
upon the instruction of any person(s) purporting to be an authorized person
named above, or in any Amendment received by the Funds or their agent. The Funds
and their Agent shall not be liable for any claims, expenses or losses resulting
from having acted upon any instruction reasonably believed to be genuine.
- --------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
o Please mail redemption proceeds to the name and address of record
o Please wire redemptions to the commercial bank account indicated below
(subject to a minimum wire transfer of $5,000)
Name as it appears on the account_______________________________________________
Commercial bank account #_______________________________________________________
ABA Routing #___________________________________________________________________
City, State and Zip in which bank is located____________________________________
- --------------------------------------------------------------------------------
SIGNATURE AND TIN CERTIFICATION
I/We certify that I have full right and power, and legal capacity to purchase
shares of the Funds and affirm that I have received a current prospectus and
understand the investment objectives and policies stated therein. The investor
hereby ratifies any instructions given pursuant to this Application and for
himself and his successors and assigns does hereby release Countrywide Fund
Services, Inc., Williamsburg Investment Trust, Tattersall Advisory Group, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The certifications in this paragraph are required from all
non-exempt persons to prevent backup withholding of 31% of all taxable
distributions and gross redemption proceeds under the federal income tax law.
The Internal Revenue Service does not require my consent to any provision of
this document other than the certifications required to avoid backup
withholding. (Check here if you are subject to backup withholding) [ ].
____________________________________ _______________________________________
APPLICANT DATE JOINT APPLICANT DATE
____________________________________ _______________________________________
OTHER AUTHORIZED SIGNATORY DATE OTHER AUTHORIZED SIGNATORY DATE
22
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
23
<PAGE>
THE JAMESTOWN BOND FUNDS
INVESTMENT ADVISOR
Tattersall Advisory Group, Inc.
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaze, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
OFFICERS
Fred T. Tattersall, President
Craig D. Truitt, Vice President
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Funds. This Prospectus does not constitute an offer by the Funds to sell
shares in any State to any person to whom it is unlawful for the Funds to make
such offer in such State.
<PAGE>
THE JAMESTOWN
BOND FUNDS
NO-LOAD FUNDS
Service Group Shares
PROSPECTUS
AUGUST 1, 1998
Investment Advisor
Tattersall Advisory Group, Inc.
Richmond, Virginia
<PAGE>
PROSPECTUS
August 1, 1998
THE JAMESTOWN BOND FUNDS
SERVICE GROUP SHARES
NO-LOAD FUNDS
- --------------------------------------------------------------------------------
The investment objective of THE JAMESTOWN BOND FUND (the "Bond Fund") is to
maximize total return, consisting of current income and capital appreciation
(both realized and unrealized), consistent with the preservation of capital
through active management of investment grade fixed income securities.
The investment objective of THE JAMESTOWN SHORT TERM BOND FUND (the "Short Term
Fund") is identical to that of the Bond Fund, with the distinction that the
Short Term Fund intends to achieve this objective by investing in a portfolio of
investment grade fixed income securities having a shorter average duration.
The Jamestown Bond Fund and The Jamestown Short Term Bond Fund are designed
primarily for institutional investors who wish to take advantage of the
professional investment management expertise of Tattersall Advisory Group, Inc.,
which serves as investment advisor to the Funds.
The Funds offer two classes of shares: Service Group Shares, sold subject to a
12b-1 fee up to .15% of average daily net assets, and Institutional Shares, sold
without a 12b-1 fee. Each Service Group and Institutional Share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except that (i) Service Group Shares bear the expenses of
distribution fees, which will cause Service Group Shares to have a higher
expense ratio and to pay lower dividends than Institutional Shares; (ii) certain
class specific expenses will be borne solely by the class to which such expenses
are attributable; and (iii) each class has exclusive voting rights with respect
to matters affecting only that class.
INVESTMENT ADVISOR
TATTERSALL ADVISORY GROUP, INC.
RICHMOND, VIRGINIA
The Jamestown Bond Fund and the Jamestown Short Term Bond Fund (the "Funds") are
NO-LOAD, diversified, open-end series of the Williamsburg Investment Trust, a
registered management investment company. This Prospectus provides you with the
basic information you should know before investing in the Funds. You should read
it and keep it for future reference. While there is no assurance that the Funds
will achieve their investment objectives, they endeavor to do so by following
the investment policies described in this Prospectus. Institutional Shares are
offered in a separate prospectus and additional information about Institutional
Shares may be obtained by calling 1-800-443-4249.
A Statement of Additional Information, dated August 1, 1998 containing
additional information about the Funds, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Funds' address is P.O. Box 5354, Cincinnati, Ohio 45201-5354, and
their telephone number is 1-800-443-4249. A copy of the Statement of Additional
Information may be obtained at no charge by calling or writing the Funds.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
1
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Prospectus Summary ........................................................ 3
Synopsis of Costs and Expenses ............................................ 4
Financial Highlights ...................................................... 5
Investment Objectives, Investment Policies and Risk Considerations ........ 8
How to Purchase Shares .................................................... 13
How to Redeem Shares ...................................................... 14
How Net Asset Value is Determined ......................................... 16
Management of the Funds ................................................... 16
Plan of Distribution ...................................................... 18
Dividends, Distributions, Taxes and Other Information ..................... 18
Application ............................................................... 21
- --------------------------------------------------------------------------------
2
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS. The Jamestown Bond Fund (the "Bond Fund") and the Jamestown Short
Term Bond Fund (the "Short Term Fund") are NO-LOAD, diversified, open-end series
of the Williamsburg Investment Trust, a registered management investment company
commonly known as a "mutual fund." Each represents a separate mutual fund with
its own objectives and policies. An investor may elect one or both of the Funds
to meet individual investment objectives, and may switch from one Fund to the
other without charge when a shareholder's investment objectives or plans change.
While there is no assurance that the Funds will achieve their investment
objectives, they each endeavor to do so by following the investment policies
described in this Prospectus. The Funds are primarily designed for tax exempt
institutional investors such as pension and profit-sharing plans, endowments,
foundations, and employee benefit trusts. Corporations and individual investors
may invest in either Fund, although it should be noted that investment decisions
of the Funds will not be influenced by any federal tax considerations, other
than those considerations which apply to the Funds themselves.
INVESTMENT OBJECTIVES. The Bond Fund and the Short Term Fund are governed by
virtually identical investment objectives and policies, WITH THE EXCEPTION of
the average duration range of the individual Funds. Each Fund seeks to maximize
total return, consisting of current income and capital appreciation (both
realized and unrealized), consistent with the preservation of capital through
active management of investment grade fixed income securities. For a more
detailed explanation of the definition of "investment grade" securities, see
"Investment Objectives, Investment Policies and Risk Considerations."
INVESTMENT APPROACH. The Advisor's philosophy in managing fixed income
portfolios is to emphasize a disciplined balance between sector selection and
moderate portfolio duration shifts to maximize total return. Duration is an
important concept in the Advisor's fixed income management philosophy and, in
the Advisor's opinion, provides a better measure of interest rate sensitivity
than maturity for many fixed income securities. Each Fund intends to invest only
in investment grade securities. Due to their controlled duration and quality
standards, the Funds expect to exhibit less volatility than would mutual funds
with longer average maturities and lower quality portfolios.
INVESTMENT ADVISOR. Tattersall Advisory Group, Inc. (the "Advisor") serves as
investment advisor to each of the Funds. For its services, the Advisor receives
compensation of 0.375% of the average daily net assets of each Fund. (See
"Management of the Funds.")
PURCHASE OF SHARES. Service Group Shares are offered "No-Load," which means they
may be purchased directly from the Funds without the imposition of any front-end
or contingent deferred sales charges. However, Service Group Shares are subject
to the imposition of a 12b-1 fee of up to .15% of average daily net assets. (See
"Plan of Distribution.")
The minimum initial purchase for the Bond Fund is $500,000.
The minimum initial purchase for the Short Term Fund is $100,000.
Subsequent investments in both Funds must be $1,000 or more. Shares may be
purchased by individuals or organizations and may be appropriate for use in Tax
Sheltered Retirement Plans. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions from either
Fund. Shares may be redeemed at any time in which the Funds are open for
business at the net asset value next determined after receipt of a redemption
request by the Funds. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Funds is distributed
quarterly. Net capital gains, if any, are distributed at least annually.
Shareholders may elect to receive dividends and capital gain distributions in
cash or the dividends and capital gain distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Funds are series of the Williamsburg Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Funds. The Trust has employed Countrywide Fund Services,
Inc. (the "Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Funds.")
3
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
- --------------------------------------------------------------------------------
THE JAMESTOWN BOND FUND
SERVICE GROUP SHARES
SHAREHOLDER TRANSACTION EXPENSES: .............................. None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ....................... 0.36%
Administrator's Fees ........................................... 0.08%
12b-1 Fees ..................................................... 0.15%
Other Expenses ................................................. 0.07%
-----
Total Fund Operating Expenses .................................. 0.66%
=====
EXAMPLE: You would pay the following expenses on a $1,000 investment, whether or
not you redeem at the end of the period, assuming 5% annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$ 7 $21 $37 $82
THE JAMESTOWN SHORT TERM BOND FUND
SERVICE GROUP SHARES
SHAREHOLDER TRANSACTION EXPENSES: ................................ None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of net assets)
Investment Advisory Fees (after waivers) ......................... 0.00%
Administrator's Fees ............................................. 0.24%
12b-1 Fees ....................................................... 0.15%
Other Expenses (after expense reimbursements) .................... 0.26%
-----
Total Fund Operating Expenses .................................... 0.65%
=====
EXAMPLE: You would pay the following expenses on a $1,000 investment, whether or
not you redeem at the end of the period, assuming 5% annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$ 7 $21 $36 $81
The purpose of the foregoing tables is to assist investors in the Funds in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Funds" for more information about the fees
and costs of operating the Funds. The Annual Fund Operating Expenses shown above
are based upon actual operating history of Institutional Shares of the Fund for
the fiscal year ended March 31, 1998, adjusted to reflect the imposition of
12b-1 fees applicable to Service Group Shares. Absent the fee waivers by the
Advisor, the Bond Fund's investment advisory fees would have been 0.375% of
average daily net assets and total fund operating expenses would have been 0.68%
of average daily net assets. Absent the fee waivers and expense reimbursements
by the Advisor, the Short Term Fund's investment advisory fees would have been
0.375% of average daily net assets, other expenses would have been 0.33% of
average net assets and total fund operating expenses would have been 1.10% of
average daily net assets. THE EXAMPLES SHOWN SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE
GREATER OR LESS THAN THOSE SHOWN.
The footnotes to the Financial Highlights table contain information concerning a
decrease in the Bond Fund's expense ratio as a result of a directed brokerage
arrangement.
4
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following audited financial information has been audited by Tait, Weller &
Baker, independent accountants, whose report covering the fiscal year ended
March 31, 1998 is contained in the Statement of Additional Information. This
information should be read in conjunction with the Funds' latest audited annual
financial statements and notes thereto, which are also contained in the
Statement of Additional Information, a copy of which may be obtained at no
charge by calling the Funds.
THE JAMESTOWN BOND FUND
SERVICE GROUP SHARES
Selected Per Share Data and Ratios for a Share
Outstanding Throughout Each Period
PERIOD
ENDED
MARCH 31,
1998(a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period .......................... $ 10.69
-------
Income from investment operations:
Net investment income ................................... 0.37
Net realized and unrealized gains on investments ........ 0.08
-------
Total from investment operations ................................ 0.45
-------
Less distributions:
Dividends from net investment income ......................... (0.31)
-------
Net asset value at end of period ................................ $ 10.83
=======
Total return .................................................... 8.55%(C)
=======
Net assets at end of period (000's) ............................. $ 3,069
=======
Ratio of gross expenses to average net assets ................... 0.68%(C)
Ratio of net expenses to average net assets(b) .................. 0.65%(C)
Ratio of net investment income to average net assets ............ 5.96%(C)
Portfolio turnover rate ......................................... 235%
(a) Represents the period from the initial public offering of Service Group
Shares (October 2, 1997) through March 31, 1998.
(b) Ratios were determined based on net expenses after reimbursements through a
directed brokerage arrangement and investment advisory fees waived for the
year ended March 31, 1998.
(c) Annualized.
5
<PAGE>
The following per share data and ratios for the Institutional Shares of the
Funds are included for informational purposes. Institutional Shares do not bear
12b-1 fees and therefore have a lower expense ratio and pay higher dividends
than Service Group Shares.
THE JAMESTOWN BOND FUND
INSTITUTIONAL SHARES
Selected Per Share Data and Ratios for a Share
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------------------
1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 10.26 $ 10.39 $ 9.97 $ 10.15
------- ------- ------- -------
Income from investment operations:
Net investment income ....................... 0.58 0.68 0.70 0.62
Net realized and unrealized gains (losses)
on investments ........................... 0.63 (0.12) 0.41 (0.18)
------- ------- ------- -------
Total from investment operations ............... 1.21 0.56 1.11 0.44
------- ------- ------- -------
Less distributions:
Dividends from net investment income ........ (0.64) (0.69) (0.69) (0.62)
Distributions from net realized gains ....... -- -- -- --
Distributions in excess of net realized gains -- -- -- --
------- ------- ------- -------
Total distributions ............................ (0.64) (0.69) (0.69) (0.62)
------- ------- ------- -------
Net asset value at end of period ............... $ 10.83 $ 10.26 $ 10.39 $ 9.97
======= ======= ======= =======
Total return ................................... 12.06% 5.52% 11.23% 4.56%
======= ======= ======= =======
Net assets at end of period (000's) ............ $96,250 $76,499 $74,774 $72,029
======= ======= ======= =======
Ratio of gross expenses to average net assets .. 0.53% 0.53% 0.56% 0.57%
Ratio of net expenses to average net assets (b) 0.50% 0.50% 0.53% 0.53%
Ratio of net investment income to
average net assets .......................... 6.06% 6.48% 6.54% 6.28%
Portfolio turnover rate ........................ 235% 207% 268% 381%
<CAPTION>
PERIOD
YEARS ENDED MARCH 31, ENDED
------------------------------- MARCH 31,
1994 1993 1992 1991(a)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 10.82 $ 10.42 $ 9.97 $ 10.00
------- ------- ------- -------
Income from investment operations:
Net investment income ....................... 0.55 0.64 0.54 0.20
Net realized and unrealized gains (losses)
on investments ........................... (0.30) 0.55 0.48 (0.03)
------- ------- ------- -------
Total from investment operations ............... 0.25 1.19 1.02 0.17
------- ------- ------- -------
Less distributions:
Dividends from net investment income ........ (0.55) (0.64) (0.54) (0.20)
Distributions from net realized gains ....... (0.19) (0.15) (0.03) --
Distributions in excess of net realized gains (0.18) -- -- --
------- ------- ------- -------
Total distributions ............................ (0.92) (0.79) (0.57) (0.20)
------- ------- ------- -------
Net asset value at end of period ............... $ 10.15 $ 10.82 $ 10.42 $ 9.97
======= ======= ======= =======
Total return ................................... 2.12% 11.69% 10.33% 5.70%(c)
======= ======= ======= =======
Net assets at end of period (000's) ............ $64,029 $55,718 $29,727 $ 794
======= ======= ======= =======
Ratio of gross expenses to average net assets .. 0.60% 0.59% 0.80% 3.08%(c)
Ratio of net expenses to average net assets (b) 0.60% 0.59% 0.60% 0.90%(c)
Ratio of net investment income to
average net assets .......................... 5.03% 6.09% 6.67% 7.07%(c)
Portfolio turnover rate ........................ 381% 454% 484% 54%
</TABLE>
(a) Represents the period from the commencement of operations (December 13,
1990) through March 31, 1991.
(b) Ratios were determined based on net expenses after reimbursements through a
directed brokerage arrangement for periods after March 31, 1994 and
investment advisory fees waived for the periods ended March 31, 1998, 1992
and 1991.
(c) Annualized.
6
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN SHORT TERM BOND FUND
INSTITUTIONAL SHARES
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
PERIOD
YEARS ENDED MARCH 31, ENDED
-------------------------------------------------------------- MARCH 31,
1998 1997 1996 1995 1994 1993 1992(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ............. $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93 $ 10.00
------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income ........................... 0.54 0.58 0.62 0.60 0.51 0.50 0.09
Net realized and unrealized gains (losses)
on investments ............................... 0.00 (0.11) 0.08 (0.17) (0.23) 0.13 (0.07)
------- ------- ------- ------- ------- ------- -------
Total from investment operations ................... 0.54 0.47 0.70 0.43 0.28 0.63 0.02
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ............ (0.54) (0.58) (0.62) (0.61) (0.51) (0.49) (0.09)
Distributions from net realized gains ........... -- -- -- -- (0.02) -- --
------- ------- ------- ------- ------- ------- -------
Total distributions ................................ (0.54) (0.58) (0.62) (0.61) (0.53) (0.49) (0.09)
------- ------- ------- ------- ------- ------- -------
Net asset value at end of period ................... $ 9.61 $ 9.61 $ 9.72 $ 9.64 $ 9.82 $ 10.07 $ 9.93
======= ======= ======= ======= ======= ======= =======
Total return ....................................... 5.76% 5.01% 7.38% 4.53% 2.76% 6.40% 0.99% (c)
======= ======= ======= ======= ======= ======= =======
Net assets at end of period (000's) ................ $10,212 $ 9,924 $ 9,426 $14,122 $18,715 $15,580 $ 5,320
======= ======= ======= ======= ======= ======= =======
Ratio of net expenses to average net assets (b) .... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%(c)
Ratio of net investment income to average net assets 5.64% 5.96% 6.27% 6.04% 5.22% 5.24% 4.86%(c)
Portfolio turnover rate ............................ 109% 62% 157% 144% 324% 289% 97%
</TABLE>
(a) Represents the period from the commencement of operations (January 21,
1992) through March 31, 1992.
(b) Absent investment advisory fees waived and expenses reimbursed by the
Advisor, the ratios of expenses to average net assets would have been
0.95%, 0.94%, 0.85%, 0.85%, 0.81%, 0.82% and 0.81%(c) for the periods ended
March 31, 1998, 1997, 1996, 1995, 1994, 1993 and 1992, respectively.
(c) Annualized.
FURTHER INFORMATION ABOUT THE PERFORMANCE OF THE FUNDS IS CONTAINED IN THE
ANNUAL REPORT, A COPY OF WHICH MAY BE OBTAINED AT NO CHARGE BY CALLING THE
FUNDS.
7
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The investment objective of each Fund is to maximize total return, consisting of
current income and capital appreciation, both realized and unrealized, through
active management of a portfolio of investment grade fixed income securities.
Any investment involves risk, and there can be no assurance that the Funds will
achieve their investment objectives. The investment objective of each Fund may
not be altered without the prior approval of a majority (as defined by the
Investment Company Act of 1940) of the Fund's shares.
The Advisor's philosophy in the management of fixed income securities utilizes a
disciplined balance between sector selection and moderate portfolio duration
shifts to maximize total return. The Advisor's determination of optimal duration
for each Fund is based on economic indicators, inflation trends, credit demands,
monetary policy and global influences as well as psychological and technical
factors. The Funds endeavor to invest in securities and market sectors which the
Advisor believes are undervalued by the marketplace. The selection of
undervalued bonds by the Advisor is based on, among other things, historical
yield relationships, credit risk, market volatility and absolute levels of
interest rates, as well as supply and demand factors.
The Funds are designed primarily to allow institutional investors to take
advantage of the professional investment management expertise of Tattersall
Advisory Group, Inc. Each Fund will be managed in a manner that closely
resembles that of other bond portfolios of similar maturity and duration managed
by the Advisor. The Advisor uses a wide variety of securities and techniques in
managing fixed income portfolios. As the fixed income markets evolve, the
Advisor may invest in other types of securities than those specifically
identified in this Prospectus if the Advisor views these investments to be
consistent with the overall investment objectives and policies of the Funds. The
securities and techniques the Advisor currently expects to utilize are described
below.
DURATION. Duration is an important concept in the Advisor's fixed income
management philosophy. "Duration" and "maturity" are different concepts and
should not be substituted for one another for purposes of understanding the
investment philosophy of either Fund. The Advisor believes that for most fixed
income securities "duration" provides a better measure of interest rate
sensitivity than maturity. Whereas maturity takes into account only the final
principal payments to determine the risk of a particular bond, duration weights
all potential cash flows (principal, interest and reinvestment income) on an
expected present value basis, to determine the "effective life" of the security.
The Advisor intends to limit the portfolio duration of the Bond Fund to a 2 year
minimum and a 6 year maximum. The Advisor intends to maintain a portfolio
duration for the Short Term Fund of less than 3 years. In addition, the Advisor
intends to limit the duration of any one single security of the Short Term Fund
to a maximum duration of 5 years. The precise point of each Fund's duration
within these ranges will depend on the Advisor's view of the market. For the
purposes of the Funds, the duration calculation used is Macaulay duration
adjusted for option features (such as call features or prepayment options).
Adjusting for option features requires assumptions with respect to the
probability of that option being exercised. These assumptions will be determined
by the Advisor based on then current market conditions.
The Funds expect the average maturity of their portfolios to be longer than the
average duration. How much longer will depend upon, among other factors, the
composition of coupons (higher coupons imply shorter duration), as well as
overall interest rate levels (higher interest rates generally will result in
shorter duration relative to maturity). It should be noted that for some
securities the standard duration calculation does not accurately reflect
interest rate sensitivity. For example, mortgage pass-through securities,
Collateralized Mortgage Obligations and Asset Backed Securities require
estimates of principal prepayments which are critical in determining interest
rate sensitivity. Floating rate securities, because of the interest rate
adjustment feature, are not appropriate for the standard duration calculation.
In these and other similar situations, the Advisor will use more sophisticated
techniques to determine interest rate sensitivity of securities of the Funds.
8
<PAGE>
INVESTMENT GRADE SECURITIES. Each Fund intends to limit its investment purchases
to investment grade securities. The Funds define investment grade securities as
those securities which, in the Advisor's opinion, have the characteristics
described by any of the nationally recognized statistical rating organizations
("NRSROs"), Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P"), in their four highest rating grades. For S&P, Fitch and D&P those
ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa, Aa, A and
Baa. For a description of each rating grade, see the Statement of Additional
Information.
Each Fund invests exclusively in those securities rated investment grade by one
or more of the NRSROs or, if not rated, are considered by the Advisor to have
essentially the same characteristics and quality as securities having such
ratings. There may also be instances where the Advisor purchases securities
which are rated investment grade by one NRSRO and which are not rated or rated
below investment grade by other NRSROs, and such securities would be eligible
for purchase by the Funds. Issues rated within the fourth highest grade (those
rated lower than A) are considered speculative in certain respects and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to pay principal and interest than is the case with higher
grade securities. The final determination of quality and value will remain with
the Advisor. Although the Advisor utilizes the ratings of various credit rating
services as one factor in establishing creditworthiness. For as long as the
Funds hold a fixed income issue, the Advisor monitors the issuer's credit
standing. In the event a security's rating is reduced below a Fund's minimum
requirements, the Fund will sell the security, subject to market conditions and
the Advisor's assessment of the most opportune time for sale. Although lower
rated securities will generally provide higher yields than higher rated
securities of similar maturities, they are subject to a greater degree of market
fluctuation.
U.S. GOVERNMENT SECURITIES. U.S. Government Securities include direct
obligations of the U.S. Treasury, securities issued or guaranteed as to interest
and principal by agencies or instrumentalities of the U.S. Government, or any of
the foregoing subject to repurchase agreements (See "Repurchase Agreements.")
While obligations of some U.S. Government sponsored entities are supported by
the full faith and credit of the U.S. Government, several are supported by the
right of the issuer to borrow from the U.S. Government, and still others are
supported only by the credit of the issuer itself. The guarantee of the U.S.
Government does not extend to the yield or value of the U.S. Government
Securities held by the Funds or to either Fund's shares. See the Statement of
Additional Information for a more detailed description.
MORTGAGE PASS-THROUGH CERTIFICATES. Obligations of the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC") include direct
pass-through certificates representing undivided ownership interests in pools of
mortgages. Such certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the issuer. In the case of
securities issued by GNMA, the payment of principal and interest would be backed
by the full faith and credit of the U.S. Government. Mortgage pass-through
certificates issued by FNMA or FHLMC would be guaranteed as to payment of
principal and interest by the credit of the issuing U.S. Government agency.
Securities issued by other non-governmental entities (such as commercial banks
or mortgage bankers) may offer credit enhancement such as guarantees, insurance,
or letters of credit. Mortgage pass-through certificates are subject to more
rapid prepayment than their stated maturity date would indicate; their rate of
prepayment tends to accelerate during periods of declining interest rates or
increased property transfers and, as a result, the proceeds from such
prepayments may be reinvested in instruments which have lower yields. To the
extent such securities were purchased at a premium, such prepayments could
result in capital losses. The issuer of a pass-through mortgage certificate does
not guarantee premiums or market value of its issue.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Funds intend to invest in
collateralized mortgage obligations ("CMOs") which are generally backed by
mortgage pass-through securities or whole mortgage loans. CMOs are usually
structured into classes of varying maturities and principal payment priorities.
The prepayment sensitivity of each class may or may not resemble that of the
CMOs' collateral depending on the maturity and structure of that class. CMOs pay
interest and principal (including prepayments) monthly, quarterly or
semiannually. Most CMOs are
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AAA rated, reflecting the credit quality of the underlying collateral; however,
some classes carry greater price risk than that of their underlying collateral.
The Advisor will invest in CMO classes only if their characteristics and
interest rate sensitivity fit the investment objectives and policies of the
individual Fund.
OTHER MORTGAGE RELATED SECURITIES. In addition to the mortgage pass-through
securities and the CMOs mentioned above, the Funds may also invest in other
mortgage derivative products if the Advisor views them to be consistent with the
overall policies and objectives of the Funds. Current offerings include
"principal only" (PO) and "interest only" (IO) Stripped Mortgage Backed
Securities ("SMBS"). POs and IOs are created when a mortgage pass-through
certificate is separated into two securities - one security representing a claim
to principal distributions and the other representing a claim to the
corresponding interest payments. As prepayments on the underlying mortgage loans
rise (typically when interest rates fall), the PO security holders receive their
principal sooner than expected, which serves to increase the POs' yield. The IO
security holders receive interest payments only on the outstanding principal
amount of the underlying mortgage loans. Therefore, if prepayments on the
notional principal of the IO rise, the IOs' price will fall. As POs generally
benefit from declining interest rates and IOs generally benefit from rising
interest rates, these securities can provide an effective way to stabilize
portfolio value.
SMBS are much more sensitive to prepayment fluctuations than are regular
mortgage-backed securities and therefore involve more risk. Due to the deep
discounted prices of SMBS, any mismatch in actual versus anticipated prepayments
of principal will significantly increase or decrease the yield to maturity. In
general, changes in interest rate levels will have the greatest effect on
prepayments. Sufficiently high prepayment rates could result in purchasers of
IOs not recovering the full amount of their initial investment. The Funds will
not invest more than 10% of their total assets in SMBS.
The Advisor expects that governmental, government related and private entities
may create other mortgage related securities offering mortgage pass-through and
mortgage collateralized instruments in addition to those described herein. As
new types of mortgage related securities are developed and offered to the
investment community, the Advisor will, consistent with the particular Fund's
investment objectives, policies and quality standards, consider making
investments in such new types of mortgage related securities.
ASSET BACKED SECURITIES. Other Asset Backed Securities have been offered to
investors backed by loans such as automobile loans, home equity loans, credit
card receivables, marine loans, recreational vehicle loans and manufactured
housing loans. Typically, Asset Backed Securities represent undivided fractional
interests in a fund whose assets consist of a pool of loans and security
interests in the collateral securing the loans. Payments of principal and
interest on Asset Backed Securities are passed through monthly to certificate
holders. In some cases Asset Backed Securities are divided into senior and
subordinated classes so as to enhance the quality of the senior class.
Underlying loans are subject to prepayment, which may reduce the overall return
to certificate holders. If the subordinated classes are exhausted and the full
amounts due on underlying loans are not received because of unanticipated costs,
depreciation, damage or loss of the collateral securing the contracts, or other
factors, certificate holders may experience delays in payment or losses on Asset
Backed Securities. The Funds may invest in other Asset Backed Securities that
may be developed in the future.
ZERO COUPON AND ORIGINAL ISSUE DISCOUNT ("OID") BONDS. Some securities may be
offered without coupons or with very low coupons. These bonds will typically be
more interest rate sensitive than a comparable maturity current coupon bond. The
majority of zero coupon bonds have been created when a qualified U.S. Government
Security is exchanged for a series of "Strips" through the Federal Reserve Bank.
Strips have been created from, among others, U.S. Treasury, Resolution Trust
Corporation and Financing Corporation securities. A number of U.S. Government
Securities have also been repackaged by broker-dealers or commercial banks into
trusts which issue zero coupon receipts such as U.S. Treasury Receipts ("TRs")
or Treasury Investment Growth Receipts ("TIGRs"). Zero coupon and original issue
discount bonds generate income under generally accepted accounting principles,
but do not generate cash flow, resulting in the possibility that the Funds may
be required to sell portfolio securities to make distributions as required under
Subchapter M of the Internal Revenue Code.
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CORPORATE BONDS. The Funds' investments in corporate debt securities will be
based on credit analysis and value determination by the Advisor. The Advisor's
selection of bonds or industries within the corporate bond sector is determined
by, among other factors, historical yield relationships between bonds or
industries, the current and anticipated credit of the borrower, and call
features, as well as supply and demand factors.
VARIABLE AND FLOATING RATE SECURITIES. The Funds may invest in variable or
floating rate securities which adjust the interest rate paid at periodic
intervals based on an interest rate index. Typically floating rate securities
use as their benchmark an index such as the 1, 3 or 6 month LIBOR, 3, 6 or 12
month Treasury bills, or the Federal Funds rate. Resets of the rates can occur
at predetermined intervals or whenever changes in the benchmark index occur.
MONEY MARKET INSTRUMENTS. Money market instruments will typically represent a
portion of each Fund's portfolio, as funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operational expenses of the Funds. Money market
instruments mature in thirteen months or less from the date of purchase and
include U.S. Government Securities (defined above) and corporate debt securities
(including those subject to repurchase agreements), bankers' acceptances and
certificates of deposit of domestic branches of U.S. banks, and commercial paper
(including variable amount demand master notes). At the time of purchase, money
market instruments will have a short-term rating in the highest category from
any NRSRO or, if not so rated, issued by a corporation having an outstanding
unsecured debt issue rated in the three highest categories of any NRSRO or, if
not so rated, of equivalent quality in the Advisor's opinion. See the Statement
of Additional Information for a further description of money market instruments.
INVESTMENT COMPANIES. Each Fund may invest in the securities of open-end and
closed-end investment companies which are generally authorized to invest in
securities eligible for purchase by the Funds. To the extent the Funds do so,
Fund shareholders would indirectly pay a portion of the operating costs of the
underlying investment companies. These costs include management, brokerage,
shareholder servicing and other operational expenses. Indirectly, then,
shareholders may pay higher operational costs than if they owned the underlying
investment companies directly. In addition, shares of closed-end investment
companies frequently trade at a discount from their net asset values. This
characteristic of shares of a closed-end investment company is a risk separate
and distinct from the risk that its net asset value will decrease.
Neither Fund presently intends to invest more than 10% of its total assets in
securities of other investment companies. In addition, neither Fund will invest
more than 5% of its total assets in securities of any single investment company,
nor will either Fund purchase more than 3% of the outstanding voting securities
of any investment company.
FACTORS TO CONSIDER. Neither Fund is intended to be a complete investment
program and there can be no assurance that the Funds will achieve their
investment objectives. The fixed income securities in which the Funds will
invest are subject to fluctuation in value. Such fluctuations may be based on
movements in interest rates or on changes in the creditworthiness of the
issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Funds' fixed income securities will generally
vary inversely with the direction of prevailing interest rate movements.
Consequently, should interest rates increase or the creditworthiness of an
issuer deteriorate, the value of the Funds' fixed income securities would
decrease in value, which would have a depressing influence on the Funds' net
asset values. The Funds may borrow using their assets as collateral, but only
under certain limited conditions. Borrowing, if done, would tend to exaggerate
the effects of market fluctuations on a Fund's net asset value until repaid.
(See "Borrowing.")
SECURITIES LENDING. Each Fund may lend up to 33% of its portfolio securities to
broker-dealers or other institutional investors. Since there could be a delay in
the recovery of loaned securities or even a loss of rights in collateral
supplied should the borrower fail financially, loans will not be made unless, in
the judgment of the Advisor, the consideration to be earned from such loans
would justify the risk. Collateral will be maintained in excess of 100%
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of the value of the underlying securities, determined by marking to market daily
those securities involved in the lending program. It is expected that the Funds
will use the cash portions of loan collateral to invest in short-term
income-producing securities. These practices may be amended from time to time as
regulatory provisions permit. Securities lending for purposes of discussion in
this Prospectus should not be confused with "Borrowing" below.
BORROWING. Each Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase this limit to 15% of its total assets to
meet redemption requests which might otherwise require untimely disposition of
portfolio holdings. To the extent the Funds borrow for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If while such borrowing is in effect, the value of the particular
Fund's assets declines, the Fund would be forced to liquidate portfolio
securities when it is disadvantageous to do so. The Funds would incur interest
and other transaction costs in connection with such borrowing. A Fund will not
make any additional investments while its outstanding borrowings exceed 5% of
the current value of its total assets.
PORTFOLIO TURNOVER. Portfolio turnover will not be a limiting factor when the
Advisor deems changes appropriate. While portfolio turnover is difficult to
predict in an active fixed income portfolio, it is expected that annual
portfolio turnover will vary between 100% and 500% with respect to each Fund.
Market conditions may dictate, however, a higher rate of turnover in a
particular year. The degree of portfolio turnover affects the brokerage costs of
the Funds and may have an impact on the amount of taxable distributions to
shareholders.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Funds acquire a security and
simultaneously resell it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by the Funds effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. For purposes of the Investment Company Act of 1940 (the "1940
Act"), a repurchase agreement is considered to be a loan collateralized by the
securities subject to the repurchase agreement. Neither Fund will enter into a
repurchase agreement which will cause more than 10% of its assets to be invested
in repurchase agreements which extend beyond seven days and other illiquid
securities.
INVESTMENT LIMITATIONS. For the purpose of limiting the Funds' exposure to risk,
each Fund has adopted certain limitations which, together with its investment
objective, are considered fundamental policies which may not be changed without
shareholder approval. Each Fund will not: (1) issue senior securities, borrow
money or pledge its assets, except that it may borrow from banks as a temporary
measure (a) for extraordinary or emergency purposes, in amounts not exceeding 5%
of either Fund's total assets, or (b) in order to meet redemption requests which
might otherwise require untimely disposition of portfolio securities, in amounts
not exceeding 15% of either Fund's total assets, and may pledge its assets to
secure all such borrowings; (2) invest more than 10% of a Fund's assets in other
illiquid securities, including repurchase agreements maturing in over seven
days, and other securities for which there is no established market or for which
market quotations are not readily available; (3) write, acquire or sell puts,
calls or combinations thereof, or purchase or sell commodities, commodities
contracts, futures contracts or related options; and (4) invest more than 5% of
its total assets in the securities of any one issuer. Other fundamental
investment limitations are listed in the Statement of Additional Information.
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HOW TO PURCHASE SHARES
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There are NO FRONT-END OR CONTINGENT DEFERRED SALES COMMISSIONS CHARGED TO
INVESTORS. Assistance in opening accounts may be obtained from the Administrator
by calling 1-800-443-4249, or by writing to the Funds at the address shown below
for regular mail orders. Assistance is also available through any broker-dealer
authorized to sell shares of the Funds. Such broker-dealer may charge you a fee
for its services. Payment for shares purchased may be made through your account
at the broker-dealer processing your application and order to purchase. Your
investment will purchase shares at a Fund's net asset value next determined
after your order is received by the Funds in proper order as indicated herein.
The minimum initial investment in the Bond Fund is $500,000.
The minimum initial investment in the Short Term Fund is $100,000.
The Funds may, in the Advisor's sole discretion, accept certain accounts with
less than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Administrator, whether by mail, bank
wire or facsimile order from a qualified broker-dealer, prior to 4:00 p.m.,
Eastern time, will purchase shares at the net asset value next determined on
that business day. If your order is not received by 4:00 p.m. Eastern time, your
order will purchase shares at the net asset value determined on the next
business day. (See "How Net Asset Value is Determined.")
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Funds are required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Funds within 60 days.
Investors should be aware that the Funds' account application contains
provisions in favor of the Funds, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Funds or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
appropriate Fund, and mail it to:
The Jamestown Bond Funds
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Funds, at
1-800-443-4249, before wiring funds, to advise the Funds of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
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Star Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For either: The Jamestown Bond Fund or
The Jamestown Short Term Bond Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Funds
receive prior telephone notification to ensure proper credit. Once your wire is
sent you should, as soon as possible thereafter, complete and mail your Account
Application to the Funds as described under "Regular Mail Orders," above.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire (minimum
additional investment of $1,000) at any time by purchasing shares at the then
current net asset value as aforementioned. Before making additional investments
by bank wire, please call the Funds at 1-800-443-4249 to alert the Funds that
your wire is to be sent. Follow the wire instructions above to send your wire.
When calling for any reason, please have your account number ready, if known.
Mail orders should include, when possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, be sure to identify
your account in your letter.
EXCHANGE PRIVILEGE. You may use proceeds from the redemption of shares of either
Fund to purchase Service Group Shares of the other Fund offering shares for sale
in your state of residence. There is no charge for this exchange privilege.
Before making an exchange, you should read the portion of the Prospectus
relating to the Fund into which the shares are to be exchanged. The shares of
the Fund to be acquired will be purchased at the net asset value next determined
after acceptance of the exchange request in writing by the Administrator. The
exchange of shares of one Fund for shares of the other Fund is treated, for
federal income tax purposes, as a sale on which you may realize taxable gain or
loss. To prevent the abuse of the exchange privilege to the disadvantage of
other shareholders, each Fund reserves the right to terminate or modify the
exchange offer upon 60 days' notice to shareholders.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
HOW TO REDEEM SHARES
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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 $100,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 60 days' written notice. If the
shareholder brings his account value up to $100,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Funds, at 1-800-443-4249, or write to the address shown below.
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REGULAR MAIL REDEMPTIONS. Your request should be addressed to The Jamestown Bond
Funds, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request for redemption
must include:
1) your letter of instruction or a stock assignment specifying the Bond Fund
or the Short Term Fund, the account number, and the number of shares or
dollar amount to be redeemed. This request must be signed by all registered
shareholders in the exact names in which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, a Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by certified check, government
check or wire transfer. In such cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
and your redemption proceeds will be mailed to you upon clearance of your check
to purchase shares. The Funds may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading on
the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Funds to dispose of securities owned by them, or
to fairly determine the value of their assets, and (iii) for such other periods
as the Commission may permit.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your bank ($5,000 minimum). Shares of the Funds
may not be redeemed by wire on days in which your bank is not open for business.
Redemption proceeds will only be sent to the bank account or person named in
your Account Application currently on file with the Funds. You can change your
redemption instructions anytime you wish by filing a letter including your new
redemption instructions with the Funds. (See "Signature Guarantees.")
There is currently no charge by the Administrator for wire redemptions. However,
the Administrator reserves the right, upon thirty days' written notice, to make
reasonable charges for wire redemptions. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Funds from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a redemption in an amount over $25,000, or a change in registration
or standing instructions for your account. Signature guarantees are required for
(1) requests to redeem shares having a value of greater than $25,000, (2) change
of registration requests, and (3) requests to establish or change redemption
services other than through your initial account application. Signature
guarantees are acceptable from a member bank of the Federal Reserve System, a
savings and loan institution, credit union, registered broker-dealer or a member
firm of a U.S. Stock Exchange, and must appear on the written request for
redemption or change of registration.
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HOW NET ASSET VALUE IS DETERMINED
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The net asset value of each Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m., Eastern time). Net asset value per share is determined by dividing the
total value of all Fund securities (valued at market value) and other assets,
less liabilities, by the total number of shares then outstanding. Net asset
value includes interest on fixed income securities, which is accrued daily. See
the Statement of Additional Information for further details.
Securities which are traded over-the-counter are priced at the last sale price,
if available, otherwise, at the last quoted bid price. Securities traded on a
national exchange will be valued based upon the closing price on the valuation
date on the principal exchange where the security is traded. It is expected that
fixed income securities will ordinarily be traded in the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service. The prices provided by the pricing service are determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities and developments related
to specific securities. The Trustees will satisfy themselves that such pricing
services consider all appropriate factors relevant to the value of such
securities in determining their fair value. Securities and other assets for
which no quotations are readily available will be valued in good faith at fair
value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
The Funds are diversified series of the Williamsburg Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
July 1988, which was formerly known as The Nottingham Investment Trust. The
Board of Trustees has overall responsibility for management of the Funds under
the laws of Massachusetts governing the responsibilities of trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Funds and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees,
Tattersall Advisory Group, Inc. (the "Advisor") provides the Funds with a
continuous program of supervision of each Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to Investment Advisory Agreements with the Trust. The
Advisor is also responsible for the selection of broker-dealers through which
the Funds execute portfolio transactions, subject to brokerage policies
established by the Trustees, and provides certain executive personnel to the
Funds.
The Advisor is a Virginia corporation controlled by Fred T. Tattersall. Prior to
February 28, 1997, the investment advisor to each Fund was Lowe, Brockenbrough &
Tattersall, Inc. ("LB&T"), of which Mr. Tattersall and Austin Brockenbrough III
were the controlling shareholders. On February 28, 1997, LB&T was reorganized by
means of a corporate restructuring into two separate legal entities: LB&T, owned
by Mr. Brockenbrough, and the Advisor, owned by Mr. Tattersall. The Advisor
manages the fixed-income accounts (including the Funds) formerly managed by
LB&T. In addition to acting as Advisor to the Funds, the Advisor provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals.
Both the Bond Fund and the Short Term Fund are managed on a day to day basis by
a committee comprised of the Advisor's fixed income portfolio management
professionals, with each portfolio professional responsible for designated
specific sectors of the fixed income market. Prior to February 28, 1997, the
Funds were managed by the same group of professionals, but such professionals
were employed by LB&T.
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Compensation of the Advisor is at the annual rate of 0.375% of each Fund's
average daily net assets. For the fiscal year ended March 31, 1998, the Advisor
received $310,227 in investment advisory fees from the Bond Fund (net of fee
waivers), which represented 0.36% of the Bond Fund's average daily net assets.
For the fiscal year ended March 31, 1998, the Advisor waived its entire
investment advisory fee from the Short Term Fund and reimbursed the Fund for
$6,909 of other operating expenses.
The Advisor currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of Service Group Shares
of each Fund to 0.65% per annum of its average daily net assets. However, there
is no assurance that any voluntary fee waivers will continue in the current or
future fiscal years, and expenses of Service Group Shares of each Fund may
therefore exceed 0.65% of its average daily net assets.
The Advisor's address is 6802 Paragon Place, Suite 200, Richmond, Virginia
23230.
ADMINISTRATOR. The Funds have retained Countrywide Fund Services, Inc. (the
"Administrator"), P.O. Box 5354, Cincinnati, Ohio 45201, to provide
administrative, pricing, accounting, dividend disbursing, shareholder servicing
and transfer agent services. The Administrator is a wholly-owned indirect
subsidiary of Countrywide Credit Industries, Inc., a New York Stock Exchange
listed company principally engaged in the business of residential mortgage
lending. The Administrator supplies executive, administrative and regulatory
services, supervises the preparation of tax returns, and coordinates the
preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission and state securities authorities. In
addition, the Administrator calculates daily net asset value per share and
maintains such books and records as are necessary to enable it to perform its
duties.
Each Fund pays the Administrator a base fee for these services at the annual
rate of 0.075% of the average value of its daily net assets up to $200 million
and 0.05% of such assets in excess of $200 million (subject to a minimum fee of
$2,000 per month with respect to each Fund) plus a surcharge of $1,000 per
month. The Administrator also charges the Funds for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses.
CUSTODIAN. The Custodian of the Funds' assets is Star Bank, N.A. (the
"Custodian"). The Custodian's mailing address is 425 Walnut Street, Cincinnati,
Ohio 45202. The Advisor, Administrator or interested persons thereof may have
banking relationships with the Custodian.
OTHER FUND COSTS. The Funds pay all expenses not assumed by the Advisor,
including its fees. Fund expenses include, among others, the fees and expenses,
if any, of the Trustees and officers who are not "affiliated persons" of the
Advisor, fees of the Funds' Custodian, interest expense, taxes, brokerage fees
and commissions, fees and expenses of the Funds' shareholder servicing
operations, fees and expenses of qualifying and registering the Funds' shares
under federal and state securities laws, expenses of preparing, printing and
distributing prospectuses and reports to existing shareholders, auditing and
legal expenses, insurance expenses, association dues, and the expense of
shareholders' meetings and proxy solicitations. The Funds are also liable for
any nonrecurring expenses that may arise such as litigation to which the Funds
may be a party. The Funds may be obligated to indemnify the Trustees and
officers with respect to such litigation. All expenses of a Fund are accrued
daily on the books of such Fund at a rate which, to the best of its belief, is
equal to the actual expenses expected to be incurred by the Fund in accordance
with generally accepted accounting practices.
BROKERAGE. The Funds have adopted brokerage policies which allow the Advisor to
prefer brokers which provide research or other valuable services to the Advisor
and/or the Funds. In all cases, the primary consideration for selection of
broker-dealers through which to execute brokerage transactions will be to obtain
the most favorable price and execution for the Funds. Research services obtained
through the Funds' brokerage transactions may be used by the Advisor for its
other clients; conversely, the Funds may benefit from research services obtained
through the brokerage transactions of the Advisor's other clients. The Statement
of Additional Information contains more information about the management and
brokerage practices of the Funds. It is anticipated that most securities
17
<PAGE>
transactions of the Funds will be handled on a principal, rather than agency,
basis. Fixed income securities are normally traded on a net basis (without
commission) through broker-dealers and banks acting for their own account. Such
firms attempt to profit from buying at the bid price and selling at the higher
asked price of the market, the difference being referred to as the spread.
PLAN OF DISTRIBUTION
- --------------------------------------------------------------------------------
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, Service Group
Shares of the Fund have adopted a plan of distribution (the "Plan") under which
such shares may directly incur or reimburse the Advisor for certain
distribution-related expenses, including payments to securities dealers and
others who are engaged in the sale of such shares and who may be advising
investors regarding the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by the Transfer
Agent; expenses of formulating and implementing marketing and promotional
activities, including direct mail promotions and mass media advertising;
expenses of preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports for recipients
other than existing shareholders of the Funds; expenses of obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of such shares. Pursuant to the Plan, the
Funds may make payments to dealers and other persons who may be advising
investors regarding the purchase, sale or retention of Service Group Shares. For
the fiscal period ended March 31, 1998, the Bond Fund paid $2,672 to dealers and
other persons who may be advising shareholders in this regard.
The annual limitation for payment of expenses pursuant to the Plan is .15% of
the average daily net assets allocable to Service Group Shares. Unreimbursed
expenditures will not be carried over from year to year. In the event the Plan
is terminated by the Funds in accordance with its terms, the Funds will not be
required to make any payments for expenses incurred by the Advisor after the
date the Plan terminates.
Pursuant to the Plan, the Funds may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass-Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Funds or their shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by regulatory authorities, and the
overall return to those shareholders availing themselves of bank services will
be lower than to those shareholders who do not. The Funds may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Funds, no preference will be shown for such
securities.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Funds in general
and, particularly, with respect to dividends and distributions and other
matters. Shareholders should be aware that dividends from the Funds which are
derived in whole or in part from interest on U.S. Government Securities may not
be taxable for state income tax purposes. Other state income tax implications
are not covered, nor is this discussion exhaustive on the subject of federal
income taxation. Consequently, investors should seek qualified tax advice.
18
<PAGE>
Each Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Funds but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed to
them. The Funds intend to declare dividends quarterly, payable in March, June,
September and December, on a date selected by the Trustees. In addition,
distributions may be made annually in December out of any net short-term or
long-term capital gains derived from the sale of securities realized through
October 31 of that year. Each Fund may make a supplemental distribution of
capital gains at the end of its fiscal year. The nature and amount of all
dividends and distributions will be identified separately when tax information
is distributed by the Funds at the end of each year. The Funds intend to
withhold 30% on taxable dividends and any other payments that are subject to
such withholding and are neither citizens nor residents of the U.S.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains for either Fund. Current
practice of the Funds, subject to the discretion of the Board of Trustees, is
for declaration and payment of income dividends during the last week of each
calendar quarter. All dividends and capital gains distributions are reinvested
in additional shares of the Funds unless the shareholder requests in writing to
receive dividends and/or capital gains distributions in cash. That request must
be received by the Funds prior to the record date to be effective as to the next
dividend. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or if received in additional shares of the Funds.
TAX STATUS OF THE FUNDS. If a Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the Funds, see "Additional
Tax Information" in the Statement of Additional Information.
PRINCIPAL SHAREHOLDERS. Rockingham Health Care, Inc., 235 Cantrell Avenue,
Harrisonburg, Virginia, owned of record 36.6% of the Short Term Fund's
outstanding shares as of July 2, 1998 and therefore may be deemed to control the
Fund.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of twelve funds,
or series, to be issued. Shares of all twelve series have currently been issued,
in addition to the Bond Fund and the Short Term Fund described in this
Prospectus: shares of the FBP Contrarian Balanced Fund and the FBP Contrarian
Equity Fund, which are managed by Flippin, Bruce & Porter, Inc. of Lynchburg,
Virginia; shares of The Government Street Equity Fund, The Government Street
Bond Fund and The Alabama Tax Free Bond Fund, which are managed by T. Leavell &
Associates, Inc. of Mobile, Alabama; shares of The Jamestown Balanced Fund, The
Jamestown Equity Fund, The Jamestown International Equity Fund and The Jamestown
Tax Exempt Virginia Fund, which are are managed by Lowe, Brockenbrough &
Tattersall, Inc. of Richmond, Virginia; and shares of The Davenport Equity Fund,
which is managed by Davenport & Company LLC of Richmond, Virginia. The Trustees
are permitted to create additional series at any time.
Shares are freely transferable, have no preemptive or conversion rights and,
when issued, are fully paid and non-assessable. Upon liquidation of the Trust or
a particular Fund of the Trust, holders of the outstanding shares of the Fund
being liquidated shall be entitled to receive, in proportion to the number of
shares of the Fund held by them, the excess of that Fund's assets over its
liabilities. Each outstanding share is entitled to one vote for each full share
and a fractional vote for each fractional share, on all matters which concern
the Trust as a whole. On any matter submitted to a vote of shareholders, all
shares of the Trust then issued and outstanding and entitled to vote,
irrespective of the Fund, shall be voted in the aggregate and not by Fund,
except (i) when required by the 1940 Act, shares shall be voted by individual
Fund; and (ii) when the matter does not affect any interest of a particular
Fund, then only shareholders of the affected Fund or Funds shall be entitled to
vote thereon. Examples of matters which affect only a particular Fund could be a
proposed change in the fundamental investment objectives or policies of that
Fund or a proposed change in the investment advisory agreement for a particular
Fund. Service Group Shares of the Funds shall vote separately on matters
relating to the plan of distribution pursuant to Rule 12b-1 (see "Plan of
Distribution").
19
<PAGE>
The shares of the Funds have noncumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of Trustees can
elect all of the Trustees if they so choose.
The Declaration of Trust provides that the Trustees may hold office
indefinitely, except that: (1) any Trustee may resign or retire; and (2) any
Trustee may be removed with or without cause at any time: (a) by a written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal; (b) by vote of shareholders holding not less than two-thirds of
the outstanding shares of the Trust, cast in person or by proxy at a meeting
called for that purpose; or (c) by a written declaration signed by shareholders
holding not less than two-thirds of the outstanding shares of the Trust and
filed with the Trust's custodian. In case a vacancy or an anticipated vacancy
shall for any reason exist, the vacancy shall be filled by the affirmative vote
of a majority of the remaining Trustees, subject to the provisions of Section
16(a) of the 1940 Act.
Any group of shareholders representing 10% or more of the shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See the Statement of Additional Information for more information.
Shareholder inquiries may be made in writing, addressed to the Funds at the
address shown on the cover.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See the Statement of Additional Information
for further information about the Trust and its shares.
CALCULATION OF PERFORMANCE DATA. From time to time each Fund may advertise its
total return. Each Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance. Total return and yield are computed separately for Service Group
and Institutional Shares. The yield of Institutional Shares is expected to be
higher than the yield of Service Group Shares due to the distribution fees
imposed on Service Group Shares.
The "total return" of a Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period. If a Fund has been operating less than 1, 5 or 10 years, the time period
during which the Fund has been operating is substituted.
In addition, the Funds may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same or
different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative percentage rate of return,
actual year-by-year rates or any combination thereof.
The "yield" of a Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Funds all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated.
20
<PAGE>
THE JAMESTOWN BOND FUNDS
SERVICE GROUP SHARES
Send completed application to:
THE JAMESTOWN BOND FUNDS
Shareholder Services
FUND SHARES APPLICATION P.O. Box 5354
(Please type or print clearly) Cincinnati, OH 45201-5354
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
o Individual
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
o Joint*
-----------------------------------------------------------------
(First Name) (Middle Initial) (Last Name) (Birthdate) (SS#)
*Joint accounts will be registered joint tenants with the right
of survivorship unless otherwise indicated.
o UGMA/UTMA under the
------------------------------------------- -----------
(First Name) (Middle Initial) (Last Name) (State)
Uniform Gifts/Transfers to Minors Act
as Custodian
----------------------------------------------------
(First Name) (Middle Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $500,000 for Bond Fund; $100,000
for Short Term Bond Fund)
o Enclosed is a check payable to the applicable Fund for $___________
(Please indicate Fund below)
o Jamestown Bond Fund o Jamestown Short Term Bond Fund
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 Jamestown Bond Fund or The Jamestown Short Term Bond Fund
For (shareholder name and Social Security or Taxpayer ID Number)
21
<PAGE>
DIVIDEND AND DISTRIBUTION INSTRUCTIONS
o Reinvest all dividends and capital gains distributions
o Reinvest all capital gain distributions; dividends to be paid in cash
o Pay all dividends and capital gain distributions in cash
o By Check o By ACH to my bank or savings account.
PLEASE ATTACH A VOIDED CHECK.
- --------------------------------------------------------------------------------
SIGNATURE AUTHORIZATION - FOR USE BY CORPORATIONS, TRUSTS, PARTNERSHIPS AND
OTHER INSTITUTIONS
Please retain a copy of this document for your files. Any modification of the
information contained in this section will require an Amendment to this
Application Form.
o New Application o Amendment to previous Application dated ______________
Account No._________________
Name of Registered Owner________________________________________________________
The following named person(s) are currently authorized signatories of the
Registered Owner. Any _____ of them is/are authorized under the applicable
governing document to act with full power to sell, assign or transfer securities
of THE JAMESTOWN BOND FUNDS for the Registered Owner and to execute and deliver
any instrument necessary to effectuate the authority hereby conferred:
Name Title Signature
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
__________________________ ______________________ __________________________
THE JAMESTOWN BOND FUNDS, or any agent of the Funds may, without inquiry, rely
upon the instruction of any person(s) purporting to be an authorized person
named above, or in any Amendment received by the Funds or their agent. The Funds
and their Agent shall not be liable for any claims, expenses or losses resulting
from having acted upon any instruction reasonably believed to be genuine.
- --------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
--------------------
REDEMPTION INSTRUCTIONS
Please honor any redemption instruction received via telegraphic or facsimile
believed to be authentic.
o Please mail redemption proceeds to the name and address of record
o Please wire redemptions to the commercial bank account indicated below
(subject to a minimum wire transfer of $5,000)
Name as it appears on the account_______________________________________________
Commercial bank account #_______________________________________________________
ABA Routing #___________________________________________________________________
City, State and Zip in which bank is located____________________________________
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, Tattersall Advisory Group, Inc.,
and their respective officers, employees, agents and affiliates from any and all
liability in the performance of the acts instructed herein provided that such
entities have exercised due care to determine that the instructions are genuine.
I certify under the penalties of perjury that (1) the Social Security Number or
Tax Identification Number shown is correct and (2) I am not subject to backup
withholding. The certifications in this paragraph are required from all
non-exempt persons to prevent backup withholding of 31% of all taxable
distributions and gross redemption proceeds under the federal income tax law.
The Internal Revenue Service does not require my consent to any provision of
this document other than the certifications required to avoid backup
withholding. (Check here if you are subject to backup withholding) [ ].
____________________________________ _______________________________________
APPLICANT DATE JOINT APPLICANT DATE
____________________________________ _______________________________________
OTHER AUTHORIZED SIGNATORY DATE OTHER AUTHORIZED SIGNATORY DATE
22
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
23
<PAGE>
THE JAMESTOWN BOND FUNDS
INVESTMENT ADVISOR
Tattersall Advisory Group, Inc.
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
OFFICERS
Fred T. Tattersall, President
Craig D. Truitt, Vice President
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Funds. This Prospectus does not constitute an offer by the Funds to sell
shares in any State to any person to whom it is unlawful for the Funds to make
such offer in such State.
<PAGE>
THE
JAMESTOWN
FUNDS
NO-LOAD FUNDS
PROSPECTUS
AUGUST 1, 1998
Investment Advisor
Lowe, Brockenbrough & Tattersall, Inc.
Richmond, Virginia
<PAGE>
PROSPECTUS
August 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 & TATTERSALL, 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
- --------------------------------------------------------------------------------
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 & Tattersall, 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, L.P. ("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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
THE JAMESTOWN BALANCED FUND
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
YEARS ENDED MARCH 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.17 $ 14.77 $ 12.76 $ 12.15 $ 12.49
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ............. 0.37 0.35 0.36 0.33 0.30
Net realized and unrealized gains
(losses) on investments ........ 4.31 1.45 2.50 0.90 (0.18)
-------- -------- -------- -------- --------
Total from investment operations ..... 4.68 1.80 2.86 1.23 0.12
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income ......................... (0.37) (0.35) (0.36) (0.33) (0.30)
Distributions from net realized
gains .......................... (2.10) (1.05) (0.49) (0.29) (0.16)
-------- -------- -------- -------- --------
Total distributions .................. (2.47) (1.40) (0.85) (0.62) (0.46)
-------- -------- -------- -------- --------
Net asset value at end of period ..... $ 17.38 $ 15.17 $ 14.77 $ 12.76 $ 12.15
======== ======== ======== ======== ========
Total return ......................... 32.42% 12.29% 22.79% 10.54% 0.94%
======== ======== ======== ======== ========
Net assets at end of period (000's) .. $101,408 $ 70,654 $ 61,576 $ 52,062 $ 46,928
======== ======== ======== ======== ========
Ratio of gross expenses to
average net assets ................ 0.90% 0.91% 0.93% 0.99% 1.01%
Ratio of net expenses to
average net assets(b) ............. 0.87% 0.87% 0.88% 0.96% 0.98%
Ratio of net investment income
to average net assets ............. 2.21% 2.31% 2.52% 2.72% 2.47%
Portfolio turnover rate .............. 90% 58% 72% 95% 123%
Average commission rate per share .... $ 0.0681 $ 0.0667 -- -- --
</TABLE>
<TABLE>
<CAPTION>
JULY 3,
YEARS ENDED MARCH 31, 1989(A) TO
---------------------------------- MARCH 31,
1993 1992 1991 1990
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period $ 11.52 $ 10.88 $ 10.27 $ 10.16
-------- -------- -------- --------
Income from investment operations:
Net investment income ............. 0.31 0.32 0.38 0.25
Net realized and unrealized gains
(losses) on investments ........ 1.11 0.67 0.63 0.10
-------- -------- -------- --------
Total from investment operations ..... 1.42 0.99 1.01 0.35
-------- -------- -------- --------
Less distributions:
Dividends from net investment
income ......................... (0.31) (0.31) (0.39) (0.24)
Distributions from net realized
gains .......................... (0.14) (0.04) (0.01) --
-------- -------- -------- --------
Total distributions .................. (0.45) (0.35) (0.40) (0.24)
-------- -------- -------- --------
Net asset value at end of period ..... $ 12.49 $ 11.52 $ 10.88 $ 10.27
======== ======== ======== ========
Total return ......................... 12.50% 9.16% 9.99% 4.65%(c)
======== ======== ======== ========
Net assets at end of period (000's) .. $ 40,512 $ 23,786 $ 13,180 $ 4,399
======== ======== ======== ========
Ratio of gross expenses to
average net assets ................ 1.07% 1.19% 1.47% 1.61%(c)
Ratio of net expenses to
average net assets(b) ............. 0.99% -- -- --
Ratio of net investment income
to average net assets ............. 2.59% 3.00% 5.52% 5.24%(c)
Portfolio turnover rate .............. 134% 153% 110% 7%
Average commission rate per share .... -- -- -- --
</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>
<TABLE>
<CAPTION>
THE JAMESTOWN EQUITY FUND
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>
<TABLE>
<CAPTION>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
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.
10
<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
11
<PAGE>
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.
12
<PAGE>
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, L.P. ("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.
13
<PAGE>
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.
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.
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.
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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.
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
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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 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).
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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, 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
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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.
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
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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 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
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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 & Tattersall, 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, L.P. ("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, L.P. is the General Partner of Oechsle Advisors. The limited
partners of Oechsle Advisors are Dresdner Asset Management (U.S.A.) Corporation
(a subsidiary of Dresdner Bank A.G.) and the OIA Limited Partnership Interest
Trust (which is beneficially owned by the partners of Oechsle Advisors). The
Managing Partner of Oechsle Group, L.P. is Walter Oechsle. Mr. 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
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<PAGE>
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.
The Advisor currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of the Tax Exempt
Virginia Fund to 0.75% per annum of its average daily net assets. However, there
is no assurance that any voluntary fee waivers will continue in the current or
future fiscal years, and expenses of the Fund may therefore exceed 0.75% of its
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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<PAGE>
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. 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
28
<PAGE>
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.
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
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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.
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
30
<PAGE>
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 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.
31
<PAGE>
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.
32
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
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:
33
<PAGE>
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.
34
<PAGE>
APPENDIX B
- --------------------------------------------------------------------------------
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.
35
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36
<PAGE>
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 Name) (Last Name)
-----------------------------------------------------------------
(Birthdate of Minor) (SS # of Minor)
o For Corporations,
Partnerships,
Trusts, Retire-
ment Plans and
Third Party IRSs
-----------------------------------------------------------------
Name of Corporation or Partnership. If a Trust, include the
name(s) of Trustees in which account will be registered, and the
date of the Trust instrument.
-----------------------------------------------------------------
(Taxpayer Identification Number)
- --------------------------------------------------------------------------------
ADDRESS
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
Telephone__________ U.S. Citizen____ Resident Alien____ Non Resident____________
(Country of Residence)
- --------------------------------------------------------------------------------
DUPLICATE CONFIRMATION ADDRESS (if desired)
Name____________________________________________________________________________
Street or P.O. Box______________________________________________________________
City_______________________________________ State________________ Zip___________
- --------------------------------------------------------------------------------
INITIAL INVESTMENT (Minimum initial investment: $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 Equity Fund (85)
o Jamestown Tax Exempt 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 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 acutomatic investment on:
______________________________________ o the last business day of each month
(Name of Bank) o the 15th day of each month
is hereby authorized to charge to my o both the 15th and last business day
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 accountsignature 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 & Tattersall,
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
<PAGE>
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39
<PAGE>
THE JAMESTOWN FUNDS
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, 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.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE
FLIPPIN, BRUCE & PORTER
FUNDS
FBP Contrarian Equity Fund
FBP Contrarian Balanced Fund
August 1, 1998
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES ........................................ 2
DESCRIPTION OF BOND RATINGS ............................................... 6
INVESTMENT LIMITATIONS .................................................... 9
TRUSTEES AND OFFICERS ..................................................... 10
INVESTMENT ADVISER ........................................................ 15
ADMINISTRATOR ............................................................. 17
DISTRIBUTOR ............................................................... 17
OTHER SERVICES ............................................................ 18
BROKERAGE ................................................................. 18
SPECIAL SHAREHOLDER SERVICES .............................................. 19
PURCHASE OF SHARES ........................................................ 21
REDEMPTION OF SHARES ...................................................... 22
NET ASSET VALUE DETERMINATION ............................................. 22
ALLOCATION OF TRUST EXPENSES .............................................. 23
ADDITIONAL TAX INFORMATION ................................................ 23
CAPITAL SHARES AND VOTING ................................................. 24
CALCULATION OF PERFORMANCE DATA ........................................... 25
FINANCIAL STATEMENTS AND REPORTS .......................................... 27
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of both the FBP Contrarian Equity Fund
and the FBP Contrarian Balanced Fund (the "Funds") dated August 1, 1998. The
Prospectus may be obtained from the Funds, at the address and phone number shown
above, at no charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both the FBP Contrarian Balanced
Fund (the "Balanced Fund"), formerly the FBP Contrarian Fund, and the FBP
Contrarian Equity Fund (the "Equity Fund") unless otherwise noted.
The investment objectives and policies of the Funds are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
WRITING COVERED CALL OPTIONS. The writing of call options by the Funds is
subject to limitations established by each of the exchanges governing the
maximum number of options which may be written or held by a single investor or
group of investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one or
more accounts or through one or more different exchanges or through one or more
brokers. Therefore the number of calls the Funds may write (or purchase in
closing transactions) may be affected by options written or held by other
entities, including other clients of the Adviser. An exchange may order the
liquidation of positions found to be in violation of these limits and may impose
certain other sanctions.
WARRANTS AND RIGHTS. Warrants are essentially options to purchase equity
securities at specific prices and are valid for a specific period of time.
Prices of warrants do not necessarily move in concert with the prices of the
underlying securities. Rights are similar to warrants but generally have a short
duration and are distributed directly by the issuer to its shareholders. Rights
and warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
FOREIGN SECURITIES. Because of the inherent risk of foreign securities over
domestic issues, the Funds will not invest in foreign investments except those
traded domestically as American Depository Receipts (ADRs). The Funds may invest
in foreign securities in order to take advantage of opportunities for growth
where, as with domestic securities, they are depressed in price because they are
out of favor with most of the investment community. The same factors would be
considered in selecting foreign securities as with domestic securities, as
discussed in the Prospectus. Foreign securities investment presents special
considerations not typically associated with investments in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuation in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less
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volume and liquidity and more volatility, less public information, and less
regulation of foreign issuers. Countries have been known to expropriate or
nationalize assets, and foreign investments may be subject to political,
financial or social instability or adverse diplomatic developments. There may be
difficulties in obtaining service of process on foreign issuers and difficulties
in enforcing judgments with respect to claims under the U.S. securities laws
against such issuers. Favorable or unfavorable differences between U.S. and
foreign economies could affect foreign securities values. The U.S. Government
has, in the past, discouraged certain foreign investments by U.S. investors
through taxation or other restrictions and it is possible that such restrictions
could be imposed again.
SECURITIES OF UNSEASONED COMPANIES. The securities of unseasoned companies
(those in business less than three years, including predecessors and, in the
case of bonds, guarantors) may have a limited trading market, which may
adversely affect disposition. If other investors attempt to dispose of such
holdings when the Funds desire to do so, the Funds could receive lower prices
than might otherwise be obtained. Because of the increased risk over larger,
better known companies, each Fund limits its investments in the securities of
unseasoned issuers to no more than 5% of its total assets.
SHARES OF OTHER INVESTMENT COMPANIES. Each Fund may invest up to 5% of its net
assets in shares of other investment companies, including Standard & Poor's
Depository Receipts ("SPDRs") and shares of the DIAMONDS Trust ("DIAMONDs").
SPDRs are exchange-traded securities that represent ownership in the SPDR Trust,
a long-term unit investment trust which has been established to accumulate and
hold a portfolio of common stocks that is intended to track the price
performance and dividend yield of the Standard & Poor's Composite Stock Price
Index. Holders of SPDRs are entitled to receive proportionate quarterly
distributions corresponding to the dividends which accrue on the S&P 500 stocks
in the underlying portfolio, less accumulated expenses of the SPDR Trust.
DIAMONDs operate similarly to SPDRs, except that the DIAMONDS Trust is intended
to track the price performance and dividend yield of the Dow Jones Industrial
Average. SPDRs and DIAMONDs are unlike traditional mutual funds in that they are
available for purchase or sale during the trading day like a share of stock,
rather than at closing net asset value per share. This characteristic of SPDRs
and DIAMONDs is a risk separate and distinct from the risk that its net asset
value will decrease.
To the extent the Funds invest in securities of other investment companies, Fund
shareholders would indirectly pay a portion of the operating costs of such
companies. These costs include management, brokerage, shareholder servicing and
other operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly.
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REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time a
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day, and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Funds' risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Funds hold a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Adviser will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times at least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Funds' custodian either directly or through a securities depository.
U.S. GOVERNMENT SECURITIES. The Balanced Fund may invest in debt obligations
which are issued or guaranteed by the U.S. Government, its agencies and
instrumentalities ("U.S. Government Securities") as described herein. U.S.
Government Securities include the following securities: (1) U.S. Treasury
obligations of various interest rates, maturities and issue dates, such as U.S.
Treasury bills (mature in one year or less), U.S. Treasury notes (mature in one
to seven years), and U.S. Treasury bonds (mature in more than seven years), the
payments of principal and interest of which are all backed by the full faith and
credit of the U.S. Government; (2) obligations issued or guaranteed by U.S.
Government agencies or instrumentalities, some of which are backed by the full
faith and credit of the U.S. Government, e.g., obligations of the Government
National Mortgage Association ("GNMA"), the Farmers Home Administration and the
Export Import
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Bank; some of which do not carry the full faith and credit of the U.S.
Government but which are supported by the right of the issuer to borrow from the
U.S. Government, e.g., obligations of the Tennessee Valley Authority, the U.S.
Postal Service, the Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan mortgage Corporation ("FHLMC"); and some of which are backed
only by the credit of the issuer itself, e.g., obligations of the Student Loan
Marketing Association, the Federal Home Loan Banks and the Federal Farm Credit
Bank; and (3) any of the foregoing purchased subject to repurchase agreements as
described herein. The Balanced Fund does not intend to invest in "zero coupon"
Treasury securities. The guarantee of the U.S. Government does not extend to the
yield or value of the Fund's shares.
Obligations of GNMA, FNMA and FHLMC may include direct pass-through
"Certificates," representing undivided ownership interests in pools of
mortgages. Such Certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the U.S. Government or the issuing
agency. Mortgage Certificates are subject to more rapid prepayment than their
stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates and, as a result, the
proceeds from such prepayments may be reinvested in instruments which have lower
yields. To the extent such securities were purchased at a premium, such
prepayments could result in capital losses. The U.S. Government does not
guarantee premiums and market value of U.S. Government Securities.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Funds. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Funds acquire a Bankers' Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Bankers' Acceptance, therefore, carries the full faith
and credit of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an unsecured
interest-bearing debt obligation of a bank. CDs acquired by the Funds would
generally be in amounts of $100,000 or more. COMMERCIAL PAPER is an unsecured,
short term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity
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generally ranges from two to 270 days and is usually sold on a discounted basis
rather than as an interest-bearing instrument. The Funds will invest in
Commercial Paper only if it is rated in the highest rating category by any
nationally recognized statistical rating organization ("NRSRO") or, if not
rated, the issuer must have an outstanding unsecured debt issue rated in the
three highest categories by any NRSRO or, if not so rated, be of equivalent
quality in the Adviser's assessment. Commercial Paper may include Master Notes
of the same quality. MASTER NOTES are unsecured obligations which are redeemable
upon demand of the holder and which permit the investment of fluctuating amounts
at varying rates of interest. Master Notes are acquired by the Funds only
through the Master Note program of the Funds' custodian, acting as administrator
thereof. The Adviser will monitor, on a continuous basis, the earnings power,
cash flow and other liquidity ratios of the issuer of a Master Note held by the
Funds.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Balanced Fund may purchase
securities on a when-issued basis or for settlement at a future date if the Fund
holds sufficient assets to meet the purchase price. In such purchase
transactions the Fund will not accrue interest on the purchased security until
the actual settlement. Similarly, if a security is sold for a forward date, the
Balanced Fund will accrue the interest until the settlement of the sale.
When-issued security purchases and forward commitments have a higher degree of
risk of price movement before settlement due to the extended time period between
the execution and settlement of the purchase or sale. As a result, the exposure
to the counterparty of the purchase or sale is increased. Although the Balanced
Fund would generally purchase securities on a forward commitment or when-issued
basis with the intention of taking delivery, the Fund may sell such a security
prior to the settlement date if the Adviser felt such action was appropriate. In
such a case the Fund could incur a short-term gain or loss.
DESCRIPTION OF BOND RATINGS
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Adviser believes that the quality of fixed-income securities in which the
Balanced Fund may invest should be continuously reviewed and that individual
analysts give different weightings to the various factors involved in credit
analysis. A rating is not a recommendation to purchase, sell or hold a security
because it does not take into account market value or suitability for a
particular investor. When a security has
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received a rating from more than one NRSRO, each rating is evaluated
independently. Ratings are based on current information furnished by the issuer
or obtained by the NRSROs from other sources that they consider reliable.
Ratings may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS:
Aaa: Bonds rated Aaa are judged to be of the best quality. These bonds carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large in Aa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements that make the long term risks
appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present that suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds rated B generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
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Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S BOND RATINGS:
AAA: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated AA also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures or adverse conditions.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Credit quality in the markets for lower rated fixed income securities can change
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular security. The Adviser believes that the
yields from the lower rated securities purchased by the Balanced Fund will more
than compensate for any additional risk. During periods of
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deteriorating economic conditions or increased interest rates, trading in the
secondary market for lower rated securities may become thin and market liquidity
may be significantly reduced. Under such conditions, valuation of the securities
at fair value becomes more difficult and judgment plays a greater role. Beside
credit and liquidity concerns, prices for lower rated securities may be affected
by legislative and regulatory developments.
INVESTMENT LIMITATIONS
The Funds have adopted the following investment limitations, in addition to
those described in the Prospectus, which cannot be changed without approval by
holders of a majority of the outstanding voting shares of the Funds. A
"majority" for this purpose, means the lesser of (i) 67% of a Fund's outstanding
shares represented in person or by proxy at a meeting at which more than 50% of
its outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, each Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting
securities or of any class of securities of any one issuer;
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Adviser who own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5% of the
outstanding securities of such issuer;
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Funds
may invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things, and the Funds may
invest in certain mortgage backed securities as described in the Prospectus
under "Investment Objectives, Investment Policies and Risk Considerations";
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(6) Underwrite securities issued by others, except to the extent a Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Funds may obtain such short-term
credits as may be necessary for the clearance of transactions);
(8) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no additional
cost securities identical to those sold short.);
(9) Participate on a joint or joint and several basis in any trading account in
securities;
(10) Make loans of money or securities, except that the Funds may invest in
repurchase agreements; or
(11) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors), if more than 5% of its total assets would be invested
in such securities.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation. However, in the case of the
borrowing limitation (the first restriction in the Prospectus) each Fund will,
to the extent necessary, reduce its existing borrowings to comply with the
limitation.
While the Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Adviser has no present intention of engaging
in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
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<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ -------------------- ---------------
<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
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Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.,
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
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Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
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Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary of
Cincinnati, Ohio 45202 Countrywide Investments, Inc. and Countrywide Financial
Services, Inc.; Secretary of Countrywide Investment Trust;
Countrywide Tax-Free Trust and Countrywide Strategic
Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
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<PAGE>
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) 3.8% of the then outstanding shares of the Equity Fund and
3.2% of the then outstanding shares of the Balanced Fund. On the same date, the
Trust Company of Knoxville, P.O. Box 789, Knoxville, Tennessee, 37901, owned of
record 10.1% of the then outstanding shares of the Equity Fund.
INVESTMENT ADVISER
Flippin, Bruce & Porter, Inc. (the "Adviser") supervises each Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement is effective until April 1,
1999 and will be renewed thereafter for one year periods only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees or by vote of a majority of the Funds' outstanding voting
securities, provided the continuance is
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also approved by a majority of the Trustees who are not "interested persons" of
the Trust or the Adviser by vote cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement is terminable without
penalty on sixty days notice by the Board of Trustees of the Trust or by the
Adviser. The Advisory Agreement provides that it will terminate automatically in
the event of its assignment.
Compensation of the Adviser, with respect to each Fund, based upon each Fund's
average daily net assets, is at the following annual rates: On the first $250
million, 0.75%; on the next $250 million, 0.65%; and on assets over $500
million, 0.50%. For the fiscal years ended March 31, 1998, 1997 and 1996, the
Equity Fund paid the Adviser advisory fees of $184,384, $89,290 (which was net
of voluntary fee waivers of $5,300) and $21,816 (net of voluntary fee waivers of
$27,849), respectively. For the fiscal years ended March 31, 1998, 1997 and
1996, the Balanced Fund paid the Adviser advisory fees of $365,477, $293,819 and
$237,270, respectively.
John M. Flippin, John T. Bruce and R. Gregory Porter, III own all the capital
stock of the Adviser and therefore control the Adviser. In addition to acting as
Adviser to the Funds, the Adviser also provides investment advice to
corporations, trusts, pension and profit sharing plans, other business and
institutional accounts and individuals.
The Adviser provides a continuous investment program for the Funds, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Funds. The Adviser determines what securities
and other investments will be purchased, retained or sold by the Funds, and does
so in accordance with the investment objectives and policies of the Funds as
described herein and in the Prospectus. The Adviser places all securities orders
for the Funds, determining with which broker, dealer or issuer to place the
orders.
The Adviser must adhere to the brokerage policies of the Funds in placing all
orders, the substance of which policies are that the Adviser must seek at all
times the most favorable price and execution for all securities brokerage
transactions.
The Adviser also provides, at its own expense, certain Executive Officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Funds to clients of such dealers or others or based on the average balance of
all accounts in the Funds for which such dealers or others are designated as the
person responsible for the account.
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<PAGE>
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Funds and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Funds, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, each Fund pays the
Administrator a fee at the annual rate of 0.20% of the average value of its
daily net assets up to $25,000,000, 0.175% of such assets from $25,000,000 to
$50,000,000 and 0.15% of such assets in excess of $50,000,000; provided,
however, that the minimum fee is $2,000 per month for each Fund. In addition,
the Funds pay out-of-pocket expenses, including but not limited to, postage,
envelopes, checks, drafts, forms, reports, record storage and communication
lines.
For the fiscal years ended March 31, 1998, 1997 and 1996, the Administrator
received fees of $48,798, $26,614 and $24,000, respectively, from the Equity
Fund and $91,365, $75,049 and $61,819, respectively, from the Balanced Fund.
DISTRIBUTOR
CW Fund Distributors, Inc. (the "Distributor"), 312 Walnut Street, Cincinnati,
Ohio 45202, serves as principal underwriter for the Funds pursuant to an
Underwriting Agreement. Shares are sold on a continuous basis by the
Distributor. The Distributor has agreed to use its best efforts to solicit
orders for the sale of Fund shares, but it is not obliged to sell any particular
amount of shares. The Underwriting Agreement provides that, unless sooner
terminated, it will continue in effect for two years from the date of its
execution, and for continuous one-year periods thereafter if such continuance is
approved at least annually (i) by the Board of Trustees or a vote of a majority
of the outstanding shares, and (ii) by a majority of the Trustees who are not
"interested persons" of the Trust or of the Distributor by vote cast in person
at a meeting called for the purpose of voting on such approval.
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<PAGE>
The Underwriting Agreement may be terminated by the Funds at any time, without
the payment of any penalty, by vote of a majority of the Board of Trustees of
the Trust or by vote of a majority of the outstanding shares of the Funds on
sixty days written notice to the Distributor, or by the Distributor at any time,
without the payment of any penalty, on sixty days written notice to the Trust.
The Underwriting Agreement will automatically terminate in the event of its
assignment.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Funds' federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
The Custodian of the Funds' assets is Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Funds
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Funds.
BROKERAGE
It is the Funds' practice to seek the best price and execution for all portfolio
securities transactions. The Adviser (subject to the general supervision of the
Board of Trustees) directs the execution of the Funds' portfolio transactions.
The Trust has adopted a policy which prohibits the Adviser from effecting Fund
portfolio transactions with broker-dealers which may be interested persons of
either Fund, the Trust, any Trustee, officer or director of the Trust or its
investment advisers or any interested person of such persons.
The Balanced Fund's fixed income portfolio transactions will normally be
principal transactions executed in over-the-counter markets and will be executed
on a "net" basis, which may include a dealer markup. The Funds' common stock
portfolio transactions will normally be exchange traded and will be effected
through broker-dealers who will charge brokerage commissions. Options would also
normally be exchange traded involving the payment of commissions. With respect
to securities traded only in the over-the-counter market, orders will be
executed on a principal basis with primary market makers in such securities
except where better prices or executions may be obtained on an agency basis or
by dealing with other than a primary market maker.
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<PAGE>
For the fiscal years ended March 31, 1998, 1997 and 1996, the total amount of
brokerage commissions paid by the Balanced Fund was $20,094, $14,442 and
$16,891, respectively. For the fiscal years ended March 31, 1998, 1997 and 1996,
the total amount of brokerage commissions paid by the Equity Fund was $36,236,
$14,989 and $8,779, respectively.
While there is no formula, agreement or undertaking to do so, the Adviser may
allocate a portion of either Fund's brokerage commission to persons or firms
providing the Adviser with research services, which may typically include, but
are not limited to, investment recommendations, financial, economic, political,
fundamental and technical market and interest rate data, and other statistical
or research services. Much of the information so obtained may also be used by
the Adviser for the benefit of the other clients it may have. Conversely, the
Funds may benefit from such transactions effected for the benefit of other
clients. In all cases, the Adviser is obligated to effect transactions for the
Funds based upon obtaining the most favorable price and execution. Factors
considered by the Adviser in determining whether the Funds will receive the most
favorable price and execution include, among other things: the size of the
order, the broker's ability to effect and settle the transaction promptly and
efficiently and the Adviser's perception of the broker's reliability, integrity
and financial condition.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Funds offer the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Funds, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
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
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<PAGE>
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $25,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see "Signature Guarantees"). A corporation (or partnership)
must also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Funds. Shareholders should be aware that such systematic
withdrawals may deplete or use up entirely their initial investment and may
result in realized long term or short term capital gains or losses. The
Systematic Withdrawal Plan may be terminated at any time by the Funds upon sixty
days' written notice or by a shareholder upon written notice to the Funds.
Applications and further details may be obtained by calling the Funds at
1-800-443-4249, or by writing to:
The Flippin, Bruce & Porter Funds
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Funds may accept securities in lieu of cash in payment
for the purchase of shares of the Funds. The acceptance of such securities is at
the sole discretion of the Adviser based upon the suitability of the securities
accepted for inclusion as a long term investment of the Funds, the marketability
of such securities, and other factors which the Adviser may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future
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<PAGE>
which would, in the opinion of the Trustees, make it undesirable for the Funds
to pay for all redemptions in cash. In such case, the Board of Trustees may
authorize payment to be made in portfolio securities or other property of the
Funds. Securities delivered in payment of redemptions would be valued at the
same value assigned to them in computing the net asset value per share.
Shareholders receiving them would incur brokerage costs when these securities
are sold. An irrevocable election may be filed under Rule 18f-1 of the 1940 Act,
wherein each Fund commits itself to pay redemptions in cash, rather than in
kind, to any shareholder of record of the Funds who redeems during any ninety
day period, the lesser of (a) $250,000 or (b) one percent (1%) of a Fund's net
assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Funds at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (see the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Funds.
PURCHASE OF SHARES
The purchase price of shares of each Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m. Eastern time
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Funds until
confirmed in writing (or unless other arrangements have been made with the
Funds, for example in the case of orders utilizing wire transfer of funds) and
payment has been received.
Each Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
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<PAGE>
EMPLOYEES AND AFFILIATES OF THE FUNDS. The Funds have adopted initial investment
minimums for the purpose of reducing the cost to the Funds (and consequently to
the shareholders) of communicating with and servicing their shareholders.
However, a reduced minimum initial investment requirement of $1,000 applies to
Trustees, officers and employees of the Funds, the Adviser and certain parties
related thereto, including clients of the Adviser or any sponsor, officer,
committee member thereof, or the immediate family of any of them. In addition,
accounts having the same mailing address may be aggregated for purposes of the
minimum investment if they consent in writing to share a single mailing of
shareholder reports, proxy statements (but each such shareholder would receive
his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
Each Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Funds for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Funds.
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Funds, and they have
adopted procedures to do so, as follows. The net asset value of each Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share of each Fund is determined by dividing the total value of all Fund
securities and other assets, less liabilities, by the total number of shares
then outstanding. Net asset value includes interest on fixed income securities,
which is accrued daily.
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<PAGE>
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Adviser
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Funds. General Trust expenses are allocated among
the series, or Funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each Fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each Fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, each Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, each Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities' loans, gains from the disposition of stock or securities, and
certain other income.
While the above requirements are aimed at qualification of the Funds as
regulated investment companies under Subchapter M of the Code, the Funds also
intend to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Funds remain qualified under Subchapter M,
they will not be subject to federal income tax to the extent they distribute
their taxable net investment income and net realized capital gains. A
nondeductible 4% federal excise tax will be imposed on each Fund to the extent
it does not distribute at least 98% of its ordinary taxable income for a
calendar year, plus 98% of its capital gain net taxable income for the one year
period ending each October 31, plus certain undistributed amounts from prior
years. While each Fund intends to distribute its taxable income and capital
gains in a manner so as to avoid imposition of the federal excise and income
taxes, there can be no assurance that the Funds indeed will make sufficient
distributions to avoid entirely imposition of federal excise or income taxes.
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<PAGE>
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUNDS' DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the
Funds derived from net investment income or net short-term capital gains are
taxable to shareholders as ordinary income, whether received in cash or
reinvested in additional shares. Distributions, if any, of long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held. For information on "backup" withholding, see "How to Purchase
Shares" in the Prospectus.
For corporate shareholders, the dividends received deduction, if applicable,
should apply to dividends from each Fund. Each Fund will send shareholders
information each year on the tax status of dividends and disbursements. A
dividend or capital gains distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income taxation. Dividends from net investment income, along with capital gains,
will be taxable to shareholders, whether received in cash or shares and no
matter how long you have held Fund shares, even if they reduce the net asset
value of shares below your cost and thus in effect result in a return of a part
of your investment.
CAPITAL SHARES AND VOTING
Shares of the Funds, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not
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<PAGE>
less than ten percent (10%) of the shares then outstanding may require the
Trustees to call such a meeting and the Trustees are obligated to provide
certain assistance to shareholders desiring to communicate with other
shareholders in such regard (e.g., providing access to shareholder lists, etc.).
In case a vacancy or an anticipated vacancy shall for any reason exist, the
vacancy shall be filled by the affirmative vote of a majority of the remaining
Trustees, subject to the provisions of Section 16(a) of the 1940 Act. The Trust
does not expect to have an annual meeting of shareholders.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, each Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Funds for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of a Fund ("T") is computed by using the redeemable value at the end of a
specified period of time ("ERV") of a hypothetical initial investment of $1,000
("P") over a period of time ("n") according to the formula P(1+T)n = ERV. The
average annual total return quotations for the Equity Fund for the one year
period ended March 31, 1998 and for the period since inception (July 30, 1993)
to March 31, 1998 are 38.90% and 21.43%, respectively. The average annual total
return quotations for the Balanced Fund for the one year period ended March 31,
1998, for the five year period ended March 31, 1998 and for the period since
inception (July 3, 1989) to March 31, 1998 are 30.22%, 15.76% and 12.78%,
respectively.
In addition, each Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation): it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, each Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
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<PAGE>
6
Yield = 2[a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest earned (for the purpose of "a" above) on
debt obligations is computed by reference to the yield to maturity of each
obligation held based on the market value of the obligation (including actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month) period for which yield is being calculated,
or, with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest). The yields of the Balanced Fund and the Equity
Fund for the 30 days ended March 31, 1998 were 2.08% and 0.82%, respectively.
The Funds' performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, each Fund may compare its performance to the S&P 500
Index, which is generally considered to be representative of the performance of
unmanaged common stocks that are publicly traded in the United States securities
markets. Comparative performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service, such as Lipper Analytical
Services, Inc. or Morningstar, Inc., or by one or more newspapers, newsletters
or financial periodicals. Performance comparisons may be useful to investors who
wish to compare the Funds' past performance to that of other mutual funds and
investment products. Of course, past performance is not a guarantee of future
results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
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<PAGE>
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of the Funds' performance before investing. Of course, when
comparing the Funds' performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Funds may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Funds based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Funds may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Funds may also disclose from time to
time information about their portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Funds may also depict the historical performance
of the securities in which the Funds may invest over periods reflecting a
variety of market or economic conditions either alone or in comparison with
alternative investments, performance indices of those investments, or economic
indicators. The Funds may also include in advertisements and in materials
furnished to present and prospective shareholders statements or illustrations
relating to the appropriateness of types of securities and/or mutual funds that
may be employed to meet specific financial goals, such as saving for retirement,
children's education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Funds will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published, and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Funds as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
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<PAGE>
LOGO:
THE FBP
FLIPPIN, BRUCE & PORTER
FUNDS
Annual Report
March 31, 1998
FBP Contrarian Equity Fund
FBP Contrarian Balanced Fund
<PAGE>
Letter to Shareholders May 21, 1998
================================================================================
We are pleased to report on the progress of your Funds and their
investments for the fiscal year ended March 31,1998. The following table
displays the total return (capital change plus income) of the Funds for the past
six months and one year.
Six Twelve
Months Months
FBP Contrarian Equity Fund 11.4% 38.9%
FBP Contrarian Balanced Fund 8.6% 30.2%
Review and Outlook
Returns from equities over the past year have been nothing short of
phenomenal. The S&P 500 Index, a measure of large companies, returned 48.0% with
dividends reinvested. The Value Line Index, a broader measure of companies,
returned 34.8%.
Our markets continued to rise as a result of the best economic and
fundamental factors experienced in many years. The lowest inflation since the
early 60's, strong corporate profit growth and new money flow into stocks were
the drivers. Valuation of stocks is clearly high, with the price earnings ratio
on the S&P 500 Index at 23 times 1998 estimated earnings. This level is
justified by current and expected economic and fundamental conditions although
we question whether the price earnings ratio can move higher from here.
Therefore, we expect positive but somewhat lower returns going forward supported
by earnings increases, continued new money flows and stock selection.
The U.S. economy remains quite strong, with real GDP rising 4.2% during the
first quarter of 1998. Corporate profit growth was about flat as earnings were
depressed by declines in energy, technology and a strong dollar. Over the
balance of the year, we expect these factors to mitigate and such profits to
rise 6% to 8%. The Federal budget, which ran a $300 billion deficit just six
years ago, will report a surplus this year and is estimated to do so for the
next several years. Wages are growing at a rate in excess of 4% due to the
lowest unemployment in many years, causing some concern. However, inflation
should remain calm due to productivity gains, global competition and the dual
effects of lower import prices and reduced exports resulting from problems in
Asia.
The well known demographic trend of our aging population, or "baby boom
generation", continues to provide fuel for the markets through increased savings
that flow to stocks and bonds. For example, net inflows into equity mutual funds
have been $20 to $30 billion per month. This trend of the increasing percentage
of "baby boomers" to our total population is projected to continue until the
middle of the next decade.
We remain focused on our value/contrarian investment approach. While it has
become very difficult to find new opportunities in the biggest companies, we
continue to find attractive investments in more mid-sized companies with modest
valuations that are out of favor with Wall Street. Novell, Shaw Industries and
Paging Network are examples of such companies purchased over the past year. The
Funds benefited from four companies affected by takeover offers over the past
year: Tandem Computer and Digital Equipment by Compaq, PHH Group by Cendant and
Pennzoil by Union Pacific Resources.
Comparative Charts
Performance for each Fund is compared on the next page to the most
appropriate broad-based index, the S&P 500, an unmanaged index of 500 large
common stocks. Over time, this index has outpaced the FBP Contrarian Balanced
Fund which maintains at least 25% bonds. Balanced funds have the growth
potential to outpace inflation, but they will typically be outperformed by a
100% stock index over the long term because of the bond portion of their
portfolios. However, the advantage of the bond portion is that it can make the
return and principal of a balanced fund more stable than a portfolio completely
invested in stocks. Results are also compared to the Consumer Price Index, a
measure of inflation.
Thank you for your continued confidence and investment in The Flippin,
Bruce & Porter Funds.
/s/ John T. Bruce
John T. Bruce, CFA
Vice President-Portfolio Manager
<PAGE>
FBP Contrarian Equity Fund
Comparison of the Change in Value of a $10,000 Investment in the FBP Contrarian
Equity Fund, the Standard & Poor's 500 Index and the Consumer Price Index
Line Chart:
FBP Contrarian Standard & Poor's
Equity Fund 500 Index Consumer Price Index
10000 10000 10000
Sept 93 10305 10299 10040
10510 10538 10110
10308 10139 10161
10379 10181 10222
Sept 94 11141 10678 10314
10996 10676 10376
11702 11716 10460
12798 12834 10554
Sept 95 13890 13854 10596
14340 14688 10649
15158 15477 10735
15846 16171 10853
Sept 96 16229 16671 10901
17604 18061 10991
17833 18545 11068
20318 21783 11088
Sept 97 22241 23414 11137
22079 24086 11206
24770 27446 11220
FBP Contrarian Equity Fund
Average Annual Total Returns
1 Year Since Inception*
38.90% 21.43%
*Initial public offering of shares was July 30, 1993.
Past performance is not predictive of future performance.
FBP Contrarian Balanced Fund
Comparison of the Change in Value of a $10,000 Investment in the FBP Contrarian
Balanced Fund, the Standard & Poor's 500 Index and the Consumer Price Index
Line Chart:
FBP Contrarian Standard & Poor's
Balanced Fund 500 Index Consumer Price Index
10000 10000 10000
Sept 89 9892 11071 10075
9897 11299 10176
9867 10960 10380
10059 11648 10474
Sept 90 8749 10047 10653
9118 10948 10835
10555 12539 10933
10683 12510 10977
Sept 91 11130 13179 11043
11607 14284 11142
12214 13922 11221
12434 14187 11311
Sept 92 12545 14634 11390
13275 15370 11481
13772 16040 11585
13875 16117 11654
Sept 93 14448 16533 11701
14598 16916 11783
14306 16275 11842
14324 16343 11913
Sept 94 15015 17141 12020
14870 17138 12093
15814 18807 12190
17031 20602 12300
Sept 95 18126 22240 12349
18689 23579 12411
19429 24844 12510
20089 25959 12649
Sept 96 20431 26762 12704
21784 28992 12809
21983 29769 12898
24490 34967 12923
Sept 97 26357 37586 12979
26278 38665 13060
28626 44059 13075
FBP Contrarian Balanced Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
30.22% 15.76% 12.78%
*Initial public offering of shares was July 3, 1989.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
FBP CONTRARIAN EQUITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
=============================================================================================================
Shares COMMON STOCKS -- 92.8% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Business Information Services -- 0.9%
9,000 Dun & Bradstreet Corporation............................................... $ 307,688
---------------
Chemicals -- 4.7%
7,000 Dow Chemical Company....................................................... 680,750
11,500 Ethyl Corporation.......................................................... 92,000
16,400 Great Lakes Chemical Corporation........................................... 885,600
---------------
1,658,350
---------------
Commercial Banking -- 11.3%
11,000 Banc One Corporation....................................................... 695,750
6,000 Chase Manhattan Corporation................................................ 809,250
6,500 Citicorp................................................................... 923,000
6,190 First Chicago NBD Corporation.............................................. 545,494
14,000 NationsBank Corporation.................................................... 1,021,125
---------------
3,994,619
---------------
Communications -- 4.0%
11,500 GTE Corporation............................................................ 688,562
8,000 Harris Corporation......................................................... 417,000
20,000 Paging Network, Inc.(a) ................................................... 307,500
---------------
1,413,062
---------------
Computers/Computer Technology Services -- 9.9%
10,500 Compaq Computer Corporation ............................................... 271,688
16,000 Electronic Data Systems Corporation........................................ 734,000
8,000 Hewlett-Packard Company.................................................... 507,000
14,000 International Business Machines Corporation ............................... 1,454,250
50,000 Novell, Inc.(a) ........................................................... 535,938
---------------
3,502,876
---------------
Consumer Goods & Services -- 5.6%
7,900 Owens Corning.............................................................. 283,906
19,000 Philip Morris Companies, Inc............................................... 792,062
40,000 Shaw Industries, Inc....................................................... 587,500
10,000 UST, Inc................................................................... 322,500
---------------
1,985,968
---------------
Drugs/Medical Equipment -- 13.6%
14,800 Allergan, Inc.............................................................. 562,400
12,500 Amgen, Inc.(a) ............................................................ 760,937
8,000 Bristol-Myers Squibb Company .............................................. 834,500
6,000 Johnson & Johnson ........................................................ 439,875
25,000 Mallinckrodt, Inc.......................................................... 987,500
5,000 Merck & Company, Inc.(b) ................................................. 641,875
13,000 Pharmacia & Upjohn, Inc.................................................... 568,750
---------------
4,795,837
---------------
Durable Goods -- 6.2%
16,000 Digital Equipment Corporation(a) ......................................... 837,000
4,000 General Electric Company................................................... 344,750
12,500 Genuine Parts Company...................................................... 476,562
17,000 Waste Management, Inc.(b) ................................................ 523,812
---------------
2,182,124
---------------
<PAGE>
<CAPTION>
FBP CONTRARIAN EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
=============================================================================================================
Shares COMMON STOCKS -- 92.8% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Electricity -- 2.1%
20,800 Unicom Corporation ........................................................ $ 728,000
---------------
Finance -- 4.1%
16,800 SLM Holding Corporation.................................................... 732,900
50,000 United Dominion Realty..................................................... 725,000
---------------
1,457,900
---------------
Hotels -- 1.6%
26,200 Circus Circus Enterprises, Inc.(a)(b) ..................................... 550,200
---------------
Insurance -- 3.2%
8,800 Aetna Life & Casualty Company ............................................. 734,250
4,400 Marsh & McLennan Companies, Inc............................................ 384,175
---------------
........................................................................ 1,118,425
---------------
Oil & Oil Drilling -- 4.9%
8,000 Equitable Resources, Inc................................................... 266,000
24,000 Oryx Energy Company(a) .................................................... 624,000
5,000 Pennzoil Company........................................................... 323,125
7,000 Schlumberger Limited(b) .................................................. 530,250
---------------
........................................................................ 1,743,375
---------------
Paper & Forest Products -- 1.2%
7,300 Weyerhaeuser Company....................................................... 412,450
---------------
Photographical Products -- 2.6%
14,000 Eastman Kodak Company...................................................... 908,250
---------------
Printing -- 1.9%
17,000 R. R. Donnelley & Sons Company............................................. 698,062
---------------
Retail Stores -- 12.2%
27,000 Apple South, Inc........................................................... 399,938
15,000 Circuit City Stores, Inc.(b) .............................................. 641,250
16,000 Cracker Barrel Old Country Store, Inc...................................... 640,000
50,000 K-Mart Corporation(a)(b) .................................................. 834,375
30,000 Toys R Us, Inc.(a) ........................................................ 901,875
18,200 Wal-Mart Stores, Inc....................................................... 924,788
---------------
........................................................................ 4,342,226
---------------
Transportation -- 2.0%
10,000 FDX Corporation(a) ....................................................... 711,250
---------------
Travel & Investment Services -- 0.8%
3,000 American Express Company................................................... 275,438
---------------
Total Common Stocks (Cost $22,713,473) ................................... $ 32,786,100
---------------
<PAGE>
<CAPTION>
FBP CONTRARIAN EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
=============================================================================================================
Face
Amount REPURCHASE AGREEMENTS(c) -- 6.3% Value
- -------------------------------------------------------------------------------------------------------------
$ 2,212,000 Star Bank N.A., 5.25%, dated 03/31/98, due 04/01/98,
repurchase proceeds $2,212,323 (Cost $2,212,000)........................... $ 2,212,000
---------------
Total Investments and Repurchase Agreements at Value-- 99.1% .............. $ 34,998,100
Other Assets in Excess of Liabilities-- 0.9% .............................. 324,216
---------------
Net Assets-- 100.0% ....................................................... $ 35,322,316
===============
(a) Non-income producing security.
(b) Security covers a call option.
(c) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/24; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/22; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/24. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985.
The Fund's pro-rata interest in the collateral at March 31, 1998 was
$2,286,970.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
============================================================================================================
FBP CONTRARIAN EQUITY FUND
SCHEDULE OF OPEN OPTIONS WRITTEN
March 31, 1998
============================================================================================================
Market
Value of Premiums
Contracts COVERED CALL OPTIONS Options Received
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Circuit City Stores, Inc.,
21 10/17/98 at $45...................................... $ 7,350 $ 13,303
Circus Circus Enterprises, Inc.,
20 09/19/98 at $25...................................... 2,000 7,170
K-Mart Corporation,
25 09/19/98 at $15...................................... 6,094 6,630
Merck & Company, Inc.,
12 07/18/98 at $130..................................... 9,450 11,652
Schlumberger Limited,
20 08/22/98 at $80...................................... 10,750 12,919
Waste Management, Inc.,
27 06/20/98 at $50...................................... 9,450 11,012
-------------- ---------------
..................................................... $ 45,094 $ 62,686
============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
=============================================================================================================
Shares COMMON STOCKS -- 68.2% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Business Information Services -- 0.5%
9,000 Dun & Bradstreet Corporation............................................... $ 307,688
---------------
Chemicals -- 2.8%
8,000 Dow Chemical Company....................................................... 778,000
20,000 Ethyl Corporation.......................................................... 160,000
11,700 Great Lakes Chemical Corporation........................................... 631,800
---------------
1,569,800
---------------
Commercial Banking -- 8.0%
14,949 Banc One Corporation....................................................... 945,524
7,500 Chase Manhattan Corporation................................................ 1,011,562
6,125 Citicorp .................................................................. 869,750
5,430 First Chicago NBD Corporation.............................................. 478,519
16,000 NationsBank Corporation.................................................... 1,167,000
---------------
4,472,355
---------------
Communications -- 4.1%
15,000 GTE Corporation............................................................ 898,125
17,000 Harris Corporation......................................................... 886,125
32,000 Paging Network, Inc.(a) ................................................... 492,000
---------------
2,276,250
---------------
Computers/Computer Technology Services -- 7.3%
11,550 Compaq Computer Corporation ............................................... 298,856
18,000 Electronic Data Systems Corporation........................................ 825,750
6,100 Hewlett-Packard Company.................................................... 386,588
20,200 International Business Machines Corporation .............................. 2,098,275
45,000 Novell, Inc.(a) ........................................................... 482,344
---------------
4,091,813
---------------
Consumer Goods & Services -- 3.1%
7,200 Owens Corning.............................................................. 258,750
19,000 Philip Morris Companies, Inc. ............................................. 792,062
29,000 Shaw Industries, Inc....................................................... 425,938
8,500 UST, Inc. ................................................................. 274,125
---------------
1,750,875
---------------
Drugs/Medical Equipment -- 9.4%
19,000 Allergan, Inc.............................................................. 722,000
14,000 Amgen, Inc.(a) ............................................................ 852,250
6,000 Bristol-Myers Squibb Company .............................................. 625,875
14,600 Johnson & Johnson ......................................................... 1,070,362
18,000 Mallinckrodt, Inc.......................................................... 711,000
4,200 Merck & Company, Inc.(b) .................................................. 539,175
16,400 Pharmacia & Upjohn, Inc.................................................... 717,500
---------------
5,238,162
---------------
Durable Goods -- 4.8%
15,000 Digital Equipment Corporation(a) .......................................... 784,688
11,200 General Electric Company................................................... 965,300
11,950 Genuine Parts Company...................................................... 455,594
16,000 Waste Management, Inc.(b) ................................................. 493,000
---------------
2,698,582
---------------
<PAGE>
<CAPTION>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS (Continued)
=============================================================================================================
Shares COMMON STOCKS -- 68.2% Value
- -------------------------------------------------------------------------------------------------------------
Electricity -- 1.7%
27,000 Unicom Corporation......................................................... $ 945,000
---------------
Finance -- 3.4%
26,950 SLM Holding Corporation ................................................... 1,175,694
50,000 United Dominion Realty..................................................... 725,000
---------------
1,900,694
---------------
Insurance -- 3.9%
8,300 Aetna Life & Casualty Company ............................................. 692,531
4,912 American International Group .............................................. 618,605
10,000 Marsh & McLennan Companies, Inc............................................ 873,125
---------------
2,184,261
---------------
Hotels -- 1.2%
31,000 Circus Circus Enterprises, Inc.(a)(b) .................................... 651,000
---------------
Oil & Oil Drilling -- 3.4%
6,800 Equitable Resources, Inc................................................... 226,100
28,000 Oryx Energy Company(a) .................................................... 728,000
5,600 Pennzoil Company........................................................... 361,900
8,000 Schlumberger Limited(b) ................................................... 606,000
---------------
1,922,000
---------------
Paper & Forest Products -- 1.0%
10,000 Weyerhaeuser Company....................................................... 565,000
---------------
Photographical Products -- 1.3%
11,000 Eastman Kodak Company ..................................................... 713,625
---------------
Printing -- 1.2%
17,000 R. R. Donnelley & Sons Company............................................. 698,062
---------------
Retail Stores -- 8.0%
33,300 Apple South, Inc........................................................... 493,256
10,400 Circuit City Stores, Inc.(b) .............................................. 444,600
18,300 Cracker Barrel Old Country Store, Inc...................................... 732,000
68,000 K-Mart Corporation(a)(b) .................................................. 1,134,750
19,000 Toys R Us, Inc.(a) ........................................................ 571,187
21,500 Wal-Mart Stores, Inc....................................................... 1,092,469
---------------
........................................................................ 4,468,262
---------------
Transportation -- 1.7%
13,000 FDX Corporation(a) ........................................................ 924,625
---------------
Travel & Investment Services -- 1.4%
8,300 American Express Company .................................................. 762,044
---------------
Total Common Stocks (Cost $19,608,070) ................................... $ 38,140,098
---------------
<PAGE>
<CAPTION>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS (Continued)
=============================================================================================================
Par Value U.S. GOVERNMENT OBLIGATIONS-- 16.4% Value
- -------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes -- 16.4%
$ 500,000 5.375%, due 05/31/98.................................................... $ 499,844
500,000 5.875%, due 08/15/98.................................................... 500,625
1,000,000 5.50%, due 02/28/99..................................................... 999,375
500,000 6.75%, due 06/30/99..................................................... 507,032
1,000,000 5.75%, due 09/30/99..................................................... 1,001,875
500,000 7.75%, due 01/31/00..................................................... 518,281
1,000,000 5.875%, due 06/30/00.................................................... 1,005,625
500,000 5.625%, due 02/28/01.................................................... 499,532
750,000 6.125%, due 12/31/01.................................................... 760,781
500,000 6.625% due 04/30/02..................................................... 516,719
500,000 6.375%, due 08/15/02.................................................... 513,281
500,000 6.25%, due 02/15/03..................................................... 512,031
500,000 7.25%, due 05/15/04..................................................... 539,532
750,000 7.00%, due 07/15/06..................................................... 810,000
---------------
Total U.S. Government Obligations (Cost $8,974,920) ....................... $ 9,184,533
---------------
<PAGE>
<CAPTION>
=============================================================================================================
Par Value CORPORATE BONDS -- 10.6% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Finance -- 4.4%
Bankers Trust New York Corporation,
$ 750,000 7.375%, due 05/01/08.................................................... $ 779,709
Green Tree Financial Corporation,
750,000 7.55%, due 10/15/1999................................................... 757,078
Macsaver Financial Services,
500,000 7.60%, due 08/01/2007................................................... 461,643
Signet Banking Corporation,
150,000 9.625%, due 06/01/99.................................................... 155,835
United Dominion Realty,
300,000 7.25%, due 04/01/99..................................................... 300,610
---------------
2,454,875
---------------
Industrial -- 1.5%
Baxter International, Inc.,
75,000 9.25%, due 12/15/99..................................................... 78,787
Dayton Hudson Corporation,
52,000 9.875%, due 06/01/17.................................................... 54,689
Hilton Hotels Corporaton,
300,000 7.70%, due 07/15/02..................................................... 306,842
USG Corporation,
375,000 8.75%, due 03/01/17..................................................... 390,000
---------------
830,318
---------------
<PAGE>
<CAPTION>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS (Continued)
=============================================================================================================
Par Value CORPORATE BONDS -- 10.6% Value
- -------------------------------------------------------------------------------------------------------------
Utilities -- 4.7%
Dayton Power & Light Inc.,
$ 500,000 8.40%, due 12/01/22..................................................... $ 533,823
Niagara Mohawk Power,
500,000 9.50%, due 03/01/21..................................................... 531,561
US WEST Communications Group,
750,000 7.30%, due 01/15/07..................................................... 787,948
West Penn Power Company,
750,000 8.875%, due 02/01/21.................................................... 787,930
---------------
........................................................................ 2,641,262
---------------
Total Corporate Bonds (Cost $5,726,928) .................................. $ 5,926,455
---------------
Total Investments at Value (Cost $34,309,918)-- 95.2% .................... $ 53,251,086
---------------
<CAPTION>
=============================================================================================================
Face
Amount REPURCHASE AGREEMENTS(c) -- 4.6% Value
- -------------------------------------------------------------------------------------------------------------
$ 2,576,000 Star Bank N.A., 5.25%, dated 03/31/98, due 04/01/98,
repurchase proceeds $2,576,376 (Cost $2,576,000)........................ $ 2,576,000
---------------
Total Investments and Repurchase Agreements at Value-- 99.8% .............. $ 55,827,086
Other Assets in Excess of Liabilities -- 0.2% ............................. 113,243
---------------
Net Assets-- 100.0% ....................................................... $ 55,940,329
===============
(a) Non-income producing security.
(b) Security covers a call option.
(c) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/24; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/22; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/24. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985.
The Fund's pro-rata interest in the collateral at March 31, 1998 was
$2,634,358.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FBP CONTRARIAN BALANCED FUND
SCHEDULE OF OPEN OPTIONS WRITTEN
March 31, 1998
============================================================================================================
Market
Value of Premiums
Contracts COVERED CALL OPTIONS Options Received
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Circuit City Stores, Inc.,
14 10/17/98 at $45...................................... $ 4,900 $ 8,869
Circus Circus Enterprises, Inc.,
30 09/19/98 at $25...................................... 3,000 10,755
K-Mart Corporation,
35 09/19/98 at $15...................................... 8,531 9,282
Merck & Company, Inc.,
10 07/18/98 at $130..................................... 7,875 9,705
Schlumberger Limited,
25 08/22/98 at $80...................................... 13,438 16,149
Waste Management, Inc.,
30 06/20/98 at $50...................................... 10,500 12,236
-------------- ---------------
$ 48,244 $ 66,996
-------------- ---------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE FLIPPIN, BRUCE & PORTER FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1998
<CAPTION>
=============================================================================================================
FBP FBP
Contrarian Contrarian
Equity Balanced
Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities:
At acquisition cost................................................. $ 22,713,473 $ 34,309,918
============== ===============
At value (Note 1)................................................... $ 32,786,100 $ 53,251,086
Investments in repurchase agreements (Note 1)......................... 2,212,000 2,576,000
Cash.................................................................. 530 314
Interest receivable................................................... 322 241,777
Dividends receivable.................................................. 51,677 58,441
Receivable for capital shares sold.................................... 404,817 7,534
Other assets.......................................................... 398 4,803
-------------- ---------------
TOTAL ASSETS........................................................ 35,455,844 56,139,955
-------------- ---------------
LIABILITIES
Dividends payable..................................................... 10,289 16,923
Distributions payable................................................. 43,348 18,261
Payable for capital shares redeemed................................... 1,500 66,684
Accrued advisory fees (Note 3)........................................ 21,548 34,971
Accrued administration fees (Note 3).................................. 5,475 8,430
Other accrued expenses................................................ 6,274 6,113
Covered call options, at value (Notes 1 and 4)
(premiums received $62,686 and $66,996, respectively) .............. 45,094 48,244
-------------- ---------------
TOTAL LIABILITIES................................................... 133,528 199,626
-------------- ---------------
NET ASSETS .............................................................. $ 35,322,316 $ 55,940,329
============== ===============
Net assets consist of:
Paid-in capital....................................................... $ 25,230,793 $ 36,976,286
Undistributed net investment income................................... 1,068 4,103
Accumulated net realized gains from security transactions............. 236 20
Net unrealized appreciation on investments............................ 10,090,219 18,959,920
-------------- ---------------
Net assets............................................................... $ 35,322,316 $ 55,940,329
============== ===============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value)............................................. 1,646,962 2,931,941
============== ===============
Net asset value, offering price and redemption price per share (Note 1).. $ 21.45 $ 19.08
============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE FLIPPIN, BRUCE & PORTER FUNDS
STATEMENTS OF OPERATIONS
Year Ended March 31, 1998
<CAPTION>
=============================================================================================================
FBP FBP
Contrarian Contrarian
Equity Balanced
Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest.............................................................. $ 142,226 $ 1,097,392
Dividends............................................................. 390,033 544,381
-------------- ---------------
TOTAL INVESTMENT INCOME............................................. 532,259 1,641,773
-------------- ---------------
EXPENSES
Investment advisory fees (Note 3)..................................... 184,384 365,477
Administration fees (Note 3).......................................... 48,798 91,365
Registration fees..................................................... 14,105 11,191
Professional fees..................................................... 9,021 12,521
Printing of shareholder reports....................................... 5,144 5,629
Custodian fees........................................................ 4,638 6,640
Trustees' fees and expenses........................................... 5,405 5,405
Pricing costs......................................................... 1,361 4,406
Other expenses........................................................ 3,072 4,161
-------------- ---------------
TOTAL EXPENSES...................................................... 275,928 506,795
-------------- ---------------
NET INVESTMENT INCOME ................................................... 256,331 1,134,978
-------------- ---------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions......................... 691,750 2,146,818
Net realized gains on option contracts written........................ 11,978 31,530
Net change in unrealized appreciation/depreciation on investments..... 6,925,224 9,325,106
-------------- ---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................ 7,628,952 11,503,454
-------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS .............................. $ 7,885,283 $ 12,638,432
============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE FLIPPIN, BRUCE & PORTER FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
============================================================================================================
FBP Contrarian FBP Contrarian
Equity Fund Balanced Fund
Year Year Year Year
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income....................... $ 256,331 $ 190,264 $ 1,134,978 $ 1,042,511
Net realized gains on:
Security transactions..................... 691,750 309,235 2,146,818 1,386,944
Option contracts written.................. 11,978 11,061 31,530 41,494
Net change in unrealized appreciation/
depreciation on investments............... 6,925,224 1,419,505 9,325,106 2,379,725
------------ -------------- ------------- --------------
Net increase in net assets from operations..... 7,885,283 1,930,065 12,638,432 4,850,674
------------ -------------- ------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income.................. ( 256,571) ( 190,839 ) ( 1,138,576 ) ( 1,041,994 )
From net realized gains..................... ( 865,431) ( 303,199 ) ( 2,862,386 ) ( 1,212,659 )
------------ -------------- ------------- --------------
Decrease in net assets from
distributions to shareholders............... ( 1,122,002) ( 494,038 ) ( 4,000,962 ) ( 2,254,653 )
------------ -------------- ------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold................... 12,609,930 7,247,789 5,859,836 5,369,393
Net asset value of shares issued in reinvestment
of distributions to shareholders.......... 963,147 415,382 3,827,435 2,148,852
Payments for shares redeemed................ ( 1,354,310) ( 1,848,844 ) ( 3,238,764 ) ( 4,900,645 )
------------ -------------- ------------- --------------
Net increase in net assets from
capital share transactions.................. 12,218,767 5,814,327 6,448,507 2,617,600
------------ -------------- ------------- --------------
TOTAL INCREASE IN NET ASSETS .................. 18,982,048 7,250,354 15,085,977 5,213,621
NET ASSETS
Beginning of year........................... 16,340,268 9,089,914 40,854,352 35,640,731
------------ -------------- ------------- --------------
End of year - (including undistributed net
investment income of $1,068, $1,308,
$4,103 and $7,701, respectively).......... $ 35,322,316 $ 16,340,268 $55,940,329 $40,854,352
============ ============== ============= ==============
Capital share activity:
Sold........................................ 651,600 467,711 323,989 346,188
Reinvested.................................. 48,841 27,437 211,834 140,100
Redeemed.................................... ( 69,562) ( 118,787 ) ( 177,851 ) ( 310,312 )
------------ -------------- ------------- --------------
Net increase in shares outstanding.......... 630,879 376,361 357,972 175,976
Shares outstanding, beginning of year....... 1,016,083 639,722 2,573,969 2,397,993
------------ -------------- ------------- --------------
Shares outstanding, end of year............. 1,646,962 1,016,083 2,931,941 2,573,969
============ ============== ============= ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FBP CONTRARIAN EQUITY FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
=============================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout
Each Period
=============================================================================================================
July 30,
Years Ended March 31, 1993(a) To
March 31,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $ 16.08 $ 14.21 $ 11.21 $ 10.15 $ 10.00
----------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income........................ 0.19 0.22 0.24 0.21 0.12
Net realized and unrealized gains on investments 5.98 2.24 3.05 1.14 0.19
----------- ---------- ---------- ---------- ----------
Total from investment operations................ 6.17 2.46 3.29 1.35 0.31
----------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income......... ( 0.19 ) ( 0.22) ( 0.24) ( 0.23) ( 0.10)
Distributions from net realized gains........ ( 0.61 ) ( 0.37) ( 0.05) ( 0.06) ( 0.06)
----------- ---------- ---------- ---------- ----------
Total distributions............................. ( 0.80 ) ( 0.59) ( 0.29) ( 0.29) ( 0.16)
----------- ---------- ---------- ---------- ----------
Net asset value at end of period................ $ 21.45 $ 16.08 $ 14.21 $ 11.21 $ 10.15
=========== ========== ========== ========== ==========
Total return.................................... 38.90% 17.65% 29.54% 13.52% 4.59%(c)
=========== ========== ========== ========== ==========
Net assets at end of period (000's)............. $ 35,322 $ 16,340 $ 9,090 $ 5,323 $ 3,135
=========== ========== ========== ========== ==========
Ratio of net expenses to average net
assets(b)..................................... 1.12% 1.21% 1.25% 1.25% 1.25%(c)
Ratio of net investment income to average
net assets.................................... 1.04% 1.50% 1.89% 2.15% 1.98%(c)
Portfolio turnover rate......................... 10% 9% 12% 9% 7%
Average commission rate per share............... $ 0.0852 $ 0.0925 $ -- $ -- $ --
(a) Commencement of operations.
(b) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.25%, 1.67%, 2.27% and
3.10%(c) for the periods ended March 31, 1997, 1996, 1995 and 1994,
respectively.
(c) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FBP CONTRARIAN BALANCED FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
=============================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
=============================================================================================================
Years Ended March 31,
- -------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 15.87 $ 14.86 $ 12.80 $ 12.19 $ 12.10
----------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income........................ 0.41 0.42 0.43 0.38 0.33
Net realized and unrealized gains
on investments............................. 4.26 1.49 2.44 0.87 0.15
----------- ---------- ---------- ---------- ----------
Total from investment operations................ 4.67 1.91 2.87 1.25 0.48
----------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income......... ( 0.41 ) ( 0.42) ( 0.43) ( 0.39) ( 0.32)
Distributions from net realized gains........ ( 1.05 ) ( 0.48) ( 0.38) ( 0.25) ( 0.07)
----------- ---------- ---------- ---------- ----------
Total distributions............................. ( 1.46 ) ( 0.90) ( 0.81) ( 0.64) ( 0.39)
----------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 19.08 $ 15.87 $ 14.86 $ 12.80 $ 12.19
=========== ========== ========== ========== ==========
Total return.................................... 30.22% 13.15% 22.86% 10.54% 3.88%
=========== ========== ========== ========== ==========
Net assets at end of year (000's)............... $ 55,940 $ 40,854 $ 35,641 $ 25,976 $ 21,969
=========== ========== ========== ========== ==========
Ratio of net expenses to average net assets..... 1.04% 1.08% 1.17% 1.17%(a) 1.25%(b)
Ratio of net investment income to average
net assets.................................... 2.33% 2.65% 3.04% 3.10% 2.64%
Portfolio turnover rate......................... 21% 24% 17% 14% 28%
Average commission rate per share............... $ 0.0630 $ 0.0779 $ -- $ -- $ --
(a) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's custodian fees for the year ended March 31, 1995 was paid
through an arrangement with a third-party broker-dealer who was compensated
through commission trades. Payment of the fees was based on a percentage of
commissions earned. Absent expenses reimbursed through the directed
brokerage arrangement, the ratio of expenses to average net assets would
have been 1.20% for the year ended March 31, 1995.
(b) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 1.36% for the year ended
March 31, 1994.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE FLIPPIN, BRUCE & PORTER FUNDS
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
================================================================================
1. Significant Accounting Policies
The FBP Contrarian Equity Fund and the FBP Contrarian Balanced Fund (the Funds)
are no-load, diversified series of the Williamsburg Investment Trust (the
Trust), an open-end management investment company registered under the
Investment Company Act of 1940, as amended.
The Trust was organized as a Massachusetts business trust on July 18, 1988.
The FBP Contrarian Equity Fund seeks long-term growth of capital through
investment in a diversified portfolio comprised primarily of equity securities,
with current income as a secondary objective.
The FBP Contrarian Balanced Fund seeks long-term capital appreciation and
current income through investment in a balanced portfolio of equity and fixed
income securities assuming a moderate level of investment risk.
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- The Funds' portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded. It is expected that fixed income securities will ordinarily be traded
on the over-the-counter market, and common stocks will ordinarily be traded on a
national securities exchange, but may also be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service.
Repurchase agreements -- The Funds generally enter into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market value. At the time the Funds
enter into the joint repurchase agreement, the Funds take possession of the
underlying securities and the seller agrees that the value of the underlying
securities, including accrued interest, will at all times be equal to or exceed
the face amount of the repurchase agreement. In addition, each Fund actively
monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of each Fund's assets, less liabilities, by
the number of shares outstanding. The offering price and redemption price per
share of each Fund is equal to the net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized in accordance with income tax regulations which approximate
generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment income
are declared and paid quarterly to shareholders of each Fund. Net realized
short-term capital gains, if any, may be distributed throughout the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income distributions and capital gain distributions are determined in
accordance with income tax regulations.
Security transactions -- Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
<PAGE>
Options transactions -- The Funds may write covered call options for which
premiums are received and are recorded as liabilities, and are subsequently
valued daily at the closing prices on their primary exchanges. Premiums received
from writing options which expire are treated as realized gains. Premiums
received from writing options which are exercised increase the proceeds used to
calculate the realized gain or loss on the sale of the security. If a closing
purchase transaction is used to terminate the Funds' obligation on a call, a
gain or loss will be realized, depending upon whether the price of the closing
purchase transaction is more or less than the premium previously received on the
call written.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of each Fund as of March 31, 1998:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FBP Contrarian FBP Contrarian
Equity Fund Balanced Fund
- --------------------------------------------------------------------------------
<S> <C> <C>
Gross unrealized appreciation............. $ 10,236,576 $ 19,134,146
Gross unrealized depreciation............. ( 146,357 ) ( 174,226 )
-------------- ---------------
Net unrealized appreciation............... $ 10,090,219 $ 18,959,920
============== ===============
Federal income tax cost................... $ 22,713,473 $ 34,309,918
============== ===============
- --------------------------------------------------------------------------------
</TABLE>
2. Investment Transactions
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $13,820,179 and $2,143,173, respectively, for the FBP Contrarian Equity Fund
and $14,273,947 and $9,747,261, respectively, for the FBP Contrarian Balanced
Fund.
3. Transactions with Affiliates
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by Flippin, Bruce & Porter, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, each Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .75% of its
average daily net assets up to $250 million; .65% of the next $250 million of
such net assets; and .50% of such net assets in excess of $500 million. Certain
trustees and officers of the Trust are also officers of the Adviser.
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement between the Trust and
Countrywide Funds Services, Inc. (CFS), CFS provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Funds. For these services, CFS receives a monthly fee from each
Fund at an annual rate of .20% on its average daily net assets up to $25
million; .175% on the next $25 million of such net assets; and .15% on such net
assets in excess of $50 million, subject to a $2,000 minimum monthly fee for
each Fund. In addition, each Fund pays out-of-pocket expenses including, but not
limited to, postage, supplies and costs of pricing the Funds' portfolio
securities. Certain officers of the Trust are also officers of CFS.
4. Covered Call Options
A summary of covered call option contracts during the year ended March 31, 1998
is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
FBP Contrarian FBP Contrarian
Equity Fund Balanced Fund
Number of Option Number of Option
Options Premiums Options Premiums
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at beginning of year....... 37 $ 18,173 144 $ 78,289
Options written................................ 125 62,686 159 77,205
Options cancelled in closing purchase
transactions................................ -- -- ( 15 ) ( 6,689 )
Options expired................................ ( 5) ( 4,522 ) ( 30 ) ( 14,004 )
Options exercised.............................. ( 32) ( 13,651 ) ( 114 ) ( 67,805 )
------------ -------------- ------------- --------------
Options outstanding at end of year............. 125 $ 62,686 144 $ 66,996
============ ============== ============= ==============
</TABLE>
- --------------------------------------------------------------------------------
Report of Independent Certified Public Accountants
================================================================================
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statements of assets and liabilities
of the FBP Contrarian Equity Fund and the FBP Contrarian Balanced Fund, (each a
series of The Williamsburg Investment Trust), including the portfolios of
investments, as of March 31, 1998, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended and the financial highlights for the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the FBP Contrarian Equity Fund and the FBP Contrarian Balanced Fund
as of March 31, 1998, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and their financial highlights for the periods referred to above, in
conformity with generally accepted accounting principles.
Philadelphia, Pennsylvania
April 24, 1998 Tait, Weller & Baker
<PAGE>
The Flippin, Bruce and Porter Funds
Investment Adviser
Flippin, Bruce & Porter, Inc.
800 Main Street, Suite 202
P.O. Box 6138
Lynchburg, Virginia 24505
800-FBP-9375
Transfer Agent and
Shareholder Servicing Agent
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
800-443-4249
Legal Counsel
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Officers
John M. Flippin, President
John T. Bruce, Vice President
and Portfolio Manager
R. Gregory Porter, III, Vice President
Trustees
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr. M.D.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE
GOVERNMENT STREET
FUNDS
The Government Street Equity Fund
The Government Street Bond Fund
August 1, 1998
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES ........................................ 2
DESCRIPTION OF BOND RATINGS ............................................... 5
INVESTMENT LIMITATIONS .................................................... 8
TRUSTEES AND OFFICERS ..................................................... 9
INVESTMENT ADVISOR ........................................................ 15
ADMINISTRATOR ............................................................. 16
OTHER SERVICES ............................................................ 17
BROKERAGE ................................................................. 17
SPECIAL SHAREHOLDER SERVICES .............................................. 18
PURCHASE OF SHARES ........................................................ 20
REDEMPTION OF SHARES ...................................................... 21
NET ASSET VALUE DETERMINATION ............................................. 21
ALLOCATION OF TRUST EXPENSES .............................................. 21
ADDITIONAL TAX INFORMATION ................................................ 22
CAPITAL SHARES AND VOTING ................................................. 23
CALCULATION OF PERFORMANCE DATA ........................................... 24
FINANCIAL STATEMENTS AND REPORTS .......................................... 27
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of both The Government Street Equity
Fund and The Government Street Bond Fund (the "Funds") dated August 1, 1998. The
Prospectus may be obtained from the Funds, at the address and phone number shown
above, at no charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both The Government Street Equity
Fund (the "Equity Fund") and The Government Street Bond Fund (the "Bond Fund")
unless otherwise noted.
The investment objectives and policies of the Funds are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
FOREIGN SECURITIES. Because of the inherent risk of foreign securities over
domestic issues, the Funds will not invest in foreign investments except those
traded domestically as American Depository Receipts (ADRs). The Funds may invest
in foreign securities if the Advisor believes such investment would be
consistent with the Funds' investment objectives. The same factors would be
considered in selecting foreign securities as with domestic securities, as
discussed in the Prospectus. Foreign securities investment presents special
considerations not typically associated with investments in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuation in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial or social instability or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
SECURITIES OF UNSEASONED COMPANIES. The securities of unseasoned companies
(those in business less than three years, including predecessors and, in the
case of bonds, guarantors) may have a limited trading market, which may
adversely affect disposition. If other investors attempt to dispose of such
holdings when the Funds desire to do so, the Funds could receive lower prices
than might otherwise be obtained. Because of the increased risk over larger,
better known companies, each Fund limits its investments in the securities of
unseasoned issuers to no more than 5% of its total assets.
- 2 -
<PAGE>
SHARES OF OTHER INVESTMENT COMPANIES. The Equity Fund may invest up to 5% of its
net assets in shares of other investment companies, including Standard & Poor's
Depository Receipts ("SPDRs") and shares of the DIAMONDS Trust ("DIAMONDs").
SPDRs are exchange-traded securities that represent ownership in the SPDR Trust,
a long-term unit investment trust which has been established to accumulate and
hold a portfolio of common stocks that is intended to track the price
performance and dividend yield of the Standard & Poor's Composite Stock Price
Index. Holders of SPDRs are entitled to receive proportionate quarterly
distributions corresponding to the dividends which accrue on the S&P 500 stocks
in the underlying portfolio, less accumulated expenses of the SPDR Trust.
DIAMONDs operate similarly to SPDRs, except that the DIAMONDS Trust is intended
to track the price performance and dividend yield of the Dow Jones Industrial
Average. SPDRs and DIAMONDs are unlike traditional mutual funds in that they are
available for purchase or sale during the trading day like a share of stock,
rather than at closing net asset value per share. This characteristic of SPDRs
and DIAMONDs is a risk separate and distinct from the risk that its net asset
value will decrease.
To the extent the Equity Fund invests in securities of other investment
companies, Fund shareholders would indirectly pay a portion of the operating
costs of such companies. These costs include management, brokerage, shareholder
servicing and other operational expenses. Indirectly, then, shareholders may pay
higher operational costs than if they owned the underlying investment companies
directly.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time a
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Funds' risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Funds hold a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines
- 3 -
<PAGE>
issued by the Trustees, the Advisor will carefully consider the creditworthiness
during the term of the repurchase agreement. Repurchase agreements are
considered as loans collateralized by the Repurchase Securities, such agreements
being defined as "loans" under the Investment Company Act of 1940 (the "1940
Act"). The return on such "collateral" may be more or less than that from the
repurchase agreement. The market value of the resold securities will be
monitored so that the value of the "collateral" is at all times as least equal
to the value of the loan, including the accrued interest earned thereon. All
Repurchase Securities will be held by the Funds' custodian either directly or
through a securities depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Funds. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Funds acquire a Bankers' Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Bankers' Acceptance, therefore, carries the full faith
and credit of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an unsecured
interest- bearing debt obligation of a bank. CDs acquired by the Funds would
generally be in amounts of $100,000 or more. COMMERCIAL PAPER is an unsecured,
short term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Funds will
invest in Commercial Paper only if it is rated in the highest rating category by
any nationally recognized statistical rating organization ("NRSRO") or, if not
rated, the issuer must have an outstanding unsecured debt issue rated in the
three highest categories by any NRSRO or, if not so rated, be of equivalent
quality in the Advisor's assessment. Commercial Paper may include Master Notes
of the same quality. MASTER NOTES are unsecured obligations which are redeemable
upon demand of the holder and which permit the investment of fluctuating amounts
at varying rates of interest. Master Notes are acquired by the Funds only
through the Master Note program of the Funds' custodian, acting as administrator
thereof. The Advisor will monitor, on a continuous basis, the earnings power,
cash flow and other liquidity ratios of the issuer of a Master Note held by the
Funds.
- 4 -
<PAGE>
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Bond Fund may purchase
securities on a when-issued basis or for settlement at a future date if the Fund
holds sufficient assets to meet the purchase price. In such purchase
transactions the Fund will not accrue interest on the purchased security until
the actual settlement. Similarly, if a security is sold for a forward date, the
Bond Fund will accrue the interest until the settlement of the sale. When-issued
security purchases and forward commitments have a higher degree of risk of price
movement before settlement due to the extended time period between the execution
and settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Bond Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Advisor felt such action was appropriate. In such a case
the Fund could incur a short-term gain or loss.
DESCRIPTION OF BOND RATINGS
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Advisor believes that the quality of fixed-income securities in which the Bond
Fund may invest should be continuously reviewed and that individual analysts
give different weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one NRSRO, each
rating is evaluated independently. Ratings are based on current information
furnished by the issuer or obtained by the NRSROs from other sources that they
consider reliable. Ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of such information, or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS:
Aaa: Bonds rated Aaa are judged to be of the best quality. These bonds
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
- 5 -
<PAGE>
Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large in Aa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements that make the long term
risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present that suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S BOND RATINGS:
AAA: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated AA also qualify as high quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
- 6 -
<PAGE>
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S BOND RATINGS:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
DESCRIPTION OF DUFF & PHELPS' CREDIT RATING CO.'S BOND RATINGS:
AAA: This is the highest rating credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average protection factors. However risk factors are
more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
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<PAGE>
INVESTMENT LIMITATIONS
The Funds have adopted the following investment limitations, in addition to
those described in the Prospectus, which cannot be changed without approval by
holders of a majority of the outstanding voting shares of the Funds. A
"majority" for this purpose, means the lesser of (i) 67% of a Fund's outstanding
shares represented in person or by proxy at a meeting at which more than 50% of
its outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, each Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting
securities or of any class of securities of any one issuer;
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Advisor who own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5% of the
outstanding securities of such issuer;
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Funds
may invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things.
(6) Underwrite securities issued by others, except to the extent a Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Funds may obtain such short-term
credits as may be necessary for the clearance of transactions);
- 8 -
<PAGE>
(8) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short);
(9) Participate on a joint or joint and several basis in any trading account in
securities;
(10) Make loans of money or securities, except that the Funds may invest in
repurchase agreements;
(11) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors), if more than 5% of its total assets would be invested
in such securities;
(12) Write, purchase or sell puts, calls or combinations thereof, or purchase or
sell commodities, commodities contracts, futures contracts or related
options; or
(13) Invest in restricted securities.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation. However, in the case of the
borrowing limitation (the first restriction in the Prospectus) each Fund will,
to the extent necessary, reduce its existing borrowings to comply with the
limitation.
While the Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
- 9 -
<PAGE>
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- --------------- -------------------- ---------------
<S> <S> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
- 10 -
<PAGE>
Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.,
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
- 11 -
<PAGE>
Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
- 12 -
<PAGE>
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary of
Cincinnati, Ohio 45202 Countrywide Investments, Inc. and Countrywide Financial
Services, Inc.; Secretary of Countrywide Investment Trust;
Countrywide Tax-Free Trust and Countrywide Strategic
Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
- 13 -
<PAGE>
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of both the Equity
Fund and the Bond Fund. On the same date, Charles Schwab & Co., Inc., 101
Montgomery Street, San Francisco, California 94104, owned of record 36.9% of the
then outstanding shares of the Equity Fund and 26.0% of the then outstanding
shares of the Bond Fund; First Alabama Bank as Trustee of the Mobile Paint
Manufacturing Co. Employee Retirement Plans, P.O. Box 2527, Mobile, Alabama
36622, owned of record 5.5% of the then outstanding shares of the Equity Fund
and 7.3% of the then outstanding shares of the Bond Fund; and Saltco, P.O. Box
469, Brewton, Alabama 36427, owned of record 21.4% of the then outstanding
shares of the Equity Fund and 10.4% of the then outstanding shares of the Bond
Fund.
- 14 -
<PAGE>
INVESTMENT ADVISOR
T. Leavell & Associates, Inc. (the "Advisor") supervises each Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement is effective until April 1,
1999 and will be renewed thereafter for one year periods only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees or by vote of a majority of the Funds' outstanding voting
securities, provided the continuance is also approved by a majority of the
Trustees who are not "interested persons" of the Trust or the Advisor by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement is terminable without penalty on sixty days notice by the
Board of Trustees of the Trust or by the Advisor. The Advisory Agreement
provides that it will terminate automatically in the event of its assignment.
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
$100 million, 0.60%; and on assets over $100 million, 0.50%. For the fiscal
years ended March 31, 1998, 1997 and 1996, the Equity Fund paid to the Advisor
advisory fees of $375,712, $275,299 and $221,551, respectively.
Compensation of the Advisor with respect to the Bond Fund, based upon the Fund's
average daily net assets, is at the following annual rates: On the first $100
million, 0.50%; and on assets over $100 million, 0.40%. For the fiscal years
ended March 31, 1998, 1997, and 1996, the Bond Fund paid the Advisor advisory
fees of $164,236, $147,268 and $143,643, respectively.
The Advisor, organized as an Alabama corporation in 1979, is controlled by its
shareholders, Thomas W. Leavell, Richard Mitchell, Dorothy G. Gambill and
Timothy S. Healey. In addition to acting as 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 Advisor provides a continuous investment program for the Funds, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Funds. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Funds, and does
so in accordance with the investment objectives and policies of the Funds as
described herein and in the Prospectus. The Advisor places all securities orders
for the Funds, determining with which broker, dealer, or issuer to place the
orders.
- 15 -
<PAGE>
The Advisor must adhere to the brokerage policies of the Funds in placing all
orders, the substance of which policies are that the Advisor must seek at all
times the most favorable price and execution for all securities brokerage
transactions.
The Advisor also provides, at its own expense, certain Executive Officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Funds to clients of such dealers or others or based on the average balance of
all accounts in the Funds for which such dealers or others are designated as the
person responsible for the account.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Funds and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Funds, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Bond Fund pays the
Administrator a fee at the annual rate of 0.075% of the average value of its
daily net assets up to $200,000,000 and 0.05% of such assets in excess of
$200,000,000 and the Equity Fund pays the Administrator a fee at the annual rate
of 0.20% of the average value of its daily net assets up to $25,000,000, 0.175%
of such assets from $25,000,000 to $50,000,000 and 0.15% of such assets in
excess of $50,000,000; provided, however, that the minimum fee is $2,000 per
month for each Fund. In addition, the Funds pay out-of-pocket expenses,
including but not limited to, postage, envelopes, checks, drafts, forms,
reports, record storage and communication lines.
For the fiscal years ended March 31, 1998, 1997 and 1996, the Administrator
received fees of $112,821, $86,708 and $71,060, respectively, from the Equity
Fund and $25,069, $24,000 and $24,000, respectively, from the Bond Fund.
- 16 -
<PAGE>
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Funds' federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
The Custodian of the Funds' assets is Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Funds
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Funds.
BROKERAGE
It is the Funds' practice to seek the best price and execution for all portfolio
securities transactions. The Advisor (subject to the general supervision of the
Board of Trustees) directs the execution of the Funds' portfolio transactions.
The Trust has adopted a policy which prohibits the Advisor from effecting Fund
portfolio transactions with broker-dealers which may be interested persons of
either Fund, the Trust, any Trustee, officer or director of the Trust or its
investment advisors or any interested person of such persons.
The Bond Fund's fixed income portfolio transactions will normally be principal
transactions executed in over-the-counter markets and will be executed on a
"net" basis, which may include a dealer markup. The Equity Fund's common stock
portfolio transactions will normally be exchange traded and will be effected
through broker-dealers who will charge brokerage commissions. With respect to
securities traded only in the over-the-counter market, orders will be executed
on a principal basis with primary market makers in such securities except where
better prices or executions may be obtained on an agency basis or by dealing
with other than a primary market maker.
For the fiscal years ended March 31, 1998, 1997 and 1996, the total amount of
brokerage commissions paid by the Equity Fund was $20,136, $15,451 and $21,642,
respectively. No brokerage commissions were paid by the Bond Fund for the last
three fiscal years.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of either Fund's brokerage commissions to persons or firms
providing the Advisor with
- 17 -
<PAGE>
research services, which may typically include, but are not limited to,
investment recommendations, financial, economic, political, fundamental and
technical market and interest rate data, and other statistical or research
services. Much of the information so obtained may also be used by the Advisor
for the benefit of the other clients it may have. Conversely, the Funds may
benefit from such transactions effected for the benefit of other clients. In all
cases, the Advisor is obligated to effect transactions for the Funds based upon
obtaining the most favorable price and execution. Factors considered by the
Advisor in determining whether the Funds will receive the most favorable price
and execution include, among other things: the size of the order, the broker's
ability to effect and settle the transaction promptly and efficiently and the
Advisor's perception of the broker's reliability, integrity and financial
condition.
As of March 31, 1998, the Bond Fund held securities issued by the following of
the Trust's "regular broker-dealers" (as defined in the 1940 Act) or their
parents: Merrill Lynch & Company, Inc. (the market value of which was $778,203);
Salomon Incorporated (the market value of which was $909,545); J.P. Morgan &
Company (the market value of which was $517,155); and Bear Stearns Company (the
market value of which was $185,585).
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Funds offer the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Funds, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
- 18 -
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see "Signature Guarantees"). A corporation (or partnership)
must also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Funds. Shareholders should be aware that such systematic
withdrawals may deplete or use up entirely their initial investment and may
result in realized long-term or short-term capital gains or losses. The
Systematic Withdrawal Plan may be terminated at any time by the Funds upon sixty
days' written notice or by a shareholder upon written notice to the Funds.
Applications and further details may be obtained by calling the Funds at
1-800-443-4249, or by writing to:
The Government Street Funds
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Funds may accept securities in lieu of cash in payment
for the purchase of shares of the Funds. The acceptance of such securities is at
the sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Funds, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Funds. Securities delivered in payment of
redemptions would be valued at the same
- 19 -
<PAGE>
value assigned to them in computing the net asset value per share. Shareholders
receiving them would incur brokerage costs when these securities are sold. An
irrevocable election may be filed under Rule 18f-1 of the 1940 Act, wherein each
Fund commits itself to pay redemptions in cash, rather than in kind, to any
shareholder of record of the Funds who redeems during any ninety day period, the
lesser of (a) $250,000 or (b) one percent (1%) of a Fund's net assets at the
beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Funds at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (see the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Funds.
PURCHASE OF SHARES
The purchase price of shares of each Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m. Eastern time
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Funds until
confirmed in writing (or unless other arrangements have been made with the
Funds, for example in the case of orders utilizing wire transfer of funds) and
payment has been received.
Each Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUNDS. The Funds have adopted initial investment
minimums for the purpose of reducing the cost to the Funds (and consequently to
the shareholders) of communicating with and servicing their shareholders.
However, a reduced minimum initial investment requirement of $1,000 applies to
Trustees, officers and employees of the Funds, the Advisor and certain parties
related thereto, including clients of the Advisor
- 20 -
<PAGE>
or any sponsor, officer, committee member thereof, or the immediate family of
any of them. In addition, accounts having the same mailing address may be
aggregated for purposes of the minimum investment if they consent in writing to
share a single mailing of shareholder reports, proxy statements (but each such
shareholder would receive his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
Each Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Funds for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Funds.
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Funds, and they have
adopted procedures to do so, as follows. The net asset value of each Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and
- 21 -
<PAGE>
junior level officers of the Trust as and if approved by the Board of Trustees;
taxes; expenses of the issuance and redemption of shares (including registration
and qualification fees and expenses); costs and expenses of membership and
attendance at meetings of certain associations which may be deemed by the
Trustees to be of overall benefit to the Fund and its shareholders; legal and
auditing expenses; and the cost of stationery and forms prepared exclusively for
the Funds. General Trust expenses are allocated among the series, or funds, on a
fair and equitable basis by the Board of Trustees, which may be based on
relative net assets of each fund (on the date the expense is paid) or the nature
of the services performed and the relative applicability to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, each Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, each Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities' loans, gains from the disposition of stock or securities, and
certain other income.
While the above requirements are aimed at qualification of the Funds as
regulated investment companies under Subchapter M of the Code, the Funds also
intend to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Funds remain qualified under Subchapter M,
they will not be subject to federal income tax to the extent they distribute
their taxable net investment income and net realized capital gains. A
nondeductible 4% federal excise tax will be imposed on each Fund to the extent
it does not distribute at least 98% of its ordinary taxable income for a
calendar year, plus 98% of its capital gain net taxable income for the one year
period ending each October 31, plus certain undistributed amounts from prior
years. While each Fund intends to distribute its taxable income and capital
gains in a manner so as to avoid imposition of the federal excise and income
taxes, there can be no assurance that the Funds indeed will make sufficient
distributions to avoid entirely imposition of federal excise or income taxes.
As of March 31, 1998, the Bond Fund had capital loss carryforwards for federal
income tax purposes of $434,110, which expire through the year 2006. These
capital loss carryforwards may be utilized in future years to offset net
realized capital gains prior to distributing such gains to shareholders.
- 22 -
<PAGE>
Should additional series, or funds, be created by the Trustees, each Fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUNDS' DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the
Funds derived from net investment income or net short-term capital gains are
taxable to shareholders as ordinary income, whether received in cash or
reinvested in additional shares. Distributions, if any, of long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held. For information on "backup" withholding, see "How to Purchase
Shares" in the Prospectus.
For corporate shareholders, the dividends received deduction, if applicable,
should apply to dividends from the Equity Fund. Each Fund will send shareholders
information each year on the tax status of dividends and disbursements. A
dividend or capital gains distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income taxation. Dividends from net investment income, along with capital gains,
will be taxable to shareholders, whether received in cash or shares and no
matter how long you have held Fund shares, even if they reduce the net asset
value of shares below your cost and thus in effect result in a return of a part
of your investment.
CAPITAL SHARES AND VOTING
Shares of the Funds, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at lease
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on
- 23 -
<PAGE>
the removal of one or more Trustees. Shareholders holding not less than ten
percent (10%) of the shares then outstanding may require the Trustees to call
such a meeting and the Trustees are obligated to provide certain assistance to
shareholders desiring to communicate with other shareholders in such regard
(e.g., providing access to shareholder lists, etc.). In case a vacancy or an
anticipated vacancy shall for any reason exist, the vacancy shall be filled by
the affirmative vote of a majority of the remaining Trustees, subject to the
provisions of Section 16(a) of the 1940 Act. The Trust does not expect to have
an annual meeting of shareholders.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, each Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Funds for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of a Fund ("T") is computed by using the redeemable value at the end of a
specified period of time ("ERV") of a hypothetical initial investment of $1,000
("P") over a period of time ("n") according to the formula P(l+T)n=ERV. The
average annual total return quotations for the Equity Fund for the one year
period ended March 31, 1998, for the five year period ended March 31, 1998 and
for the period since inception (June 3, 1991) to March 31, 1998 are 39.31%,
16.97% and 15.10%, respectively. The average annual total return quotations for
the Bond Fund for the one year period ended March 31, 1998, for the five year
period ended March 31, 1998 and for the period since inception (June 3, 1991) to
March 31, 1998 are 9.61%, 5.88% and 7.27%, respectively.
In addition, each Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
- 24 -
<PAGE>
From time to time, each Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest earned (for the purpose of "a" above) on
debt obligations is computed by reference to the yield to maturity of each
obligation held based on the market value of the obligation (including actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month) period for which yield is being calculated,
or, with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest). The yields of the Equity Fund and the Bond Fund
for the 30 days ended March 31, 1998 were 0.73% and 5.66%, respectively.
The Funds' performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Equity Fund may compare its performance to the
S&P 500 Index, which is generally considered to be representative of the
performance of unmanaged common stocks that are publicly traded in the United
States securities markets, and the Bond Fund may compare its performance to the
Merrill Lynch 1-5 Year Government Corporate Index and the Lehman Government
Corporate Intermediate Bond Index, which are generally considered to be
representative of the performance of a portfolio of domestic, taxable fixed
income securities of intermediate maturities. Comparative performance may also
be expressed by reference to a ranking prepared by a mutual fund monitoring
service, such as Lipper Analytical Services, Inc. or Morningstar, Inc. or by one
or more newspapers, newsletters or financial periodicals. Performance
comparisons may be useful to investors who wish to compare the Funds' past
performance to that of other mutual funds and investment products. Of course,
past performance is not a guarantee of future results.
- 25 -
<PAGE>
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of the Funds' performance before investing. Of course, when
comparing the Funds' performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Funds may quote total returns that are calculated
on nonstandardized base periods. The total returns represent the historic change
in the value of an investment in the Funds based on monthly reinvestment of
dividends over a specified period of time.
From time to time the Funds may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Funds may also disclose from time to
time information about their portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Funds may also depict the historical performance
of the securities in which the Funds may invest over periods reflecting a
variety of market or economic conditions either alone or in comparison with
alternative investments, performance indices of those investments, or economic
indicators. The Funds may also include in advertisements and in materials
furnished to present and prospective shareholders statements or illustrations
relating to the appropriateness of types of securities and/or mutual funds that
may be employed to meet specific financial goals, such as saving for retirement,
children's education, or other future needs.
- 26 -
<PAGE>
FINANCIAL STATEMENTS AND REPORTS
The books of the Funds will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published, and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Funds as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
- 27 -
<PAGE>
The Government Street Funds
The Alabama Tax Free Bond Fund
------------------------------
No Load Mutual Funds
Annual Report
March 31, 1998
Investment Adviser
T. Leavell & Associates, Inc.
Founded 1979
<PAGE>
LETTER FROM THE PRESIDENT
================================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the audited annual report of
The Government Street Funds and of The Alabama Tax Free Bond Fund for the year
ended March 31, 1998.
THE GOVERNMENT STREET EQUITY FUND
- ---------------------------------
The Government Street Equity Fund achieved a total return of 39.3% for
its fiscal year ended March 31, 1998. The total return of the S&P 500 Index was
48.0% for the same twelve month period.
The environment for investing in common stocks remained extraordinarily
positive in 1997 and during 1998's first calendar quarter. Robust economic
growth; growth in corporate profitability; strong growth in capital spending;
low inflation (and lower inflation expectations); and a strong dollar have all
contributed to another remarkable year in the U.S. stock market. These elements
combined with a tremendous demand for common stocks by individual investors,
401-K plans, IRAs, and other employee benefit plans have resulted in an
unprecedented three consecutive years of annual stock returns in excess of 20%.
It is hard to imagine that the market can continue its momentum. A
strong U.S. economy means that Federal Reserve tightening of interest rates is a
realistic concern. In addition, while Asia accounts for only a small proportion
of U.S. companies sales, it is a much bigger share of expected sales growth; and
the economic situation there remains uncertain. There also is the possibility of
lower corporate profitability. Yet, the average stock fund was up 11.9% during
the first calendar quarter of 1998 -- a greater return than most analysts were
expecting for the entire year.
Regardless of what occurs, however, the Fund's diversification provides
the foundation for a solid, high quality investment. There are eighty-five
different companies represented in the portfolio; they are spread across
industry and capitalization sectors. Approximately 53% of the Fund's assets are
invested in growth stocks; 39% in value stocks; and 8% in cash equivalents. If
the market continues its advance, investors in The Government Street Equity Fund
will participate; if there is a correction, they are well positioned
defensively.
During the year ended March 31, 1998, the Fund experienced a turnover
rate of only 18%; average trading costs were approximately $0.035 per share.
Both of these statistics reflect the continued operating efficiency of the Fund.
At year end, the net assets of the Fund were $75,643,037; net asset value per
share was $43.79.
In February, Stephen W. Simmons joined T. Leavell & Associates after
having spent the last three and a half years managing the $6 billion equity
portfolio of the Retirement Systems of Alabama. It is our pleasure to announce
that he has been appointed co-manager of The Government Street Equity Fund. He
will focus his efforts on the value stock area of the portfolio. In addition,
Stephen will be involved in the development of our quantitative stock selection
techniques.
THE GOVERNMENT STREET BOND FUND
- -------------------------------
The twelve month period that ended March 31, 1998 was a stellar year
for bonds and for The Government Street Bond Fund, as well.
Continued low inflation in the face of a strong economy, an inactive
Federal Reserve Board, the prospects for a balanced budget, and Asian market
uncertainties all contributed to the bond market surge in 1997 and early 1998.
In addition, the strong U.S. dollar encouraged foreign investors to buy U.S.
bonds, and commodity prices fell throughout the year. This latter phenomenon
indicates that the current benign inflationary environment is likely to
continue.
<PAGE>
The Government Street Bond Fund achieved a total return of 9.6% for its
fiscal year ended March 31, 1998. This return is in line with the Lehman
Intermediate Government Corporate Bond Index which had a total return of 9.6%
for the same twelve month period. The ratio of net investment income to average
net assets was 6.4%.
At year end, 97.2% of the Fund's assets were invested in fixed-income
securities rated A or better, and over 50% were invested in AAA bonds. The
average maturity and duration of the Fund were 5.6 years and 4.3 years,
respectively. The net assets of the Fund were $36,907,953; net asset value per
share was $21.06. The ratio of expenses to average net assets was 0.74%.
THE ALABAMA TAX FREE BOND FUND
- ------------------------------
The Alabama Tax Free Bond Fund provides Alabama investors with a source
of income which is exempt from both federal and state income taxes. The Fund
invests in a broad spectrum of high-quality Alabama municipal bond issues with
an intermediate average maturity.
It remains the only no-load Alabama municipal bond fund.
For the fiscal year ended March 31, 1998, the ratio of net investment
income to average net assets was 4.2%. To an Alabama investor in the maximum
combined federal and state tax brackets of 42.6%, the taxable equivalent of this
ratio was 7.3%.
The total return of the Fund for its fiscal year was 7.4%. This return
compares favorably with the 6.1% return of the Lehman Three Year Municipal Bond
Index and with the 9.1% return of the Lehman Seven Year Municipal Bond Index
over the same twelve month period.
The net assets of the Fund at March 31, 1998 were $19,938,296; the net
asset value per share was $10.49. The weighted average maturity of the Fund's
portfolio was 6.9 years. There were 97 issues held by the Fund, all of which
were rated A or better by Standard and Poor's or Moody's Investors Service. More
than 50% of the Fund's assets were rated AAA.
Thank you for your continued confidence in The Government Street Funds
and in The Alabama Tax Free Bond Fund. Please call us if we can be of further
service to you.
Very truly yours,
/s/ Thomas W. Leavell
Thomas W. Leavell
President
T. Leavell & Associates, Inc.
/s/ Richard Mitchell
Richard Mitchell
President
The Government Streets Funds
The Alabama Tax Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
The Government Street Equity Fund
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Equity Fund, the Standard & Poor's 500 Index and the Consumer Price
Index.
<S> <C> <C> <C>
The Government
Street Equity Fund Standard & Poor's 500 Index Consumer Price Index
Jun 91 10000 10000 10000
9795 9813 10030
10297 10337 10090
11147 11203 10181
Mar 92 10812 10920 10253
10822 11127 10335
11214 11478 10407
11821 12056 10491
Mar 93 11857 12582 10586
11682 12642 10649
11971 12968 10692
12194 13269 10767
Mar 94 11825 12766 10821
11471 12820 10886
12086 13446 10984
11855 13443 11050
Mar 95 12655 14752 11138
13564 16161 11239
14385 17445 11284
15106 18495 11340
Mar 96 15941 19488 11431
16399 20363 11558
17247 20992 11609
18351 22742 11704
Mar 97 18642 23352 11785
21733 27429 11807
23069 29483 11859
23459 30330 11932
Mar 98 25969 34560 11947
The Government Street Equity Fund Average Annual Total Return
1 Year 5 Years Since Inception*
39.1% 16.97% 15.10%
*Initial public offering of shares was June 3, 1991.
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Government Street Bond Fund
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Bond Fund, the Lehman Government/Corporate Intermediate Bond Index
and the 90-Day Treasury Bill Index.
<S> <C> <C> <C>
The Government Lehman Government/Corporate
Street Bond Fund Intermediate Bond Index 90-Day Treasury Bill Index
Jun 91 10000 10000 10000
10045 10007 10039
10444 10488 10193
10931 10992 10342
Mar 92 10813 10892 10445
11218 11323 10559
11706 11822 10666
11627 11780 10748
Mar 93 12125 12249 10832
12366 12513 10916
12673 12796 11005
12650 12818 11091
Mar 94 12350 12558 11176
12261 12452 11283
12347 12585 11405
12310 12571 11556
Mar 95 12859 13123 11729
13533 13778 11905
13727 14006 12075
14213 14499 12253
Mar 96 14072 14378 12404
14158 14469 12563
14403 14726 12737
14731 15087 12903
Mar 97 14719 15070 13067
15146 15515 13245
15564 15934 13423
15888 16275 13591
Mar 98 16134 16529 13768
The Government Street Bond Fund Average Annual Total Return
1 Year 5 Years Since Inception*
9.61% 5.88% 7.27%
*Initial public offering of shares was June 3, 1991.
Past perfromance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Alabama Tax Free Bond Fund
Comparison of the Change in Value of a $10,000 Investment in The Alabama Tax
Free Bond Fund, the Lehman 7-Year G.O. Municipal Bond Index and the Lehman
3-Year Municipal Bond Index.
<S> <C> <C> <C>
The Alabama Tax Lehman 7-Year G.O. Lehman 3-Year
Free Bond Fund Municipal Bond Index Municipal Bond Index
10000 10000 10000
Mar 93 10096 10255 10168
10380 10547 10321
10670 10856 10467
10781 11004 10585
Mar 94 10440 10527 10445
10506 10673 10558
10562 10755 10657
10439 10647 10658
Mar 95 10927 11224 10957
11219 11526 11189
11459 11905 11428
11735 12198 11603
Mar 96 11693 12172 11668
11724 12208 11763
11921 12437 11918
12178 12757 12118
Mar 97 12140 12738 12168
12437 13092 12393
12690 13441 12605
12947 13736 12784
Mar 98 13043 13894 12916
The Alabama Tax Free Bond Fund Average Annual Total Return
1 Year 5 Years Since Inception*
7.44% 5.26% 5.23%
*Initial public offering of shares was January 15, 1993.
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1998
<S> <C> <C> <C>
====================================================================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
At acquisition cost................................... $ 38,594,955 $ 35,092,994 $ 18,988,868
=============== =============== ===============
At value (Note 1)..................................... $ 69,990,927 $ 35,479,894 $ 19,720,043
Investments in repurchase agreements (Note 1)............ 5,612,000 804,000 --
Cash .................................................... 878 562 --
Receivable for capital shares sold....................... 17,392 57,434 850
Interest receivable...................................... 818 638,895 250,303
Dividends receivable..................................... 77,845 -- --
Other assets............................................. 1,693 1,168 430
--------------- --------------- ---------------
TOTAL ASSETS.......................................... 75,701,553 36,981,953 19,971,626
--------------- --------------- ---------------
LIABILITIES
Dividends payable........................................ 4,819 21,023 19,712
Payable for capital shares redeemed...................... 1,200 28,023 2,500
Accrued advisory fees (Note 3)........................... 37,807 15,567 5,018
Accrued administration fees (Note 3)..................... 10,850 2,290 2,470
Other accrued expenses and liabilities................... 3,840 7,097 3,630
--------------- --------------- ---------------
TOTAL LIABILITIES..................................... 58,516 74,000 33,330
--------------- --------------- ---------------
NET ASSETS .............................................. $ 75,643,037 $ 36,907,953 $ 19,938,296
=============== =============== ===============
Net assets consist of:
Paid-in capital ......................................... $ 42,316,546 $ 36,951,307 $ 19,406,057
Accumulated net realized gains (losses)
from security transactions............................ 1,929,635 ( 434,110 ) ( 198,936 )
Undistributed net investment income...................... 884 3,856 --
Net unrealized appreciation on investments............... 31,395,972 386,900 731,175
--------------- --------------- ---------------
Net assets............................................... $ 75,643,037 $ 36,907,953 $ 19,938,296
=============== =============== ===============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value)............ 1,727,277 1,752,457 1,899,959
=============== =============== ===============
Net asset value, offering price and
redemption price per share (Note 1)................... $ 43.79 $ 21.06 $ 10.49
=============== =============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF OPERATIONS
Year Ended March 31, 1998
<S> <C> <C> <C>
====================================================================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest.............................................. $ 183,292 $ 2,330,572 $ 903,771
Dividends............................................. 874,608 -- --
--------------- --------------- ---------------
TOTAL INVESTMENT INCOME............................. 1,057,900 2,330,572 903,771
--------------- --------------- ---------------
EXPENSES
Investment advisory fees (Note 3)..................... 375,712 164,236 65,359
Administrative fees (Note 3).......................... 112,821 25,069 28,029
Professional fees..................................... 12,021 12,021 8,996
Pricing costs......................................... 2,033 9,391 13,239
Printing of shareholder reports....................... 7,522 6,647 5,472
Custodian fees........................................ 8,276 4,111 3,600
Trustees' fees and expenses........................... 5,405 5,405 5,405
Postage and supplies.................................. 7,135 5,693 5,351
Registration fees..................................... 6,525 5,465 2,573
Insurance expense..................................... 3,095 2,059 1,305
Other expenses........................................ 1,074 3,144 873
--------------- --------------- ---------------
TOTAL EXPENSES...................................... 541,619 243,241 140,202
Fees waived by the Adviser (Note 3)................... -- -- ( 18,821 )
--------------- --------------- ---------------
NET EXPENSES........................................ 541,619 243,241 121,381
--------------- --------------- ---------------
NET INVESTMENT INCOME ................................... 516,281 2,087,331 782,390
--------------- --------------- ---------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses)
from security transactions.......................... 2,517,491 ( 36,286 ) 1,079
Net change in unrealized appreciation/depreciation
on investments...................................... 17,143,907 906,779 546,731
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS ....................................... 19,661,398 870,493 547,810
--------------- --------------- ---------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ...................................... $ 20,177,679 $ 2,957,824 $ 1,330,200
=============== =============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Government Street Government Street Alabama Tax Free
Equity Fund Bond Fund Bond Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
March 31, March 31, March 31, March 31, March 31, March 31,
1998 1997 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income............. $ 516,281 $ 536,422 $2,087,331 $1,901,229 $ 782,390 $688,356
Net realized gains (losses)
from security transactions...... 2,517,491 2,262,399 (36,286) (201,643) 1,079 6,155
Net change in unrealized appreciation/
depreciation on investments...... 17,143,907 4,313,961 906,779 (362,072) 546,731 (76,770)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
from operations 20,177,679 7,112,782 2,957,824 1,337,514 1,330,200 617,741
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income........ (527,419) (526,528) (2,095,202) (1,892,341) (782,390) (688,356)
From net realized gains........... (1,732,108)(1,910,988) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Decrease in net assets from distributions
to shareholders.................. (2,259,527)(2,437,516) (2,095,202) (1,892,341) (782,390) (688,356)
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold......... 10,616,273 5,118,742 7,696,201 3,531,544 2,804,374 2,068,564
Net asset value of shares issued in
reinvestment of distributions
to shareholders.................. 2,175,993 2,347,971 1,871,979 1,663,544 555,482 480,364
Payments for shares redeemed...... (4,696,332)(3,933,851) (2,965,314) (3,915,554) (770,028) (1,158,134)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from
capital share transactions........ 8,095,934 3,532,862 6,602,866 1,279,534 2,589,828 1,390,794
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ....... 26,014,086 8,208,128 7,465,488 724,707 3,137,638 1,320,179
NET ASSETS:
Beginning of year................. 49,628,951 41,420,823 29,442,465 28,717,758 16,800,658 15,480,479
----------- ----------- ----------- ----------- ----------- -----------
End of year....................... $75,643,037$49,628,951 $36,907,953 $29,442,465 $19,938,296 $16,800,658
=========== =========== =========== =========== =========== ===========
UNDISTRIBUTED NET
INVESTMENT INCOME ................ $ 884$ 12,022 $ 3,856 $ 11,727 $ -- $ --
=========== =========== =========== =========== =========== ===========
Capital share activity:
Sold............................. 268,759 162,325 365,904 170,003 270,970 202,023
Reinvested....................... 56,533 76,331 89,389 80,355 53,306 46,910
Redeemed......................... (121,016) (124,086) (141,456) (188,067) (73,918) (112,871)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in shares outstanding 204,276 114,570 313,837 62,291 250,358 136,062
Shares outstanding, beginning
of year 1,523,001 1,408,431 1,438,620 1,376,329 1,649,601 1,513,539
----------- ----------- ----------- ----------- ----------- -----------
Shares outstanding, end of year.. 1,727,277 1,523,001 1,752,457 1,438,620 1,899,959 1,649,601
=========== =========== =========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
FINANCIAL HIGHLIGHTS
====================================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
====================================================================================================================================
Years Ended March 31,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year...... $ 32.59 $ 29.41 $ 23.87 $ 22.69 $ 23.06
----------- ----------- ---------- ---------- -----------
Income from investment operations:
Net investment income.................. 0.32 0.37 0.40 0.38 0.30
Net realized and unrealized
gains (losses) on investments........ 12.28 4.50 5.75 1.19 ( 0.37 )
----------- ----------- ---------- ---------- -----------
Total from investment operations.......... 12.60 4.87 6.15 1.57 ( 0.07 )
----------- ----------- ---------- ---------- -----------
Less distributions:
Dividends from net investment income... ( 0.32) ( 0.36 ) ( 0.40) ( 0.39) ( 0.30 )
Distributions from net realized gains.. ( 1.08) ( 1.33 ) ( 0.21) -- --
----------- ----------- ---------- ---------- -----------
Total distributions....................... ( 1.40) ( 1.69 ) ( 0.61) ( 0.39) ( 0.30 )
----------- ----------- ---------- ---------- -----------
Net asset value at end of year............ $ 43.79 $ 32.59 $ 29.41 $ 23.87 $ 22.69
=========== =========== ========== ========== ===========
Total return.............................. 39.31% 16.94% 25.96% 7.02% ( 0.31% )
=========== =========== ========== ========== ===========
Net assets at end of year (000's)......... $ 75,643 $ 49,629 $ 41,421 $ 31,473 $ 27,101
=========== =========== ========== ========== ===========
Ratio of net expenses to average net assets(a) 0.86% 0.89% 0.94% 0.91% 1.00%
Ratio of net investment income
to average net assets.................. 0.82% 1.17% 1.50% 1.71% 1.33%
Portfolio turnover rate................... 18% 20% 31% 55% 63%
Average commission rate per share......... $ 0.0351 $ 0.0410 $ -- $ -- $ --
(a) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's administrative and custodian fees for years ended prior to March
31, 1996 were paid through an arrangement with a third-party broker-dealer who
was compensated through commission trades. Payment of the fees was based on a
percentage of commissions earned. Absent expenses reimbursed through the
directed brokerage arrangement, the ratios of expenses to average net assets
would have been 1.00% and 1.16% for the years ended March 31, 1995 and 1994,
respectively.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET BOND FUND
FINANCIAL HIGHLIGHTS
====================================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
====================================================================================================================================
Years Ended March 31,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year...... $ 20.47 $ 20.87 $ 20.33 $ 20.87 $ 21.77
----------- ----------- ---------- ---------- -----------
Income from investment operations:
Net investment income.................. 1.32 1.34 1.35 1.35 1.32
Net realized and unrealized
gains (losses) on investments........ 0.60 ( 0.40 ) 0.54 ( 0.53) ( 0.90 )
----------- ----------- ---------- ---------- -----------
Total from investment operations.......... 1.92 0.94 1.89 0.82 0.42
----------- ----------- ---------- ---------- -----------
Less distributions:
Dividends from net investment income... ( 1.33) ( 1.34 ) ( 1.35) ( 1.36) ( 1.32 )
----------- ----------- ---------- ---------- -----------
Net asset value at end of year............ $ 21.06 $ 20.47 $ 20.87 $ 20.33 $ 20.87
=========== =========== ========== ========== ===========
Total return.............................. 9.61% 4.60% 9.43% 4.12% 1.85%
=========== =========== ========== ========== ===========
Net assets at end of year (000's)......... $ 36,908 $ 29,442 $ 28,718 $ 27,780 $ 22,633
=========== =========== ========== ========== ===========
Ratio of net expenses to average net assets 0.74% 0.75% 0.76% 0.85% 0.86%(a)
Ratio of net investment income
to average net assets.................. 6.35% 6.44% 6.38% 6.68% 6.15%
Portfolio turnover rate................... 10% 20% 10% 11% 10%
(a) Absent investment advisory fees waived by the Adviser, the ratios of expenses to average net assets would have
been 1.03% for the year ended March 31, 1994.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
====================================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
====================================================================================================================================
Seven
Months January 15,
Years Ended March 31, Ended 1993(b) to
March 31, August 31,
1998 1997 1996 1995 1994(a) 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 10.18 $ 10.23 $ 9.96 $ 9.96 $ 10.30 $ 10.00
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income............. 0.44 0.43 0.42 0.45 0.26 0.23
Net realized and unrealized
gains (losses) on investments.... 0.31 ( 0.05 ) 0.27 -- ( 0.34 ) 0.30
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations.... 0.75 0.38 0.69 0.45 ( 0.08 ) 0.53
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends from net investment income ( 0.44 ) ( 0.43 ) ( 0.42 ) ( 0.45 ) ( 0.26 ) ( 0.23 )
----------- ----------- ----------- ----------- ----------- -----------
Net asset value at end of period.... $ 10.49 $ 10.18 $ 10.23 $ 9.96 $ 9.96 $ 10.30
=========== =========== =========== =========== =========== ===========
Total return........................ 7.44% 3.82% 7.02% 4.66% (1.50%)(d) 8.79%(d)
=========== =========== =========== =========== =========== ===========
Net assets at end of period (000's). $ 19,938 $ 16,801 $ 15,480 $ 12,816 $ 9,716 $ 3,429
=========== =========== =========== =========== =========== ===========
Ratio of net expenses to
average net assets(c) 0.65% 0.66% 0.75% 0.75% 0.75%(d) 0.75%(d)
Ratio of net investment income
to average net assets............. 4.19% 4.24% 4.11% 4.56% 4.46%(d) 4.01%(d)
Portfolio turnover rate............. 2% 6% 4% 36% 3% 2%
(a) Effective April 1, 1994, the Fund was reorganized and changed its fiscal year end from August 31 to March 31.
(b) Commencement of operations.
(c) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been 0.75%,
0.78%, 0.86%, 1.05%, 1.76%(d) and 2.75%(d) for the periods ended March 31,
1998, 1997, 1996, 1995, 1994 and August 31, 1993, respectively (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
====================================================================================================================================
<S> <C> <C>
Shares COMMON STOCKS -- 92.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE -- 1.3%
18,200 Boeing Company............................................................. $ 948,675
--------------
CHEMICALS AND DRUGS -- 14.9%
20,000 Becton Dickinson & Company................................................. 1,361,250
15,000 Biomet, Inc................................................................ 450,000
20,000 Cardinal Health, Inc....................................................... 1,763,750
20,000 duPont (E.I.) de Nemours & Company......................................... 1,360,000
13,000 Eli Lilly & Company........................................................ 775,125
18,000 Goodrich (B.F.) Company.................................................... 919,125
15,000 Johnson & Johnson.......................................................... 1,099,687
8,700 Merck & Company, Inc....................................................... 1,116,863
20,000 Schering-Plough Corporation................................................ 1,633,750
22,000 Sigma-Aldrich Corporation.................................................. 819,500
--------------
......................................................................... 11,299,050
--------------
CONSTRUCTION -- 5.6%
25,500 Blount, Inc. - Class A..................................................... 758,625
20,000 Caterpiller, Inc........................................................... 1,101,250
20,312 Clayton Homes, Inc......................................................... 411,318
12,000 Florida Rock Industries, Inc............................................... 342,750
8,000 Lowe's Companies, Inc...................................................... 561,500
25,600 Valspar Corporation........................................................ 1,004,800
--------------
......................................................................... 4,180,243
--------------
CONSUMER PRODUCTS -- 9.4%
21,633 Archer-Daniels-Midland Company............................................. 475,232
13,500 Belo (A.H.) Corporation - Class A.......................................... 742,500
12,000 General Motors Corporation................................................. 809,250
14,500 Gillette Company........................................................... 1,720,969
15,000 Kimberly-Clark Corporation................................................. 751,875
12,000 Polygram NV................................................................ 556,500
15,000 Procter & Gamble Company................................................... 1,265,625
10,000 Sun Microsystems, Inc. (a) ................................................ 417,188
8,000 Newell Company............................................................. 387,500
--------------
......................................................................... 7,126,639
--------------
DURABLE GOODS -- 15.2%
12,000 Advanced Micro Devices, Inc.(a) ........................................... 348,750
20,000 Andrew Corporation(a) ..................................................... 396,250
35,000 Cisco Systems, Inc.(a) .................................................... 2,393,125
15,000 Compaq Computer Corporation................................................ 388,125
8,000 Computer Assoc. International Inc.......................................... 462,000
9,000 Deere & Company............................................................ 577,437
11,000 Diebold, Inc............................................................... 484,000
23,000 General Electric Company .................................................. 1,982,313
15,000 General Signal Corporation ................................................ 701,250
9,000 Intel Corporation.......................................................... 702,563
5,000 International Business Machines Corporation................................ 519,375
16,000 Philips Electronics NV..................................................... 1,175,000
11,500 Raytheon Company........................................................... 671,312
6,000 Shared Medical Systems, Inc................................................ 470,250
5,000 Springs Industries, Inc.................................................... 274,687
--------------
11,526,437
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
<S> <C> <C>
Shares COMMON STOCKS -- 92.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL -- 16.3%
9,695 Aetna, Inc................................................................. $ 808,927
15,000 AFLAC, Inc................................................................. 948,750
10,000 American Express Company................................................... 918,125
22,000 Federal Home Loan Mortgage Corporation..................................... 1,043,625
10,000 Fleet Financial Group, Inc................................................. 850,625
5,000 MBNA Corporation........................................................... 179,063
28,000 Mellon Bank Corporation.................................................... 1,778,000
14,000 S&P Mid-Cap 400 Depository Receipts........................................ 998,156
8,300 S&P 500 Depository Receipts................................................ 913,000
33,000 Star Banc Corporation ..................................................... 1,951,125
14,000 Synovus Financial Corporation.............................................. 519,750
15,000 Torchmark Corporation...................................................... 687,188
12,000 Travelers, Inc............................................................. 720,000
--------------
12,316,334
--------------
FOOD/BEVERAGES -- 3.1%
6,000 Anheuser-Busch Companies, Inc.............................................. 277,875
10,000 Campbell Soup Company...................................................... 567,500
40,000 Coca-Cola Enterprises...................................................... 1,467,500
1,000 Vlasic Foods International Inc.(a) ........................................ 25,562
--------------
......................................................................... 2,338,437
--------------
METAL AND MINING -- 0.8%
9,000 Aluminum Company of America................................................ 619,312
--------------
OIL/ENERGY -- 7.9%
12,500 Amoco Corporation.......................................................... 1,079,688
10,000 Baker Hughes, Inc.......................................................... 402,500
13,000 Chevron Corporation........................................................ 1,044,063
14,650 Exxon Corporation.......................................................... 990,706
11,000 Halliburton Company........................................................ 552,062
10,000 Helmerich & Payne, Inc..................................................... 312,500
5,000 Pennzoil Company........................................................... 323,125
28,500 Shell Transport & Trading PLC.............................................. 1,261,125
--------------
......................................................................... 5,965,769
--------------
PAPER AND FOREST PRODUCTS -- 1.3%
11,000 Georgia Pacific Corporation................................................ 712,250
11,000 Georgia Pacific Corporation, Timber Group.................................. 282,562
--------------
......................................................................... 994,812
--------------
RETAIL -- 4.9%
21,000 American Stores Company.................................................... 546,000
17,700 Home Depot, Inc............................................................ 1,193,644
12,000 Nike, Inc. - Class B ..................................................... 531,000
11,000 Wal-Mart Stores, Inc....................................................... 558,937
25,000 Walgreen Company........................................................... 879,687
--------------
......................................................................... 3,709,268
--------------
SERVICES - COMPUTER -- 2.7%
11,100 Automatic Data Processing, Inc............................................. 755,494
24,000 Computer Sciences Corporation(a) .......................................... 1,320,000
--------------
......................................................................... 2,075,494
--------------
TELECOMMUNICATION EQUIPMENT -- 0.5%
18,000 Scientific - Atlanta, Inc.................................................. 352,125
--------------
TRANSPORTATION -- 1.6%
15,000 FDX Corporation(a) ........................................................ 1,066,875
5,000 Southwest Airlines Company................................................. 147,812
--------------
1,214,687
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
<S> <C> <C>
Shares COMMON STOCKS -- 92.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES -- 6.9%
29,000 Ameritech Corporation...................................................... $ 1,433,688
11,000 Bellsouth Corporation...................................................... 743,188
15,490 Duke Power Company......................................................... 922,623
28,000 SBC Communications, Inc.................................................... 1,221,500
17,000 US West Inc................................................................ 930,750
--------------
5,251,749
--------------
TOTAL COMMON STOCKS (COST $38,541,826) ...................................... $69,919,031
--------------
====================================================================================================================================
Shares PREFERRED STOCKS -- 0.1% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL -- 0.1%
898 Aetna Inc., Convertible.................................................... $ 71,896
--------------
TOTAL PREFERRED STOCKS (COST $53,129) ...................................... $ 71,896
--------------
TOTAL INVESTMENTS AT VALUE (COST $38,594,955)-- 92.5% ...................... $ 69,990,927
--------------
====================================================================================================================================
Face
Amount REPURCHASE AGREEMENTS(b) -- 7.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Star Bank, N.A.,
$ 5,612,000 5.25%, dated 03/31/1998, due 04/01/1998,
repurchase proceeds $5,612,818 (Cost $5,612,000)......................... $ 5,612,000
--------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 99.9% ............... $ 75,602,927
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.1% ................................ 40,110
--------------
NET ASSETS-- 100.0% ......................................................... $ 75,643,037
==============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/2024; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/2022; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/2024. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985.
The funds pro-rata interest in the collateral at March 31, 1998 was
$5,760,848.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
====================================================================================================================================
<S> <C> <C>
Par Value U.S. TREASURY AND AGENCY OBLIGATIONS-- 43.3% Value
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 6.6%
$ 70,000 7.875%, due 04/15/1998..................................................... $ 70,066
50,000 8.25%, due 07/15/1998...................................................... 50,391
855,000 7.125%, due 10/15/1998..................................................... 862,215
225,000 7.00%, due 04/15/1999...................................................... 228,234
150,000 6.375%, due 07/15/1999..................................................... 151,406
100,000 8.00%, due 08/15/1999...................................................... 103,125
200,000 6.00%, due 10/15/1999...................................................... 201,125
250,000 7.50%, due 10/31/1999...................................................... 256,953
50,000 7.875%, due 11/15/1999..................................................... 51,734
100,000 8.50%, due 02/15/2000...................................................... 105,063
20,000 8.75%, due 08/15/2000...................................................... 21,369
50,000 8.50%, due 11/15/2000...................................................... 53,437
140,000 8.00%, due 05/15/2001...................................................... 149,231
125,000 7.875%, due 08/15/2001..................................................... 133,320
--------------
2,437,669
--------------
U.S. TREASURY STRIPS -- 0.1%
Coupon Treasury Investment Growth Security,
11,000 due 08/15/1998........................................................... 10,773
--------------
FEDERAL FARM CREDIT BANK BONDS -- 1.4%
500,000 6.00%, due 01/07/2008...................................................... 499,744
--------------
FEDERAL HOME LOAN BANK BONDS -- 1.5%
500,000 7.57%, due 08/19/2004...................................................... 543,589
--------------
.........................................................................
FEDERAL HOME LOAN MORTGAGE CORPORATION BONDS -- 9.5%
240,000 7.12%, due 09/30/2005...................................................... 241,089
500,000 6.345%, due 11/01/2005..................................................... 512,712
200,000 6.73%, due 01/05/2006...................................................... 199,535
300,000 7.52%, due 04/21/2006...................................................... 305,413
500,000 7.55%, due 04/26/2006 ..................................................... 507,734
895,000 7.44%, due 09/20/2006...................................................... 931,398
800,000 7.04%, due 01/09/2007...................................................... 824,645
--------------
3,522,526
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BONDS -- 20.8%
750,000 7.85%, due 09/10/1998...................................................... 756,827
100,000 8.45%, due 07/12/1999...................................................... 103,248
650,000 6.85%, due 05/04/2001...................................................... 650,508
500,000 6.83%, due 04/02/2003...................................................... 501,895
500,000 6.63%, due 06/20/2005...................................................... 520,380
500,000 8.00%, due 06/15/2006...................................................... 502,424
500,000 7.90%, due 06/28/2006...................................................... 508,230
650,000 7.65%, due 10/06/2006...................................................... 667,812
500,000 7.36%, due 02/07/2007...................................................... 507,943
400,000 7.70%, due 04/10/2007...................................................... 412,120
500,000 6.62%, due 06/25/2007...................................................... 522,475
500,000 7.16%, due 06/26/2007...................................................... 507,731
500,000 7.00%, due 07/17/2007...................................................... 507,744
400,000 6.80%, due 08/27/2012...................................................... 416,259
600,000 6.875%, due 09/24/2012..................................................... 622,744
--------------
7,708,340
--------------
PRIVATE EXPORT FUNDING BONDS -- 1.3%
470,000 7.90%, due 03/31/2000...................................................... 488,675
--------------
TENNESSEE VALLEY AUTHORITY BONDS -- 2.1%
745,000 6.875%, due 01/15/2002..................................................... 760,421
--------------
TOTAL U.S. TREASURY AND AGENCY OBLIGATIONS (COST $15,861,253) ............... $ 15,971,737
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
<S> <C> <C>
Par Value MORTGAGE-BACKED SECURITIES -- 5.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 0.2%
$ 87,566 Series #G92-40, Class G, 7.00%, due 07/25/2002............................. $ 87,301
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 4.8%
24,444 Pool #15032, 7.50%, due 02/15/2007......................................... 25,063
494,854 Pool #438434, 6.50%, due 01/01/2013........................................ 498,411
22,329 Pool #176413, 7.50%, due 09/15/2016........................................ 22,894
29,074 Pool #170784, 8.00%, due 12/15/2016........................................ 30,101
25,790 Pool #181540, 8.00%, due 02/15/2017........................................ 26,700
496,499 Pool #366710, 6.50%, due 02/01/2024........................................ 491,226
669,633 Pool #453826, 7.25%, due 09/01/2027........................................ 681,352
--------------
1,775,747
--------------
OTHER MORTGAGE-BACKED SECURITIES -- 0.4%
Collateralized Mortgage Securities Corporation,
145,738 Series #1991-8PF, 7.30%, due 08/20/2020............................... 146,506
--------------
.........................................................................
TOTAL MORTGAGE-BACKED SECURITIES (COST $2,012,567) .......................... $ 2,009,554
--------------
====================================================================================================================================
Par Value CORPORATE BONDS -- 47.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCE -- 22.7%
American Express Company,
$ 350,000 8.50%, due 08/15/2001.................................................... $ 375,906
--------------
AmSouth Bancorp,
425,000 9.375%, due 05/01/1999................................................... 439,635
550,000 7.75%, due 05/15/2004.................................................... 589,484
--------------
1,029,119
--------------
Associates Corporation, N.A.,
300,000 8.80%, due 08/01/1998.................................................... 302,699
--------------
Banc One Corporation,
600,000 7.00%, due 07/15/2005.................................................... 621,659
--------------
BankAmerica Corporation,
496,000 8.375%, due 03/15/2002................................................... 532,474
--------------
Bear Stearns Company,
170,000 9.375%, due 06/01/2001................................................... 185,585
--------------
General Electric Capital Corporation,
100,000 7.24%, due 01/15/2002.................................................... 104,053
150,000 7.50%, due 03/15/2002.................................................... 157,571
--------------
......................................................................... 261,624
--------------
Merrill Lynch & Company, Inc.,
745,000 7.375%, due 08/17/2002................................................... 778,203
--------------
J.P. Morgan & Company,
500,000 7.25%, due 01/15/2002.................................................... 517,155
--------------
NationsBank,
550,000 7.625%, due 04/15/2005................................................... 590,731
--------------
Regions Financial Corporation,
350,000 7.80%, due 12/01/2002.................................................... 368,257
--------------
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
Par Value CORPORATE BONDS -- 47.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc.,
$ 400,000 7.25%, due 01/15/2000.................................................... $ 407,226
480,000 7.50%, due 02/01/2003.................................................... 502,319
--------------
......................................................................... 909,545
--------------
SouthTrust Bank of Alabama, N.A.,
500,000 7.00%, due 11/15/2008.................................................... 519,350
--------------
Transamerica Financial Corporation,
785,000 7.50%, due 03/15/2004.................................................... 828,741
--------------
Wachovia Corporation,
535,000 7.00%, due 12/15/1999.................................................... 544,121
--------------
TOTAL FINANCE CORPORATE BONDS ............................................... 8,365,169
--------------
INDUSTRIAL -- 21.6%
BP America Inc.,
265,000 8.50%, due 04/15/2001................................................... 283,284
--------------
Campbell Soup Company,
500,000 6.90%, due 10/15/2006.................................................... 527,340
--------------
Coca-Cola Company,
401,000 7.875%, due 09/15/1998.................................................. 404,371
500,000 6.625%, due 08/01/2004.................................................. 512,070
--------------
916,441
--------------
duPont (E.I.) de Nemours & Company,
150,000 9.15%, due 04/15/2000.................................................... 159,309
300,000 6.75%, due 10/15/2002.................................................... 308,528
--------------
......................................................................... 467,837
--------------
Hanson Overseas,
1,100,000 7.375%, due 01/15/2003................................................... 1,150,338
--------------
International Business Machines Corporation,
1,000,000 7.25%, due 11/01/2002.................................................... 1,048,253
--------------
Kimberly-Clark Corporation,
240,000 8.625%, due 05/01/2001................................................... 258,139
--------------
Limited, Inc.,
150,000 8.875%, due 08/15/1999................................................... 154,943
--------------
Mobil Corporation,
100,000 8.375%, due 02/12/2001................................................... 106,411
--------------
Philip Morris Companies, Inc.,
305,000 7.375%, due 02/15/1999................................................... 308,156
175,000 7.75%, due 05/01/1999.................................................... 177,906
500,000 7.125%, due 10/01/2004................................................... 516,365
--------------
1,002,427
--------------
Procter & Gamble Company,
150,000 8.70%, due 08/01/2001.................................................... 162,252
--------------
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
Par Value CORPORATE BONDS -- 47.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Raytheon Company,
$ 800,000 6.50%, due 07/15/2005.................................................... $ 807,701
--------------
Wal-Mart Stores, Inc.,
170,000 9.10%, due 07/15/2000.................................................... 181,501
100,000 8.625%, due 04/01/2001................................................... 107,255
745,000 7.50%, due 05/15/2004.................................................... 796,906
--------------
1,085,662
--------------
TOTAL INDUSTRIAL CORPORATE BONDS ............................................ 7,971,028
--------------
UTILITY -- 3.1%
Consolidated Edison,
785,000 7.60%, due 01/15/2000.................................................... 805,587
--------------
Emerson Electric Company,
352,000 6.30%, due 11/01/2005.................................................... 356,819
--------------
TOTAL UTILITY CORPORATE BONDS ............................................... 1,162,406
--------------
TOTAL CORPORATE BONDS (COST $17,219,174) .................................... $ 17,498,603
--------------
TOTAL INVESTMENTS AT VALUE (COST $35,092,994)-- 96.1% ...................... $35,479,894
--------------
====================================================================================================================================
Face
Amount REPURCHASE AGREEMENTS(a) -- 2.2% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Star Bank, N.A.,
$ 804,000 5.25%, dated 03/31/1998, due 04/01/1998,
repurchase proceeds $804,117 (Cost $804,000)............................. $ 804,000
--------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 98.3% ................ $36,283,894
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.7% ................................ 624,059
--------------
NET ASSETS-- 100.0% ......................................................... $36,907,953
==============
(a) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/2024; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/2022; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/2024. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985.
The funds pro-rata interest in the collateral at March 31, 1998 was $839,521.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alabama Housing Finance Auth. Rev.,
$ 245,000 4.90%, due 10/01/1998...................................................... $ 246,421
--------------
Alabama Mental Health Finance Auth. Special Tax,
300,000 5.00%, due 05/01/2006...................................................... 311,295
--------------
Alabama State, GO,
200,000 5.90%, due 03/01/1999...................................................... 204,068
100,000 5.70%, due 12/01/2002...................................................... 106,181
--------------
310,249
--------------
Alabama State Corrections Institutions Rev.,
100,000 4.20%, due 04/01/1998...................................................... 100,000
--------------
Alabama State Industrial Access Road & Bridge Corp., GO,
100,000 4.00%, due 06/01/1998...................................................... 100,038
100,000 5.25%, due 06/01/2003...................................................... 104,165
--------------
204,203
--------------
Alabama State Mun. Elec. Auth. Power Supply Rev.,
150,000 5.625%, due 09/01/2000..................................................... 155,486
340,000 5.75%, due 09/01/2001...................................................... 356,742
400,000 6.50%, due 09/01/2005, prerefunded 09/01/2001 at 101....................... 433,916
--------------
946,144
--------------
Alabama State Public School & College Auth. Rev.,
100,000 4.40%, due 12/01/2000...................................................... 101,275
130,000 5.00%, due 06/01/2003...................................................... 135,194
250,000 5.25%, due 11/01/2005...................................................... 263,898
--------------
500,367
--------------
Alabama Water Pollution Control Rev.,
25,000 7.00%, due 08/15/2001...................................................... 26,092
190,000 6.25%, due 08/15/2004...................................................... 210,560
--------------
236,652
--------------
Anniston, AL, GO,
250,000 5.50%, due 01/01/2004...................................................... 266,562
--------------
Anniston, AL, Regional Medical Center Board Hospital Rev.,
30,000 7.375%, due 07/01/2006, ETM................................................ 33,304
--------------
Auburn University, Alabama, Rev.,
25,000 6.10%, due 06/01/1999...................................................... 25,663
150,000 5.20%, due 06/01/2004...................................................... 157,318
325,000 5.25%, due 04/01/2005...................................................... 341,887
--------------
524,868
--------------
Baldwin Co., AL, GO,
200,000 5.85%, due 08/01/2003...................................................... 215,608
400,000 5.00%, due 02/01/2007...................................................... 414,716
--------------
630,324
--------------
Baldwin Co., AL, Board of Education Rev.,
50,000 5.40%, due 12/01/1998...................................................... 50,552
300,000 5.90%, due 12/01/2001...................................................... 308,595
--------------
359,147
-------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Birmingham, AL, GO,
$ 100,000 5.80%, due 04/01/2002...................................................... $ 105,986
200,000 5.90%, due 04/01/2003...................................................... 214,724
--------------
320,710
--------------
Birmingham, AL, Industrial Water Board Rev.,
100,000 5.00%, due 03/01/2001...................................................... 102,668
100,000 6.00%, due 07/01/2007...................................................... 111,721
--------------
214,389
--------------
Birmingham, AL, Medical Clinic Board Rev.,
60,000 7.30%, due 07/01/2005, ETM................................................. 67,241
--------------
Birmingham, AL, Special Facilities Rev.,
100,000 4.45%, due 06/01/1999...................................................... 100,817
--------------
Birmingham, AL, Waterworks & Sewer Board Rev.,
50,000 5.90%, due 01/01/2003...................................................... 53,577
400,000 6.15%, due 01/01/2006...................................................... 432,164
--------------
485,741
--------------
Birmingham-Southern College, AL, Private Education Bldg. Auth. Rev.,
500,000 5.10%, due 12/01/2012...................................................... 498,225
--------------
DCH Health Care Auth. of Alabama Rev.,
55,000 5.00%, due 06/01/2004...................................................... 56,882
--------------
Decatur, AL, GO,
300,000 5.00%, due 06/01/2009...................................................... 308,901
--------------
Fairhope, AL, Utility, Rev.,
200,000 5.10%, due 12/01/2008...................................................... 205,788
--------------
Greenville, AL, GO,
300,000 5.10%, due 12/01/2009...................................................... 310,722
--------------
Hoover, AL, Board of Education, GO,
400,000 6.00%, due 02/15/2006...................................................... 437,668
--------------
Hoover, AL, Board of Education Special Tax,
200,000 6.625%, due 02/01/2010, prerefunded 02/01/2001 at 102...................... 217,268
--------------
Houston Co., AL, GO,
100,000 4.20%, due 10/01/1998...................................................... 100,265
250,000 5.00%, due 07/01/2002...................................................... 258,088
--------------
358,353
--------------
Huntsville, AL, GO,
115,000 5.15%, due 08/01/2000...................................................... 118,171
100,000 5.20%, due 11/01/2000...................................................... 103,162
500,000 5.50%, due 11/01/2002...................................................... 528,105
100,000 5.90%, due 11/01/2005...................................................... 107,886
300,000 5.40%, due 02/01/2010...................................................... 313,290
--------------
1,170,614
--------------
Huntsville, AL, Electric Systems Rev.,
150,000 6.10%, due 12/01/2000...................................................... 158,156
150,000 5.00%, due 12/01/2003...................................................... 155,451
--------------
313,607
--------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Huntsville, AL, Water Systems Rev.,
$ 150,000 5.15%, due 05/01/2004...................................................... $ 156,837
150,000 5.25%, due 05/01/2005...................................................... 156,897
--------------
313,734
--------------
Jefferson Co., AL, GO,
150,000 5.55%, due 04/01/2002...................................................... 157,329
100,000 5.00%, due 04/01/2004...................................................... 103,347
--------------
260,676
--------------
Jefferson Co., AL, Board of Education Capital Outlay Warrants,
300,000 5.70%, due 02/15/2011...................................................... 319,794
--------------
Jefferson Co., AL, Sewer Rev.,
140,000 5.15%, due 09/01/2002...................................................... 145,936
50,000 5.50%, due 09/01/2003 ..................................................... 53,093
300,000 5.75%, due 09/01/2005 ..................................................... 323,343
--------------
522,372
--------------
Lee Co., AL, GO,
300,000 5.50%, due 02/01/2007...................................................... 321,876
--------------
Madison, AL, Board of Education School Warrants,
100,000 5.00%, due 02/01/1999...................................................... 101,118
--------------
Madison, AL, Warrants,
325,000 5.55%, due 04/01/2007...................................................... 350,873
--------------
Madison Co., AL, Board of Education Capital Outlay Tax Antic. Warrants,
175,000 5.20%, due 09/01/2004...................................................... 184,144
250,000 5.10%, due 09/01/2011...................................................... 255,807
--------------
439,951
--------------
Mobile, AL, GO,
200,000 5.00%, due 08/15/1998...................................................... 200,978
150,000 5.20%, due 02/15/1999...................................................... 152,010
200,000 5.40%, due 08/15/2000...................................................... 206,816
25,000 6.25%, due 08/01/2001...................................................... 26,665
25,000 6.30%, due 08/01/2001...................................................... 26,500
275,000 6.20%, due 02/15/2007, ETM................................................. 307,802
--------------
920,771
--------------
Mobile, AL, Water & Sewer Commissioners Rev.,
55,000 6.30%, due 01/01/2003...................................................... 59,794
--------------
Mobile Co., AL, GO,
50,000 6.10%, due 02/01/2002, prerefunded 02/01/2000 at 102....................... 52,871
160,000 6.70%, due 02/01/2011, prerefunded 02/01/2000 at 102....................... 170,958
--------------
223,829
--------------
Mobile Co., AL., Board of Education Capital Outlay Warrants,
400,000 5.00%, due 03/01/2008...................................................... 412,376
--------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mobile Co., AL, Gas Tax Antic. Warrants Rev.,
$ 100,000 4.50%, due 02/01/2003...................................................... $ 100,976
--------------
Montgomery, AL, GO,
200,000 4.25%, due 05/01/1999, ETM................................................. 201,152
200,000 4.70%, due 05/01/2002...................................................... 204,064
500,000 5.10%, due 10/01/2008...................................................... 521,480
--------------
926,696
--------------
Montgomery, AL, Waterworks & Sanitation Rev.,
200,000 5.85%, due 03/01/2003...................................................... 213,598
400,000 5.60%, due 09/01/2009...................................................... 428,632
--------------
642,230
--------------
Montgomery Co., AL, GO,
100,000 5.20%, due 11/01/2006...................................................... 104,352
--------------
Mountain Brook, AL, Board of Education Capital Outlay Warrants,
405,000 4.80%, due 02/15/2011...................................................... 403,898
--------------
Muscle Shoals, AL, GO,
400,000 5.60%, due 08/01/2010...................................................... 427,020
--------------
Opelika, AL, GO,
100,000 4.60%, due 03/01/2003...................................................... 101,801
100,000 5.30%, due 07/01/2003...................................................... 105,128
--------------
206,929
--------------
Shelby Co., AL, GO,
205,000 5.20%, due 08/01/2000...................................................... 210,970
50,000 5.35%, due 08/01/2001...................................................... 52,010
--------------
262,980
--------------
Shelby Co., AL, Hospital Board Rev.,
35,000 6.60%, due 02/01/2001, ETM................................................. 37,296
25,000 6.60%, due 02/01/2002, ETM................................................. 27,084
40,000 6.60%, due 02/01/2003, ETM................................................. 44,028
--------------
108,408
--------------
Tuscaloosa, AL, Board of Education, GO,
300,000 4.625%, due 08/01/2001..................................................... 301,323
100,000 5.10%, due 02/01/2004...................................................... 104,135
--------------
405,458
--------------
Tuscaloosa, AL, Board of Education Special Tax Warrants,
75,000 5.70%, due 02/15/2005...................................................... 79,755
125,000 6.00%, due 02/15/2009...................................................... 134,805
--------------
214,560
--------------
University of Alabama General Fee Series A Rev.,
250,000 4.15%, due 10/01/1999...................................................... 251,317
50,000 5.00%, due 11/01/2000...................................................... 51,325
240,000 5.10%, due 10/01/2002...................................................... 249,271
400,000 5.25%, due 06/01/2010...................................................... 415,624
--------------
......................................................................... 967,537
--------------
Vestavia Hills, AL, Board of Education Capital Outlay Rev.,
55,000 5.25%, due 02/01/2004...................................................... 57,367
--------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Vestavia Hills, AL, Warrants,
$ 125,000 4.90%, due 04/01/2005...................................................... $ 128,655
--------------
TOTAL ALABAMA (COST $18,209,517) ............................................ $ 18,940,692
--------------
<CAPTION>
==============================================================================================================
Shares MONEY MARKETS -- 3.9% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
779,351 Star Tax-Free Money Market Fund (Cost $779,351).............................. $ 779,351
-------------
TOTAL INVESTMENTS AT VALUE (COST $18,988,868)-- 98.9% ...................... $19,720,043
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.1% ................................ 218,253
--------------
NET ASSETS-- 100.0% ......................................................... $ 19,938,296
==============
ETM - Escrowed to maturity.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
================================================================================
1. Significant Accounting Policies
The Government Street Equity Fund, The Government Street Bond Fund, and The
Alabama Tax Free Bond Fund (the Funds) are each a no-load series of The
Williamsburg Investment Trust (the Trust). The Trust, an open-end management
investment company registered under the Investment Company Act of 1940, as
amended, was organized as a Massachusetts business trust on July 18, 1988.
The Government Street Equity Fund's investment objective is to seek capital
appreciation through the compounding of dividends and capital gains, both
realized and unrealized, on its investments in common stocks. Current income is
of secondary importance.
The Government Street Bond Fund's investment objectives are to preserve capital,
to provide current income and to protect the value of the portfolio against the
effects of inflation by limiting investments to fixed income securities in the
four highest quality ratings.
Capital appreciation is of secondary importance.
The Alabama Tax Free Bond Fund's investment objectives are to provide current
income exempt from both federal income taxes and the personal income taxes of
Alabama and to preserve capital. Capital appreciation is of secondary
importance.
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- The Funds' portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded. It is expected that fixed income securities will ordinarily be traded
on the over-the-counter market, and common stocks will ordinarily be traded on a
national securities exchange, but may also be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service.
Repurchase agreements -- The Funds generally enter into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market value. At the time the Funds
enter into the joint repurchase agreement, the Funds take possession of the
underlying securities and the seller agrees that the value of the underlying
securities, including accrued interest, will at all times be equal to or exceed
the face amount of the repurchase agreement. In addition, each Fund actively
monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of each Fund's assets, less liabilities, by
the number of shares outstanding. The offering price and redemption price per
share of each Fund is equal to the net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized in accordance with income tax regulations which approximate
generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment income
are declared and paid quarterly to shareholders of The Government Street Equity
Fund; declared and paid monthly to shareholders of The Government Street Bond
Fund; and declared daily and paid monthly to shareholders of The Alabama Tax
Free Bond Fund. Net realized short-term capital gains, if any, may be
distributed throughout the year and net realized long-term capital gains, if
any, are distributed at least once each year. Income distributions and capital
gain distributions are determined in accordance with income tax regulations.
<PAGE>
Security transactions -- Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies,
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of each Fund as of March 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Government Government Alabama
Street Street Tax Free
Equity Fund Bond Fund Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized appreciation............................ $ 31,625,324 $ 744,768 $ 739,086
Gross unrealized depreciation............................ ( 229,352 ) ( 357,868 ) ( 7,911 )
--------------- --------------- ---------------
Net unrealized appreciation.............................. $ 31,395,972 $ 386,900 $ 731,175
--------------- --------------- ---------------
Federal income tax cost.................................. $ 38,594,955 $ 35,092,994 $ 18,988,868
=============== =============== ===============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1998, The Government Street Bond Fund and The Alabama Tax Free
Bond Fund had capital loss carryforwards for federal income tax purposes of
$434,110 and $198,936, respectively, which expire through the year 2006.
2. Investment Transactions
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $13,696,785 and $10,331,366, respectively, for The Government Street Equity
Fund, $9,890,780 and $3,220,454, respectively, for The Government Street Bond
Fund, and $2,686,769 and $436,170, respectively, for The Alabama Tax Free Bond
Fund.
3. Transactions with Affiliates
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by T. Leavell & Associates, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, The Government Street Equity Fund pays the
Adviser a fee, which is computed and accrued daily and paid monthly at an annual
rate of .60% of its average daily net assets up to $100 million and .50% of such
assets in excess of $100 million. The Government Street Bond Fund pays the
Adviser a fee at an annual rate of .50% of its average daily net assets up to
$100 million and .40% of such net assets in excess of $100 million. The Alabama
Tax Free Bond Fund pays the Adviser a fee at an annual rate of .35% of its
average daily net assets up to $100 million and .25% of such net assets in
excess of $100 million.
<PAGE>
The Adviser currently intends to limit the total operating expenses of The
Alabama Tax Free Bond Fund to .65% of its average daily net assets. Accordingly,
the Adviser voluntarily waived $18,821 of its investment advisory fees for the
Fund during the year ended March 31, 1998.
Certain trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement between the Trust and
Countrywide Fund Services, Inc. (CFS), CFS provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Funds. For these services, CFS receives a monthly fee from The
Government Street Equity Fund at an annual rate of .20% of its average daily net
assets up to $25 million; .175% of the next $25 million of such assets; and .15%
of such net assets in excess of $50 million. From The Government Street Bond
Fund, CFS receives a monthly fee of .075% of its average daily net assets up to
$200 million and .05% of such assets in excess of $200 million. From The Alabama
Tax Free Bond Fund, CFS receives a monthly fee of .15% of its average daily net
assets up to $200 million and .10% of such assets in excess of $200 million. The
fee for each Fund is subject to a $2,000 monthly minimum. In addition, each Fund
pays out-of-pocket expenses including, but not limited to, postage, supplies and
costs of pricing the Funds' portfolio securities.
Certain officers of the Trust are also officers of CFS.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
================================================================================
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statements of assets and liabilities
of The Government Street Equity Fund, The Government Street Bond Fund and The
Alabama Tax Free Bond Fund, (each a series of The Williamsburg Investment
Trust), including the portfolios of investments, as of March 31, 1998, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Government Street Equity Fund, The Government Street Bond Fund
and The Alabama Tax Free Bond Fund, as of March 31, 1998, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended and their financial highlights for the
periods referred to above, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
The Government Street Funds
The Alabama Tax Free Bond Fund
------------------------------
No Load Mutual Funds
Investment Adviser
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, AL 36633
Administrator
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, OH 45201-5354
1-800-443-4249
Legal Counsel
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Board of Trustees
Richard Mitchell, President
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr. M.D.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
Portfolio Managers
Thomas W. Leavell and
Stephen W. Simmons,
The Government Street Equity Fund
Mary Shannon Hope,
The Government Street Bond Fund
Timothy S. Healey,
The Alabama Tax Free Bond Fund
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STATEMENT OF ADDITIONAL INFORMATION
THE ALABAMA
TAX FREE BOND FUND
August 1, 1998
A series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
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INVESTMENT OBJECTIVES AND POLICIES ........................................ 2
INVESTMENT LIMITATIONS .................................................... 4
TRUSTEES AND OFFICERS ..................................................... 5
INVESTMENT ADVISOR ........................................................ 10
ADMINISTRATOR ............................................................. 11
OTHER SERVICES ............................................................ 12
BROKERAGE ................................................................. 12
SPECIAL SHAREHOLDER SERVICES .............................................. 13
PURCHASE OF SHARES ........................................................ 15
REDEMPTION OF SHARES ...................................................... 15
NET ASSET VALUE DETERMINATION ............................................. 16
ALLOCATION OF TRUST EXPENSES .............................................. 16
ADDITIONAL TAX INFORMATION ................................................ 16
CAPITAL SHARES AND VOTING ................................................. 18
CALCULATION OF PERFORMANCE DATA ........................................... 18
FINANCIAL STATEMENTS AND REPORTS .......................................... 21
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Alabama Tax Free Bond Fund (the
"Fund") dated August 1, 1998. The Prospectus may be obtained from the Fund, at
the address and phone number shown above, at no charge.
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INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time the
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Fund holds a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Advisor will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Fund's custodian either directly or through a securities depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Fund. Money market
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instruments also may include Bankers' Acceptances and Certificates of Deposit of
domestic branches of U.S. banks, Commercial Paper and Variable Amount Demand
Master Notes ("Master Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and
"accepted" by a bank, are the customary means of effecting payment for
merchandise sold in import-export transactions and are a source of financing
used extensively in international trade. When a bank "accepts" such a time
draft, it assumes liability for its payment. When the Fund acquires a Bankers'
Acceptance, the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Bankers' Acceptance, therefore, carries the
full faith and credit of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an
unsecured interest-bearing debt obligation of a bank. CDs acquired by the Fund
would generally be in amounts of $100,000 or more. COMMERCIAL PAPER is an
unsecured, short term debt obligation of a bank, corporation or other borrower.
Commercial Paper maturity generally ranges from two to 270 days and is usually
sold on a discounted basis rather than as an interest-bearing instrument. The
Fund will invest in Commercial Paper only if it is rated in the highest rating
category by any nationally recognized statistical rating organization ("NRSRO")
or, if not rated, the issuer must have an outstanding unsecured debt issue rated
in the three highest categories by any NRSRO or, if not so rated, be of
equivalent quality in the Advisor's assessment. Commercial Paper may include
Master Notes of the same quality. MASTER NOTES are unsecured obligations which
are redeemable upon demand of the holder and which permit the investment of
fluctuating amounts at varying rates of interest. Master Notes are acquired by
the Fund only through the Master Note program of the Fund's custodian, acting as
administrator thereof. The Advisor will monitor, on a continuous basis, the
earnings power, cash flow and other liquidity ratios of the issuer of a Master
Note held by the Fund.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Advisor felt such action was appropriate. In such a case
the Fund could incur a short-term gain or loss.
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INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations, in addition to those
described in the Prospectus, which cannot be changed without approval by holders
of a majority of the outstanding voting shares of the Fund. A "majority" for
this purpose, means the lesser of (i) 67% of the Fund's outstanding shares
represented in person or by proxy at a meeting at which more than 50% of its
outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, the Fund MAY NOT:
(1) Invest for the purpose of exercising control or management of another
issuer;
(2) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Fund may
invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things;
(3) Underwrite securities issued by others, except to the extent the Fund may
be deemed to be an underwriter under the federal securities laws in
connection with the disposition of portfolio securities;
(4) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
(5) Make short sales of securities or maintain a short position, except short
sales "against the box" (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);
(6) Participate on a joint or joint and several basis in any trading account in
securities;
(7) Make loans of money or securities, except that the Fund may invest in
repurchase agreements;
(8) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors), if more than 5% of its total assets would be invested
in such securities;
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(9) Write, purchase or sell commodities, commodities contracts, futures
contracts or related options;
(10) Invest, with respect to at least 50% of its total assets, more than 5% in
the securities of any one issuer (other than the U.S. Government, its
agencies or instrumentalities) or acquire more than 25% of the outstanding
voting securities of any issuer; or
(11) Invest more than an aggregate of 15% of the net assets of the Fund in
securities subject to legal or contractual restrictions on resale or for
which there are no readily available market quotations or in other illiquid
securities.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation.
While the Fund has reserved the right to make short sales "against the box"
(limitation number 5, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
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<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
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John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
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Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
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Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary
Cincinnati, Ohio 45202 of Countrywide Investments, Inc. and Countrywide
Financial Services, Inc.; Secretary of Countrywide
Investment Trust, Countrywide Tax-Free Trust
and Countrywide Strategic Trust, Cincinnati, Ohio
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Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
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**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
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PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Fund. On
the same date, Mr. John R. Miller, Jr., P.O. Box 469, Brewton, Alabama 36427,
beneficially owned 19.5% of the then outstanding shares of the Fund; Charles
Schwab & Co., Inc., 101 Montgomery Street, San Francisco, California 94104,
owned of record 27.4% of the then outstanding shares of the Fund; and Saltco,
P.O. Box 469, Brewton, Alabama 36427, owned of record 5.3% of the then
outstanding shares of the Fund.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc. (the "Advisor") supervises the Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement is effective until April 1,
1999 and will be renewed thereafter for one year periods only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees or by vote of a majority of the Fund's outstanding voting
securities, provided the continuance is also approved by a majority of the
Trustees who are not "interested persons" of the Trust or the Advisor by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement is terminable without penalty on sixty days notice by the
Board of Trustees of the Trust or by the Advisor. The Advisory Agreement
provides that it will terminate automatically in the event of its assignment.
Compensation of the Advisor is at the annual rate of 0.35% of the Fund's average
daily net assets. For the fiscal years ended March 31, 1998, 1997 and 1996, the
Fund paid the Advisor advisory fees of $46,538 (which was net of voluntary fee
waivers of $18,821), $36,816 (net of voluntary fee waivers of $19,812) and
$34,436 (net of voluntary fee waivers of $15,334), respectively.
The Advisor, organized as an Alabama corporation in 1979, is controlled by its
shareholders, Thomas W. Leavell, Richard Mitchell, Dorothy G. Gambill and
Timothy S. Healey. In addition to acting as Advisor to the Fund, the Advisor
serves as investment advisor to two additional investment companies, the
subjects of separate prospectuses, and also provides investment advice to
corporations, trusts, pension and profit sharing plans, other business and
institutional accounts and individuals.
The Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Fund. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Fund, and does
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so in accordance with the investment objectives and policies of the Fund as
described herein and in the Prospectus. The Advisor places all securities orders
for the Fund, determining with which broker, dealer, or issuer to place the
orders.
The Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Advisor must seek at all
times the most favorable price and execution for all securities brokerage
transactions.
The Advisor also provides, at its own expense, certain Executive Officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Fund to clients of such dealers or others or based on the average balance of all
accounts in the Fund for which such dealers or others are designated as the
person responsible for the account.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Fund and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Fund pays the
Administrator a fee at the annual rate of 0.15% of the average value of its
daily net assets up to $200,000,000 and 0.10% of such assets in excess of
$200,000,000; provided, however, that the minimum fee is $2,000 per month. In
addition, the Fund pays out-of-pocket expenses, including but not limited to,
postage, envelopes, checks, drafts, forms, reports, record storage and
communication lines.
For the fiscal years ended March 31, 1998, 1997 and 1996, the Administrator
received from the Fund fees of $28,029, $24,513 and $24,000, respectively.
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OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Fund's federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
The Custodian of the Fund's assets is Star Bank, N.A. (the "Custodian"), 425
Walnut Street, Cincinnati, Ohio 45202. The Custodian holds all cash and
securities of the Fund (either in its possession or in its favor through "book
entry systems" authorized by the Trustees in accordance with the 1940 Act),
collects all income and effects all securities transactions on behalf of the
Fund.
BROKERAGE
It is the Fund's practice to seek the best price and execution for all portfolio
securities transactions. The Advisor (subject to the general supervision of the
Board of Trustees) directs the execution of the Fund's portfolio transactions.
The Trust has adopted a policy which prohibits the Advisor from effecting Fund
portfolio transactions with broker-dealers which may be interested persons of
the Fund, the Trust, any Trustee, officer or director of the Trust or its
investment advisors or any interested person of such persons.
The Fund's portfolio transactions will normally be principal transactions
executed in over-the-counter markets and will be executed on a "net" basis,
which may include a dealer markup.
No brokerage commissions were paid by the Fund for the last three fiscal years.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of the Fund's brokerage commissions to persons or firms
providing the Advisor with research services, which may typically include, but
are not limited to, investment recommendations, financial, economic, political,
fundamental and technical market and interest rate data, and other statistical
or research services. Much of the information so obtained may also be used by
the Advisor for the benefit of the other clients it may have. Conversely, the
Fund may benefit from such transactions effected for the benefit of other
clients. In all cases, the Advisor is obligated to effect transactions for the
Fund based upon obtaining the most favorable price and execution. Factors
considered by the Advisor in determining whether the Fund will receive the most
favorable price and execution include, among other things: the size of the
order, the broker's ability to effect and settle the transaction promptly and
efficiently and the Advisor's perception of the broker's reliability, integrity
and financial condition.
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SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts, estates
and others, investors are free to make additions and withdrawals to or from
their account as often as they wish. When an investor makes an initial
investment in the Fund, a shareholder account is opened in accordance with the
investor's registration instructions. Each time there is a transaction in a
shareholder account, such as an additional investment or the reinvestment of a
dividend or distribution, the shareholder will receive a statement showing the
current transaction and all prior transactions in the shareholder account during
the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see "Signature Guarantees"). A corporation (or partnership)
must also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Fund. Shareholders should be aware that such systematic withdrawals
may deplete or use up entirely their initial investment and may result in
realized long-term or short-term capital gains or losses. The Systematic
Withdrawal Plan may be terminated at any time by the
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Fund upon sixty days' written notice or by a shareholder upon written notice to
the Fund. Applications and further details may be obtained by calling the Fund
at 1-800-443-4249, or by writing to:
The Alabama Tax Free Bond Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares of the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election may be filed under
Rule 18f-1 of the 1940 Act, wherein the Fund commits itself to pay redemptions
in cash, rather than in kind, to any shareholder of record of the Fund who
redeems during any ninety day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the existing account registration; (2) signature(s) of the
registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (see the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
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PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m. Eastern time
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Fund until
confirmed in writing (or unless other arrangements have been made with the Fund,
for example in the case of orders utilizing wire transfer of funds) and payment
has been received.
The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUND. The Fund has adopted initial investment
minimums for the purpose of reducing the cost to the Fund (and consequently to
the shareholders) of communicating with and servicing its shareholders. However,
a reduced minimum initial investment requirement of $1,000 applies to Trustees,
officers and employees of the Fund, the Advisor and certain parties related
thereto, including clients of the Advisor or any sponsor, officer, committee
member thereof, or the immediate family of any of them. In addition, accounts
having the same mailing address may be aggregated for purposes of the minimum
investment if they consent in writing to share a single mailing of shareholder
reports, proxy statements (but each such shareholder would receive his/her own
proxy) and other Fund literature.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Fund for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Fund.
- 15 -
<PAGE>
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund, and they have
adopted procedures to do so, as follows. The net asset value of the Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the Trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Fund. General Trust expenses are allocated among
the series, or funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, the Fund
must distribute annually at least 90% of its net taxable income plus 90% of its
net tax-exempt interest income. In addition to this distribution requirement,
the Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities' loans, gains from the
disposition of stock or securities, and certain other income.
- 16 -
<PAGE>
While the above requirements are aimed at qualification of the Fund as a
regulated investment company under Subchapter M of the Code, the Fund also
intends to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Fund remains qualified under Subchapter M,
it will not be subject to federal income tax to the extent it distributes its
taxable net investment income and net realized capital gains. A nondeductible 4%
federal excise tax will be imposed on the Fund to the extent it does not
distribute at least 98% of its ordinary taxable income for a calendar year, plus
98% of its capital gain net taxable income for the one year period ending each
October 31, plus certain undistributed amounts from prior years. Such required
distributions are based only on the Fund's taxable income, however, so the
excise tax generally would not apply to tax-exempt income earned by the Fund.
While the Fund intends to distribute its taxable income and capital gains in a
manner so as to avoid imposition of the federal excise and income taxes, there
can be no assurance that the Fund indeed will make sufficient distributions to
avoid entirely imposition of federal excise or income taxes.
As of March 31, 1998, the Fund had capital loss carryforwards for federal income
tax purposes of $198,936, which expire through the year 2005. These capital loss
carryforwards may be utilized in future years to offset net realized capital
gains prior to distributing such gains to shareholders.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUND'S DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the Fund
derived from net investment income or net short-term capital gains are taxable
to shareholders as ordinary income, whether received in cash or reinvested in
additional shares. Since federal and Alabama tax laws exempt income from
qualifying municipal bond obligations, income dividends attributable to such
obligations are exempt from such taxes. A report will be distributed to each
shareholder as of December 31st of each year outlining the percentage of income
dividends which qualify for such tax exemptions. Distributions, if any, of
long-term capital gains are taxable to shareholders as long-term capital gains,
whether received in cash or reinvested in additional shares, regardless of how
long Fund shares have been held. Such capital gain distributions are also
subject to Alabama income tax, except to the extent attributable to gains from
certain obligations of the State of Alabama and its political subdivisions. For
information on "backup" withholding, see "How to Purchase Shares" in the
Prospectus.
For federal income tax purposes, any loss upon the sale of shares of the Fund
held for six months or less will be treated as long-term capital loss to the
extent of any long-term capital gain
- 17 -
<PAGE>
distributions received by the shareholder. In addition, any loss of Fund shares
held for six months or less will be disallowed for both federal and Alabama
income tax purposes to the extent of any dividends received by the shareholder
exempt from federal income tax, even though, in the case of Alabama, some
portion of such dividends actually may have been subject to Alabama income tax.
CAPITAL SHARES AND VOTING
Shares of the Fund, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not less
than ten percent (10%) of the shares then outstanding may require the Trustees
to call such a meeting and the Trustees are obligated to provide certain
assistance to shareholders desiring to communicate with other shareholders in
such regard (e.g., providing access to shareholder lists, etc.). In case a
vacancy or an anticipated vacancy shall for any reason exist, the vacancy shall
be filled by the affirmative vote of a majority of the remaining Trustees,
subject to the provisions of Section 16(a) of the 1940 Act. The Trust does not
expect to have an annual meeting of shareholders.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Fund for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the
- 18 -
<PAGE>
result by the net asset value per share at the beginning of the period. In
particular, the average annual total return of the Fund ("T") is computed by
using the redeemable value at the end of a specified period of time ("ERV") of a
hypothetical initial investment of $1,000 ("P") over a period of time ("n")
according to the formula P(l+T)n=ERV. The average annual total return quotations
for the Fund for the one year period ended March 31, 1998, for the five year
period ended March 31, 1998 and for the period since inception (January 15,
1993) to March 31, 1998 are 7.44%, 5.26% and 5.23%, respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, the Fund may advertise its yield and tax-equivalent yield. A
yield quotation is based on a 30-day (or one month) period and is computed by
dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period, according to the
following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The Fund's yield for the 30 days ended March 31, 1998 was 3.79%.
The tax-equivalent yield of the Fund is computed by using the tax-exempt yield
figure and dividing by one minus the applicable tax rate. The Fund's
tax-equivalent yield for the 30 days ended March 31, 1998, based on the highest
marginal combined federal and Alabama income tax rate, was 6.60%.
- 19 -
<PAGE>
The Fund's performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Fund may compare its performance to the Lehman
7-Year Municipal Bond Index or the Lehman 3-Year Municipal Bond Index, which are
generally considered to be representative of the performance of intermediate
term municipal bonds. Comparative performance may also be expressed by reference
to a ranking prepared by a mutual fund monitoring service, such as Lipper
Analytical Services, Inc. or Morningstar, Inc., or by one or more newspapers,
newsletters or financial periodicals. Performance comparisons may be useful to
investors who wish to compare the Fund's past performance to that of other
mutual funds and investment products. Of course, past performance is not a
guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. he maximum rating is five stars, and ratings are effective for two
weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time
- 20 -
<PAGE>
information about its portfolio allocation and holdings at a particular date
(including ratings of securities assigned by independent rating services such as
S&P and Moody's). The Fund may also depict the historical performance of the
securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Fund will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published, and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Fund as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
- 21 -
<PAGE>
The Government Street Funds
The Alabama Tax Free Bond Fund
------------------------------
No Load Mutual Funds
Annual Report
March 31, 1998
Investment Adviser
T. Leavell & Associates, Inc.
Founded 1979
<PAGE>
LETTER FROM THE PRESIDENT
================================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the audited annual report of
The Government Street Funds and of The Alabama Tax Free Bond Fund for the year
ended March 31, 1998.
THE GOVERNMENT STREET EQUITY FUND
- ---------------------------------
The Government Street Equity Fund achieved a total return of 39.3% for
its fiscal year ended March 31, 1998. The total return of the S&P 500 Index was
48.0% for the same twelve month period.
The environment for investing in common stocks remained extraordinarily
positive in 1997 and during 1998's first calendar quarter. Robust economic
growth; growth in corporate profitability; strong growth in capital spending;
low inflation (and lower inflation expectations); and a strong dollar have all
contributed to another remarkable year in the U.S. stock market. These elements
combined with a tremendous demand for common stocks by individual investors,
401-K plans, IRAs, and other employee benefit plans have resulted in an
unprecedented three consecutive years of annual stock returns in excess of 20%.
It is hard to imagine that the market can continue its momentum. A
strong U.S. economy means that Federal Reserve tightening of interest rates is a
realistic concern. In addition, while Asia accounts for only a small proportion
of U.S. companies sales, it is a much bigger share of expected sales growth; and
the economic situation there remains uncertain. There also is the possibility of
lower corporate profitability. Yet, the average stock fund was up 11.9% during
the first calendar quarter of 1998 -- a greater return than most analysts were
expecting for the entire year.
Regardless of what occurs, however, the Fund's diversification provides
the foundation for a solid, high quality investment. There are eighty-five
different companies represented in the portfolio; they are spread across
industry and capitalization sectors. Approximately 53% of the Fund's assets are
invested in growth stocks; 39% in value stocks; and 8% in cash equivalents. If
the market continues its advance, investors in The Government Street Equity Fund
will participate; if there is a correction, they are well positioned
defensively.
During the year ended March 31, 1998, the Fund experienced a turnover
rate of only 18%; average trading costs were approximately $0.035 per share.
Both of these statistics reflect the continued operating efficiency of the Fund.
At year end, the net assets of the Fund were $75,643,037; net asset value per
share was $43.79.
In February, Stephen W. Simmons joined T. Leavell & Associates after
having spent the last three and a half years managing the $6 billion equity
portfolio of the Retirement Systems of Alabama. It is our pleasure to announce
that he has been appointed co-manager of The Government Street Equity Fund. He
will focus his efforts on the value stock area of the portfolio. In addition,
Stephen will be involved in the development of our quantitative stock selection
techniques.
THE GOVERNMENT STREET BOND FUND
- -------------------------------
The twelve month period that ended March 31, 1998 was a stellar year
for bonds and for The Government Street Bond Fund, as well.
Continued low inflation in the face of a strong economy, an inactive
Federal Reserve Board, the prospects for a balanced budget, and Asian market
uncertainties all contributed to the bond market surge in 1997 and early 1998.
In addition, the strong U.S. dollar encouraged foreign investors to buy U.S.
bonds, and commodity prices fell throughout the year. This latter phenomenon
indicates that the current benign inflationary environment is likely to
continue.
<PAGE>
The Government Street Bond Fund achieved a total return of 9.6% for its
fiscal year ended March 31, 1998. This return is in line with the Lehman
Intermediate Government Corporate Bond Index which had a total return of 9.6%
for the same twelve month period. The ratio of net investment income to average
net assets was 6.4%.
At year end, 97.2% of the Fund's assets were invested in fixed-income
securities rated A or better, and over 50% were invested in AAA bonds. The
average maturity and duration of the Fund were 5.6 years and 4.3 years,
respectively. The net assets of the Fund were $36,907,953; net asset value per
share was $21.06. The ratio of expenses to average net assets was 0.74%.
THE ALABAMA TAX FREE BOND FUND
- ------------------------------
The Alabama Tax Free Bond Fund provides Alabama investors with a source
of income which is exempt from both federal and state income taxes. The Fund
invests in a broad spectrum of high-quality Alabama municipal bond issues with
an intermediate average maturity.
It remains the only no-load Alabama municipal bond fund.
For the fiscal year ended March 31, 1998, the ratio of net investment
income to average net assets was 4.2%. To an Alabama investor in the maximum
combined federal and state tax brackets of 42.6%, the taxable equivalent of this
ratio was 7.3%.
The total return of the Fund for its fiscal year was 7.4%. This return
compares favorably with the 6.1% return of the Lehman Three Year Municipal Bond
Index and with the 9.1% return of the Lehman Seven Year Municipal Bond Index
over the same twelve month period.
The net assets of the Fund at March 31, 1998 were $19,938,296; the net
asset value per share was $10.49. The weighted average maturity of the Fund's
portfolio was 6.9 years. There were 97 issues held by the Fund, all of which
were rated A or better by Standard and Poor's or Moody's Investors Service. More
than 50% of the Fund's assets were rated AAA.
Thank you for your continued confidence in The Government Street Funds
and in The Alabama Tax Free Bond Fund. Please call us if we can be of further
service to you.
Very truly yours,
/s/ Thomas W. Leavell
Thomas W. Leavell
President
T. Leavell & Associates, Inc.
/s/ Richard Mitchell
Richard Mitchell
President
The Government Streets Funds
The Alabama Tax Free Bond Fund
<PAGE>
<TABLE>
<CAPTION>
The Government Street Equity Fund
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Equity Fund, the Standard & Poor's 500 Index and the Consumer Price
Index.
<S> <C> <C> <C>
The Government
Street Equity Fund Standard & Poor's 500 Index Consumer Price Index
Jun 91 10000 10000 10000
9795 9813 10030
10297 10337 10090
11147 11203 10181
Mar 92 10812 10920 10253
10822 11127 10335
11214 11478 10407
11821 12056 10491
Mar 93 11857 12582 10586
11682 12642 10649
11971 12968 10692
12194 13269 10767
Mar 94 11825 12766 10821
11471 12820 10886
12086 13446 10984
11855 13443 11050
Mar 95 12655 14752 11138
13564 16161 11239
14385 17445 11284
15106 18495 11340
Mar 96 15941 19488 11431
16399 20363 11558
17247 20992 11609
18351 22742 11704
Mar 97 18642 23352 11785
21733 27429 11807
23069 29483 11859
23459 30330 11932
Mar 98 25969 34560 11947
The Government Street Equity Fund Average Annual Total Return
1 Year 5 Years Since Inception*
39.1% 16.97% 15.10%
*Initial public offering of shares was June 3, 1991.
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Government Street Bond Fund
Comparison of the Change in Value of a $10,000 Investment in The Government
Street Bond Fund, the Lehman Government/Corporate Intermediate Bond Index
and the 90-Day Treasury Bill Index.
<S> <C> <C> <C>
The Government Lehman Government/Corporate
Street Bond Fund Intermediate Bond Index 90-Day Treasury Bill Index
Jun 91 10000 10000 10000
10045 10007 10039
10444 10488 10193
10931 10992 10342
Mar 92 10813 10892 10445
11218 11323 10559
11706 11822 10666
11627 11780 10748
Mar 93 12125 12249 10832
12366 12513 10916
12673 12796 11005
12650 12818 11091
Mar 94 12350 12558 11176
12261 12452 11283
12347 12585 11405
12310 12571 11556
Mar 95 12859 13123 11729
13533 13778 11905
13727 14006 12075
14213 14499 12253
Mar 96 14072 14378 12404
14158 14469 12563
14403 14726 12737
14731 15087 12903
Mar 97 14719 15070 13067
15146 15515 13245
15564 15934 13423
15888 16275 13591
Mar 98 16134 16529 13768
The Government Street Bond Fund Average Annual Total Return
1 Year 5 Years Since Inception*
9.61% 5.88% 7.27%
*Initial public offering of shares was June 3, 1991.
Past perfromance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Alabama Tax Free Bond Fund
Comparison of the Change in Value of a $10,000 Investment in The Alabama Tax
Free Bond Fund, the Lehman 7-Year G.O. Municipal Bond Index and the Lehman
3-Year Municipal Bond Index.
<S> <C> <C> <C>
The Alabama Tax Lehman 7-Year G.O. Lehman 3-Year
Free Bond Fund Municipal Bond Index Municipal Bond Index
10000 10000 10000
Mar 93 10096 10255 10168
10380 10547 10321
10670 10856 10467
10781 11004 10585
Mar 94 10440 10527 10445
10506 10673 10558
10562 10755 10657
10439 10647 10658
Mar 95 10927 11224 10957
11219 11526 11189
11459 11905 11428
11735 12198 11603
Mar 96 11693 12172 11668
11724 12208 11763
11921 12437 11918
12178 12757 12118
Mar 97 12140 12738 12168
12437 13092 12393
12690 13441 12605
12947 13736 12784
Mar 98 13043 13894 12916
The Alabama Tax Free Bond Fund Average Annual Total Return
1 Year 5 Years Since Inception*
7.44% 5.26% 5.23%
*Initial public offering of shares was January 15, 1993.
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1998
<S> <C> <C> <C>
====================================================================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
At acquisition cost................................... $ 38,594,955 $ 35,092,994 $ 18,988,868
=============== =============== ===============
At value (Note 1)..................................... $ 69,990,927 $ 35,479,894 $ 19,720,043
Investments in repurchase agreements (Note 1)............ 5,612,000 804,000 --
Cash .................................................... 878 562 --
Receivable for capital shares sold....................... 17,392 57,434 850
Interest receivable...................................... 818 638,895 250,303
Dividends receivable..................................... 77,845 -- --
Other assets............................................. 1,693 1,168 430
--------------- --------------- ---------------
TOTAL ASSETS.......................................... 75,701,553 36,981,953 19,971,626
--------------- --------------- ---------------
LIABILITIES
Dividends payable........................................ 4,819 21,023 19,712
Payable for capital shares redeemed...................... 1,200 28,023 2,500
Accrued advisory fees (Note 3)........................... 37,807 15,567 5,018
Accrued administration fees (Note 3)..................... 10,850 2,290 2,470
Other accrued expenses and liabilities................... 3,840 7,097 3,630
--------------- --------------- ---------------
TOTAL LIABILITIES..................................... 58,516 74,000 33,330
--------------- --------------- ---------------
NET ASSETS .............................................. $ 75,643,037 $ 36,907,953 $ 19,938,296
=============== =============== ===============
Net assets consist of:
Paid-in capital ......................................... $ 42,316,546 $ 36,951,307 $ 19,406,057
Accumulated net realized gains (losses)
from security transactions............................ 1,929,635 ( 434,110 ) ( 198,936 )
Undistributed net investment income...................... 884 3,856 --
Net unrealized appreciation on investments............... 31,395,972 386,900 731,175
--------------- --------------- ---------------
Net assets............................................... $ 75,643,037 $ 36,907,953 $ 19,938,296
=============== =============== ===============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value)............ 1,727,277 1,752,457 1,899,959
=============== =============== ===============
Net asset value, offering price and
redemption price per share (Note 1)................... $ 43.79 $ 21.06 $ 10.49
=============== =============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF OPERATIONS
Year Ended March 31, 1998
<S> <C> <C> <C>
====================================================================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest.............................................. $ 183,292 $ 2,330,572 $ 903,771
Dividends............................................. 874,608 -- --
--------------- --------------- ---------------
TOTAL INVESTMENT INCOME............................. 1,057,900 2,330,572 903,771
--------------- --------------- ---------------
EXPENSES
Investment advisory fees (Note 3)..................... 375,712 164,236 65,359
Administrative fees (Note 3).......................... 112,821 25,069 28,029
Professional fees..................................... 12,021 12,021 8,996
Pricing costs......................................... 2,033 9,391 13,239
Printing of shareholder reports....................... 7,522 6,647 5,472
Custodian fees........................................ 8,276 4,111 3,600
Trustees' fees and expenses........................... 5,405 5,405 5,405
Postage and supplies.................................. 7,135 5,693 5,351
Registration fees..................................... 6,525 5,465 2,573
Insurance expense..................................... 3,095 2,059 1,305
Other expenses........................................ 1,074 3,144 873
--------------- --------------- ---------------
TOTAL EXPENSES...................................... 541,619 243,241 140,202
Fees waived by the Adviser (Note 3)................... -- -- ( 18,821 )
--------------- --------------- ---------------
NET EXPENSES........................................ 541,619 243,241 121,381
--------------- --------------- ---------------
NET INVESTMENT INCOME ................................... 516,281 2,087,331 782,390
--------------- --------------- ---------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses)
from security transactions.......................... 2,517,491 ( 36,286 ) 1,079
Net change in unrealized appreciation/depreciation
on investments...................................... 17,143,907 906,779 546,731
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS ....................................... 19,661,398 870,493 547,810
--------------- --------------- ---------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ...................................... $ 20,177,679 $ 2,957,824 $ 1,330,200
=============== =============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Government Street Government Street Alabama Tax Free
Equity Fund Bond Fund Bond Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
March 31, March 31, March 31, March 31, March 31, March 31,
1998 1997 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income............. $ 516,281 $ 536,422 $2,087,331 $1,901,229 $ 782,390 $688,356
Net realized gains (losses)
from security transactions...... 2,517,491 2,262,399 (36,286) (201,643) 1,079 6,155
Net change in unrealized appreciation/
depreciation on investments...... 17,143,907 4,313,961 906,779 (362,072) 546,731 (76,770)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
from operations 20,177,679 7,112,782 2,957,824 1,337,514 1,330,200 617,741
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income........ (527,419) (526,528) (2,095,202) (1,892,341) (782,390) (688,356)
From net realized gains........... (1,732,108)(1,910,988) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Decrease in net assets from distributions
to shareholders.................. (2,259,527)(2,437,516) (2,095,202) (1,892,341) (782,390) (688,356)
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold......... 10,616,273 5,118,742 7,696,201 3,531,544 2,804,374 2,068,564
Net asset value of shares issued in
reinvestment of distributions
to shareholders.................. 2,175,993 2,347,971 1,871,979 1,663,544 555,482 480,364
Payments for shares redeemed...... (4,696,332)(3,933,851) (2,965,314) (3,915,554) (770,028) (1,158,134)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from
capital share transactions........ 8,095,934 3,532,862 6,602,866 1,279,534 2,589,828 1,390,794
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ....... 26,014,086 8,208,128 7,465,488 724,707 3,137,638 1,320,179
NET ASSETS:
Beginning of year................. 49,628,951 41,420,823 29,442,465 28,717,758 16,800,658 15,480,479
----------- ----------- ----------- ----------- ----------- -----------
End of year....................... $75,643,037$49,628,951 $36,907,953 $29,442,465 $19,938,296 $16,800,658
=========== =========== =========== =========== =========== ===========
UNDISTRIBUTED NET
INVESTMENT INCOME ................ $ 884$ 12,022 $ 3,856 $ 11,727 $ -- $ --
=========== =========== =========== =========== =========== ===========
Capital share activity:
Sold............................. 268,759 162,325 365,904 170,003 270,970 202,023
Reinvested....................... 56,533 76,331 89,389 80,355 53,306 46,910
Redeemed......................... (121,016) (124,086) (141,456) (188,067) (73,918) (112,871)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in shares outstanding 204,276 114,570 313,837 62,291 250,358 136,062
Shares outstanding, beginning
of year 1,523,001 1,408,431 1,438,620 1,376,329 1,649,601 1,513,539
----------- ----------- ----------- ----------- ----------- -----------
Shares outstanding, end of year.. 1,727,277 1,523,001 1,752,457 1,438,620 1,899,959 1,649,601
=========== =========== =========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
FINANCIAL HIGHLIGHTS
====================================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
====================================================================================================================================
Years Ended March 31,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year...... $ 32.59 $ 29.41 $ 23.87 $ 22.69 $ 23.06
----------- ----------- ---------- ---------- -----------
Income from investment operations:
Net investment income.................. 0.32 0.37 0.40 0.38 0.30
Net realized and unrealized
gains (losses) on investments........ 12.28 4.50 5.75 1.19 ( 0.37 )
----------- ----------- ---------- ---------- -----------
Total from investment operations.......... 12.60 4.87 6.15 1.57 ( 0.07 )
----------- ----------- ---------- ---------- -----------
Less distributions:
Dividends from net investment income... ( 0.32) ( 0.36 ) ( 0.40) ( 0.39) ( 0.30 )
Distributions from net realized gains.. ( 1.08) ( 1.33 ) ( 0.21) -- --
----------- ----------- ---------- ---------- -----------
Total distributions....................... ( 1.40) ( 1.69 ) ( 0.61) ( 0.39) ( 0.30 )
----------- ----------- ---------- ---------- -----------
Net asset value at end of year............ $ 43.79 $ 32.59 $ 29.41 $ 23.87 $ 22.69
=========== =========== ========== ========== ===========
Total return.............................. 39.31% 16.94% 25.96% 7.02% ( 0.31% )
=========== =========== ========== ========== ===========
Net assets at end of year (000's)......... $ 75,643 $ 49,629 $ 41,421 $ 31,473 $ 27,101
=========== =========== ========== ========== ===========
Ratio of net expenses to average net assets(a) 0.86% 0.89% 0.94% 0.91% 1.00%
Ratio of net investment income
to average net assets.................. 0.82% 1.17% 1.50% 1.71% 1.33%
Portfolio turnover rate................... 18% 20% 31% 55% 63%
Average commission rate per share......... $ 0.0351 $ 0.0410 $ -- $ -- $ --
(a) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's administrative and custodian fees for years ended prior to March
31, 1996 were paid through an arrangement with a third-party broker-dealer who
was compensated through commission trades. Payment of the fees was based on a
percentage of commissions earned. Absent expenses reimbursed through the
directed brokerage arrangement, the ratios of expenses to average net assets
would have been 1.00% and 1.16% for the years ended March 31, 1995 and 1994,
respectively.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET BOND FUND
FINANCIAL HIGHLIGHTS
====================================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
====================================================================================================================================
Years Ended March 31,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year...... $ 20.47 $ 20.87 $ 20.33 $ 20.87 $ 21.77
----------- ----------- ---------- ---------- -----------
Income from investment operations:
Net investment income.................. 1.32 1.34 1.35 1.35 1.32
Net realized and unrealized
gains (losses) on investments........ 0.60 ( 0.40 ) 0.54 ( 0.53) ( 0.90 )
----------- ----------- ---------- ---------- -----------
Total from investment operations.......... 1.92 0.94 1.89 0.82 0.42
----------- ----------- ---------- ---------- -----------
Less distributions:
Dividends from net investment income... ( 1.33) ( 1.34 ) ( 1.35) ( 1.36) ( 1.32 )
----------- ----------- ---------- ---------- -----------
Net asset value at end of year............ $ 21.06 $ 20.47 $ 20.87 $ 20.33 $ 20.87
=========== =========== ========== ========== ===========
Total return.............................. 9.61% 4.60% 9.43% 4.12% 1.85%
=========== =========== ========== ========== ===========
Net assets at end of year (000's)......... $ 36,908 $ 29,442 $ 28,718 $ 27,780 $ 22,633
=========== =========== ========== ========== ===========
Ratio of net expenses to average net assets 0.74% 0.75% 0.76% 0.85% 0.86%(a)
Ratio of net investment income
to average net assets.................. 6.35% 6.44% 6.38% 6.68% 6.15%
Portfolio turnover rate................... 10% 20% 10% 11% 10%
(a) Absent investment advisory fees waived by the Adviser, the ratios of expenses to average net assets would have
been 1.03% for the year ended March 31, 1994.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
====================================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
====================================================================================================================================
Seven
Months January 15,
Years Ended March 31, Ended 1993(b) to
March 31, August 31,
1998 1997 1996 1995 1994(a) 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 10.18 $ 10.23 $ 9.96 $ 9.96 $ 10.30 $ 10.00
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income............. 0.44 0.43 0.42 0.45 0.26 0.23
Net realized and unrealized
gains (losses) on investments.... 0.31 ( 0.05 ) 0.27 -- ( 0.34 ) 0.30
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations.... 0.75 0.38 0.69 0.45 ( 0.08 ) 0.53
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends from net investment income ( 0.44 ) ( 0.43 ) ( 0.42 ) ( 0.45 ) ( 0.26 ) ( 0.23 )
----------- ----------- ----------- ----------- ----------- -----------
Net asset value at end of period.... $ 10.49 $ 10.18 $ 10.23 $ 9.96 $ 9.96 $ 10.30
=========== =========== =========== =========== =========== ===========
Total return........................ 7.44% 3.82% 7.02% 4.66% (1.50%)(d) 8.79%(d)
=========== =========== =========== =========== =========== ===========
Net assets at end of period (000's). $ 19,938 $ 16,801 $ 15,480 $ 12,816 $ 9,716 $ 3,429
=========== =========== =========== =========== =========== ===========
Ratio of net expenses to
average net assets(c) 0.65% 0.66% 0.75% 0.75% 0.75%(d) 0.75%(d)
Ratio of net investment income
to average net assets............. 4.19% 4.24% 4.11% 4.56% 4.46%(d) 4.01%(d)
Portfolio turnover rate............. 2% 6% 4% 36% 3% 2%
(a) Effective April 1, 1994, the Fund was reorganized and changed its fiscal year end from August 31 to March 31.
(b) Commencement of operations.
(c) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been 0.75%,
0.78%, 0.86%, 1.05%, 1.76%(d) and 2.75%(d) for the periods ended March 31,
1998, 1997, 1996, 1995, 1994 and August 31, 1993, respectively (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
====================================================================================================================================
<S> <C> <C>
Shares COMMON STOCKS -- 92.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE -- 1.3%
18,200 Boeing Company............................................................. $ 948,675
--------------
CHEMICALS AND DRUGS -- 14.9%
20,000 Becton Dickinson & Company................................................. 1,361,250
15,000 Biomet, Inc................................................................ 450,000
20,000 Cardinal Health, Inc....................................................... 1,763,750
20,000 duPont (E.I.) de Nemours & Company......................................... 1,360,000
13,000 Eli Lilly & Company........................................................ 775,125
18,000 Goodrich (B.F.) Company.................................................... 919,125
15,000 Johnson & Johnson.......................................................... 1,099,687
8,700 Merck & Company, Inc....................................................... 1,116,863
20,000 Schering-Plough Corporation................................................ 1,633,750
22,000 Sigma-Aldrich Corporation.................................................. 819,500
--------------
......................................................................... 11,299,050
--------------
CONSTRUCTION -- 5.6%
25,500 Blount, Inc. - Class A..................................................... 758,625
20,000 Caterpiller, Inc........................................................... 1,101,250
20,312 Clayton Homes, Inc......................................................... 411,318
12,000 Florida Rock Industries, Inc............................................... 342,750
8,000 Lowe's Companies, Inc...................................................... 561,500
25,600 Valspar Corporation........................................................ 1,004,800
--------------
......................................................................... 4,180,243
--------------
CONSUMER PRODUCTS -- 9.4%
21,633 Archer-Daniels-Midland Company............................................. 475,232
13,500 Belo (A.H.) Corporation - Class A.......................................... 742,500
12,000 General Motors Corporation................................................. 809,250
14,500 Gillette Company........................................................... 1,720,969
15,000 Kimberly-Clark Corporation................................................. 751,875
12,000 Polygram NV................................................................ 556,500
15,000 Procter & Gamble Company................................................... 1,265,625
10,000 Sun Microsystems, Inc. (a) ................................................ 417,188
8,000 Newell Company............................................................. 387,500
--------------
......................................................................... 7,126,639
--------------
DURABLE GOODS -- 15.2%
12,000 Advanced Micro Devices, Inc.(a) ........................................... 348,750
20,000 Andrew Corporation(a) ..................................................... 396,250
35,000 Cisco Systems, Inc.(a) .................................................... 2,393,125
15,000 Compaq Computer Corporation................................................ 388,125
8,000 Computer Assoc. International Inc.......................................... 462,000
9,000 Deere & Company............................................................ 577,437
11,000 Diebold, Inc............................................................... 484,000
23,000 General Electric Company .................................................. 1,982,313
15,000 General Signal Corporation ................................................ 701,250
9,000 Intel Corporation.......................................................... 702,563
5,000 International Business Machines Corporation................................ 519,375
16,000 Philips Electronics NV..................................................... 1,175,000
11,500 Raytheon Company........................................................... 671,312
6,000 Shared Medical Systems, Inc................................................ 470,250
5,000 Springs Industries, Inc.................................................... 274,687
--------------
11,526,437
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
<S> <C> <C>
Shares COMMON STOCKS -- 92.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL -- 16.3%
9,695 Aetna, Inc................................................................. $ 808,927
15,000 AFLAC, Inc................................................................. 948,750
10,000 American Express Company................................................... 918,125
22,000 Federal Home Loan Mortgage Corporation..................................... 1,043,625
10,000 Fleet Financial Group, Inc................................................. 850,625
5,000 MBNA Corporation........................................................... 179,063
28,000 Mellon Bank Corporation.................................................... 1,778,000
14,000 S&P Mid-Cap 400 Depository Receipts........................................ 998,156
8,300 S&P 500 Depository Receipts................................................ 913,000
33,000 Star Banc Corporation ..................................................... 1,951,125
14,000 Synovus Financial Corporation.............................................. 519,750
15,000 Torchmark Corporation...................................................... 687,188
12,000 Travelers, Inc............................................................. 720,000
--------------
12,316,334
--------------
FOOD/BEVERAGES -- 3.1%
6,000 Anheuser-Busch Companies, Inc.............................................. 277,875
10,000 Campbell Soup Company...................................................... 567,500
40,000 Coca-Cola Enterprises...................................................... 1,467,500
1,000 Vlasic Foods International Inc.(a) ........................................ 25,562
--------------
......................................................................... 2,338,437
--------------
METAL AND MINING -- 0.8%
9,000 Aluminum Company of America................................................ 619,312
--------------
OIL/ENERGY -- 7.9%
12,500 Amoco Corporation.......................................................... 1,079,688
10,000 Baker Hughes, Inc.......................................................... 402,500
13,000 Chevron Corporation........................................................ 1,044,063
14,650 Exxon Corporation.......................................................... 990,706
11,000 Halliburton Company........................................................ 552,062
10,000 Helmerich & Payne, Inc..................................................... 312,500
5,000 Pennzoil Company........................................................... 323,125
28,500 Shell Transport & Trading PLC.............................................. 1,261,125
--------------
......................................................................... 5,965,769
--------------
PAPER AND FOREST PRODUCTS -- 1.3%
11,000 Georgia Pacific Corporation................................................ 712,250
11,000 Georgia Pacific Corporation, Timber Group.................................. 282,562
--------------
......................................................................... 994,812
--------------
RETAIL -- 4.9%
21,000 American Stores Company.................................................... 546,000
17,700 Home Depot, Inc............................................................ 1,193,644
12,000 Nike, Inc. - Class B ..................................................... 531,000
11,000 Wal-Mart Stores, Inc....................................................... 558,937
25,000 Walgreen Company........................................................... 879,687
--------------
......................................................................... 3,709,268
--------------
SERVICES - COMPUTER -- 2.7%
11,100 Automatic Data Processing, Inc............................................. 755,494
24,000 Computer Sciences Corporation(a) .......................................... 1,320,000
--------------
......................................................................... 2,075,494
--------------
TELECOMMUNICATION EQUIPMENT -- 0.5%
18,000 Scientific - Atlanta, Inc.................................................. 352,125
--------------
TRANSPORTATION -- 1.6%
15,000 FDX Corporation(a) ........................................................ 1,066,875
5,000 Southwest Airlines Company................................................. 147,812
--------------
1,214,687
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
<S> <C> <C>
Shares COMMON STOCKS -- 92.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES -- 6.9%
29,000 Ameritech Corporation...................................................... $ 1,433,688
11,000 Bellsouth Corporation...................................................... 743,188
15,490 Duke Power Company......................................................... 922,623
28,000 SBC Communications, Inc.................................................... 1,221,500
17,000 US West Inc................................................................ 930,750
--------------
5,251,749
--------------
TOTAL COMMON STOCKS (COST $38,541,826) ...................................... $69,919,031
--------------
====================================================================================================================================
Shares PREFERRED STOCKS -- 0.1% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL -- 0.1%
898 Aetna Inc., Convertible.................................................... $ 71,896
--------------
TOTAL PREFERRED STOCKS (COST $53,129) ...................................... $ 71,896
--------------
TOTAL INVESTMENTS AT VALUE (COST $38,594,955)-- 92.5% ...................... $ 69,990,927
--------------
====================================================================================================================================
Face
Amount REPURCHASE AGREEMENTS(b) -- 7.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Star Bank, N.A.,
$ 5,612,000 5.25%, dated 03/31/1998, due 04/01/1998,
repurchase proceeds $5,612,818 (Cost $5,612,000)......................... $ 5,612,000
--------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 99.9% ............... $ 75,602,927
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.1% ................................ 40,110
--------------
NET ASSETS-- 100.0% ......................................................... $ 75,643,037
==============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/2024; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/2022; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/2024. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985.
The funds pro-rata interest in the collateral at March 31, 1998 was
$5,760,848.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
====================================================================================================================================
<S> <C> <C>
Par Value U.S. TREASURY AND AGENCY OBLIGATIONS-- 43.3% Value
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 6.6%
$ 70,000 7.875%, due 04/15/1998..................................................... $ 70,066
50,000 8.25%, due 07/15/1998...................................................... 50,391
855,000 7.125%, due 10/15/1998..................................................... 862,215
225,000 7.00%, due 04/15/1999...................................................... 228,234
150,000 6.375%, due 07/15/1999..................................................... 151,406
100,000 8.00%, due 08/15/1999...................................................... 103,125
200,000 6.00%, due 10/15/1999...................................................... 201,125
250,000 7.50%, due 10/31/1999...................................................... 256,953
50,000 7.875%, due 11/15/1999..................................................... 51,734
100,000 8.50%, due 02/15/2000...................................................... 105,063
20,000 8.75%, due 08/15/2000...................................................... 21,369
50,000 8.50%, due 11/15/2000...................................................... 53,437
140,000 8.00%, due 05/15/2001...................................................... 149,231
125,000 7.875%, due 08/15/2001..................................................... 133,320
--------------
2,437,669
--------------
U.S. TREASURY STRIPS -- 0.1%
Coupon Treasury Investment Growth Security,
11,000 due 08/15/1998........................................................... 10,773
--------------
FEDERAL FARM CREDIT BANK BONDS -- 1.4%
500,000 6.00%, due 01/07/2008...................................................... 499,744
--------------
FEDERAL HOME LOAN BANK BONDS -- 1.5%
500,000 7.57%, due 08/19/2004...................................................... 543,589
--------------
.........................................................................
FEDERAL HOME LOAN MORTGAGE CORPORATION BONDS -- 9.5%
240,000 7.12%, due 09/30/2005...................................................... 241,089
500,000 6.345%, due 11/01/2005..................................................... 512,712
200,000 6.73%, due 01/05/2006...................................................... 199,535
300,000 7.52%, due 04/21/2006...................................................... 305,413
500,000 7.55%, due 04/26/2006 ..................................................... 507,734
895,000 7.44%, due 09/20/2006...................................................... 931,398
800,000 7.04%, due 01/09/2007...................................................... 824,645
--------------
3,522,526
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BONDS -- 20.8%
750,000 7.85%, due 09/10/1998...................................................... 756,827
100,000 8.45%, due 07/12/1999...................................................... 103,248
650,000 6.85%, due 05/04/2001...................................................... 650,508
500,000 6.83%, due 04/02/2003...................................................... 501,895
500,000 6.63%, due 06/20/2005...................................................... 520,380
500,000 8.00%, due 06/15/2006...................................................... 502,424
500,000 7.90%, due 06/28/2006...................................................... 508,230
650,000 7.65%, due 10/06/2006...................................................... 667,812
500,000 7.36%, due 02/07/2007...................................................... 507,943
400,000 7.70%, due 04/10/2007...................................................... 412,120
500,000 6.62%, due 06/25/2007...................................................... 522,475
500,000 7.16%, due 06/26/2007...................................................... 507,731
500,000 7.00%, due 07/17/2007...................................................... 507,744
400,000 6.80%, due 08/27/2012...................................................... 416,259
600,000 6.875%, due 09/24/2012..................................................... 622,744
--------------
7,708,340
--------------
PRIVATE EXPORT FUNDING BONDS -- 1.3%
470,000 7.90%, due 03/31/2000...................................................... 488,675
--------------
TENNESSEE VALLEY AUTHORITY BONDS -- 2.1%
745,000 6.875%, due 01/15/2002..................................................... 760,421
--------------
TOTAL U.S. TREASURY AND AGENCY OBLIGATIONS (COST $15,861,253) ............... $ 15,971,737
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
<S> <C> <C>
Par Value MORTGAGE-BACKED SECURITIES -- 5.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 0.2%
$ 87,566 Series #G92-40, Class G, 7.00%, due 07/25/2002............................. $ 87,301
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 4.8%
24,444 Pool #15032, 7.50%, due 02/15/2007......................................... 25,063
494,854 Pool #438434, 6.50%, due 01/01/2013........................................ 498,411
22,329 Pool #176413, 7.50%, due 09/15/2016........................................ 22,894
29,074 Pool #170784, 8.00%, due 12/15/2016........................................ 30,101
25,790 Pool #181540, 8.00%, due 02/15/2017........................................ 26,700
496,499 Pool #366710, 6.50%, due 02/01/2024........................................ 491,226
669,633 Pool #453826, 7.25%, due 09/01/2027........................................ 681,352
--------------
1,775,747
--------------
OTHER MORTGAGE-BACKED SECURITIES -- 0.4%
Collateralized Mortgage Securities Corporation,
145,738 Series #1991-8PF, 7.30%, due 08/20/2020............................... 146,506
--------------
.........................................................................
TOTAL MORTGAGE-BACKED SECURITIES (COST $2,012,567) .......................... $ 2,009,554
--------------
====================================================================================================================================
Par Value CORPORATE BONDS -- 47.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCE -- 22.7%
American Express Company,
$ 350,000 8.50%, due 08/15/2001.................................................... $ 375,906
--------------
AmSouth Bancorp,
425,000 9.375%, due 05/01/1999................................................... 439,635
550,000 7.75%, due 05/15/2004.................................................... 589,484
--------------
1,029,119
--------------
Associates Corporation, N.A.,
300,000 8.80%, due 08/01/1998.................................................... 302,699
--------------
Banc One Corporation,
600,000 7.00%, due 07/15/2005.................................................... 621,659
--------------
BankAmerica Corporation,
496,000 8.375%, due 03/15/2002................................................... 532,474
--------------
Bear Stearns Company,
170,000 9.375%, due 06/01/2001................................................... 185,585
--------------
General Electric Capital Corporation,
100,000 7.24%, due 01/15/2002.................................................... 104,053
150,000 7.50%, due 03/15/2002.................................................... 157,571
--------------
......................................................................... 261,624
--------------
Merrill Lynch & Company, Inc.,
745,000 7.375%, due 08/17/2002................................................... 778,203
--------------
J.P. Morgan & Company,
500,000 7.25%, due 01/15/2002.................................................... 517,155
--------------
NationsBank,
550,000 7.625%, due 04/15/2005................................................... 590,731
--------------
Regions Financial Corporation,
350,000 7.80%, due 12/01/2002.................................................... 368,257
--------------
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
Par Value CORPORATE BONDS -- 47.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc.,
$ 400,000 7.25%, due 01/15/2000.................................................... $ 407,226
480,000 7.50%, due 02/01/2003.................................................... 502,319
--------------
......................................................................... 909,545
--------------
SouthTrust Bank of Alabama, N.A.,
500,000 7.00%, due 11/15/2008.................................................... 519,350
--------------
Transamerica Financial Corporation,
785,000 7.50%, due 03/15/2004.................................................... 828,741
--------------
Wachovia Corporation,
535,000 7.00%, due 12/15/1999.................................................... 544,121
--------------
TOTAL FINANCE CORPORATE BONDS ............................................... 8,365,169
--------------
INDUSTRIAL -- 21.6%
BP America Inc.,
265,000 8.50%, due 04/15/2001................................................... 283,284
--------------
Campbell Soup Company,
500,000 6.90%, due 10/15/2006.................................................... 527,340
--------------
Coca-Cola Company,
401,000 7.875%, due 09/15/1998.................................................. 404,371
500,000 6.625%, due 08/01/2004.................................................. 512,070
--------------
916,441
--------------
duPont (E.I.) de Nemours & Company,
150,000 9.15%, due 04/15/2000.................................................... 159,309
300,000 6.75%, due 10/15/2002.................................................... 308,528
--------------
......................................................................... 467,837
--------------
Hanson Overseas,
1,100,000 7.375%, due 01/15/2003................................................... 1,150,338
--------------
International Business Machines Corporation,
1,000,000 7.25%, due 11/01/2002.................................................... 1,048,253
--------------
Kimberly-Clark Corporation,
240,000 8.625%, due 05/01/2001................................................... 258,139
--------------
Limited, Inc.,
150,000 8.875%, due 08/15/1999................................................... 154,943
--------------
Mobil Corporation,
100,000 8.375%, due 02/12/2001................................................... 106,411
--------------
Philip Morris Companies, Inc.,
305,000 7.375%, due 02/15/1999................................................... 308,156
175,000 7.75%, due 05/01/1999.................................................... 177,906
500,000 7.125%, due 10/01/2004................................................... 516,365
--------------
1,002,427
--------------
Procter & Gamble Company,
150,000 8.70%, due 08/01/2001.................................................... 162,252
--------------
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
====================================================================================================================================
Par Value CORPORATE BONDS -- 47.4% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Raytheon Company,
$ 800,000 6.50%, due 07/15/2005.................................................... $ 807,701
--------------
Wal-Mart Stores, Inc.,
170,000 9.10%, due 07/15/2000.................................................... 181,501
100,000 8.625%, due 04/01/2001................................................... 107,255
745,000 7.50%, due 05/15/2004.................................................... 796,906
--------------
1,085,662
--------------
TOTAL INDUSTRIAL CORPORATE BONDS ............................................ 7,971,028
--------------
UTILITY -- 3.1%
Consolidated Edison,
785,000 7.60%, due 01/15/2000.................................................... 805,587
--------------
Emerson Electric Company,
352,000 6.30%, due 11/01/2005.................................................... 356,819
--------------
TOTAL UTILITY CORPORATE BONDS ............................................... 1,162,406
--------------
TOTAL CORPORATE BONDS (COST $17,219,174) .................................... $ 17,498,603
--------------
TOTAL INVESTMENTS AT VALUE (COST $35,092,994)-- 96.1% ...................... $35,479,894
--------------
====================================================================================================================================
Face
Amount REPURCHASE AGREEMENTS(a) -- 2.2% Value
- ------------------------------------------------------------------------------------------------------------------------------------
Star Bank, N.A.,
$ 804,000 5.25%, dated 03/31/1998, due 04/01/1998,
repurchase proceeds $804,117 (Cost $804,000)............................. $ 804,000
--------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 98.3% ................ $36,283,894
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.7% ................................ 624,059
--------------
NET ASSETS-- 100.0% ......................................................... $36,907,953
==============
(a) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/2024; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/2022; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/2024. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985.
The funds pro-rata interest in the collateral at March 31, 1998 was $839,521.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alabama Housing Finance Auth. Rev.,
$ 245,000 4.90%, due 10/01/1998...................................................... $ 246,421
--------------
Alabama Mental Health Finance Auth. Special Tax,
300,000 5.00%, due 05/01/2006...................................................... 311,295
--------------
Alabama State, GO,
200,000 5.90%, due 03/01/1999...................................................... 204,068
100,000 5.70%, due 12/01/2002...................................................... 106,181
--------------
310,249
--------------
Alabama State Corrections Institutions Rev.,
100,000 4.20%, due 04/01/1998...................................................... 100,000
--------------
Alabama State Industrial Access Road & Bridge Corp., GO,
100,000 4.00%, due 06/01/1998...................................................... 100,038
100,000 5.25%, due 06/01/2003...................................................... 104,165
--------------
204,203
--------------
Alabama State Mun. Elec. Auth. Power Supply Rev.,
150,000 5.625%, due 09/01/2000..................................................... 155,486
340,000 5.75%, due 09/01/2001...................................................... 356,742
400,000 6.50%, due 09/01/2005, prerefunded 09/01/2001 at 101....................... 433,916
--------------
946,144
--------------
Alabama State Public School & College Auth. Rev.,
100,000 4.40%, due 12/01/2000...................................................... 101,275
130,000 5.00%, due 06/01/2003...................................................... 135,194
250,000 5.25%, due 11/01/2005...................................................... 263,898
--------------
500,367
--------------
Alabama Water Pollution Control Rev.,
25,000 7.00%, due 08/15/2001...................................................... 26,092
190,000 6.25%, due 08/15/2004...................................................... 210,560
--------------
236,652
--------------
Anniston, AL, GO,
250,000 5.50%, due 01/01/2004...................................................... 266,562
--------------
Anniston, AL, Regional Medical Center Board Hospital Rev.,
30,000 7.375%, due 07/01/2006, ETM................................................ 33,304
--------------
Auburn University, Alabama, Rev.,
25,000 6.10%, due 06/01/1999...................................................... 25,663
150,000 5.20%, due 06/01/2004...................................................... 157,318
325,000 5.25%, due 04/01/2005...................................................... 341,887
--------------
524,868
--------------
Baldwin Co., AL, GO,
200,000 5.85%, due 08/01/2003...................................................... 215,608
400,000 5.00%, due 02/01/2007...................................................... 414,716
--------------
630,324
--------------
Baldwin Co., AL, Board of Education Rev.,
50,000 5.40%, due 12/01/1998...................................................... 50,552
300,000 5.90%, due 12/01/2001...................................................... 308,595
--------------
359,147
-------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Birmingham, AL, GO,
$ 100,000 5.80%, due 04/01/2002...................................................... $ 105,986
200,000 5.90%, due 04/01/2003...................................................... 214,724
--------------
320,710
--------------
Birmingham, AL, Industrial Water Board Rev.,
100,000 5.00%, due 03/01/2001...................................................... 102,668
100,000 6.00%, due 07/01/2007...................................................... 111,721
--------------
214,389
--------------
Birmingham, AL, Medical Clinic Board Rev.,
60,000 7.30%, due 07/01/2005, ETM................................................. 67,241
--------------
Birmingham, AL, Special Facilities Rev.,
100,000 4.45%, due 06/01/1999...................................................... 100,817
--------------
Birmingham, AL, Waterworks & Sewer Board Rev.,
50,000 5.90%, due 01/01/2003...................................................... 53,577
400,000 6.15%, due 01/01/2006...................................................... 432,164
--------------
485,741
--------------
Birmingham-Southern College, AL, Private Education Bldg. Auth. Rev.,
500,000 5.10%, due 12/01/2012...................................................... 498,225
--------------
DCH Health Care Auth. of Alabama Rev.,
55,000 5.00%, due 06/01/2004...................................................... 56,882
--------------
Decatur, AL, GO,
300,000 5.00%, due 06/01/2009...................................................... 308,901
--------------
Fairhope, AL, Utility, Rev.,
200,000 5.10%, due 12/01/2008...................................................... 205,788
--------------
Greenville, AL, GO,
300,000 5.10%, due 12/01/2009...................................................... 310,722
--------------
Hoover, AL, Board of Education, GO,
400,000 6.00%, due 02/15/2006...................................................... 437,668
--------------
Hoover, AL, Board of Education Special Tax,
200,000 6.625%, due 02/01/2010, prerefunded 02/01/2001 at 102...................... 217,268
--------------
Houston Co., AL, GO,
100,000 4.20%, due 10/01/1998...................................................... 100,265
250,000 5.00%, due 07/01/2002...................................................... 258,088
--------------
358,353
--------------
Huntsville, AL, GO,
115,000 5.15%, due 08/01/2000...................................................... 118,171
100,000 5.20%, due 11/01/2000...................................................... 103,162
500,000 5.50%, due 11/01/2002...................................................... 528,105
100,000 5.90%, due 11/01/2005...................................................... 107,886
300,000 5.40%, due 02/01/2010...................................................... 313,290
--------------
1,170,614
--------------
Huntsville, AL, Electric Systems Rev.,
150,000 6.10%, due 12/01/2000...................................................... 158,156
150,000 5.00%, due 12/01/2003...................................................... 155,451
--------------
313,607
--------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Huntsville, AL, Water Systems Rev.,
$ 150,000 5.15%, due 05/01/2004...................................................... $ 156,837
150,000 5.25%, due 05/01/2005...................................................... 156,897
--------------
313,734
--------------
Jefferson Co., AL, GO,
150,000 5.55%, due 04/01/2002...................................................... 157,329
100,000 5.00%, due 04/01/2004...................................................... 103,347
--------------
260,676
--------------
Jefferson Co., AL, Board of Education Capital Outlay Warrants,
300,000 5.70%, due 02/15/2011...................................................... 319,794
--------------
Jefferson Co., AL, Sewer Rev.,
140,000 5.15%, due 09/01/2002...................................................... 145,936
50,000 5.50%, due 09/01/2003 ..................................................... 53,093
300,000 5.75%, due 09/01/2005 ..................................................... 323,343
--------------
522,372
--------------
Lee Co., AL, GO,
300,000 5.50%, due 02/01/2007...................................................... 321,876
--------------
Madison, AL, Board of Education School Warrants,
100,000 5.00%, due 02/01/1999...................................................... 101,118
--------------
Madison, AL, Warrants,
325,000 5.55%, due 04/01/2007...................................................... 350,873
--------------
Madison Co., AL, Board of Education Capital Outlay Tax Antic. Warrants,
175,000 5.20%, due 09/01/2004...................................................... 184,144
250,000 5.10%, due 09/01/2011...................................................... 255,807
--------------
439,951
--------------
Mobile, AL, GO,
200,000 5.00%, due 08/15/1998...................................................... 200,978
150,000 5.20%, due 02/15/1999...................................................... 152,010
200,000 5.40%, due 08/15/2000...................................................... 206,816
25,000 6.25%, due 08/01/2001...................................................... 26,665
25,000 6.30%, due 08/01/2001...................................................... 26,500
275,000 6.20%, due 02/15/2007, ETM................................................. 307,802
--------------
920,771
--------------
Mobile, AL, Water & Sewer Commissioners Rev.,
55,000 6.30%, due 01/01/2003...................................................... 59,794
--------------
Mobile Co., AL, GO,
50,000 6.10%, due 02/01/2002, prerefunded 02/01/2000 at 102....................... 52,871
160,000 6.70%, due 02/01/2011, prerefunded 02/01/2000 at 102....................... 170,958
--------------
223,829
--------------
Mobile Co., AL., Board of Education Capital Outlay Warrants,
400,000 5.00%, due 03/01/2008...................................................... 412,376
--------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mobile Co., AL, Gas Tax Antic. Warrants Rev.,
$ 100,000 4.50%, due 02/01/2003...................................................... $ 100,976
--------------
Montgomery, AL, GO,
200,000 4.25%, due 05/01/1999, ETM................................................. 201,152
200,000 4.70%, due 05/01/2002...................................................... 204,064
500,000 5.10%, due 10/01/2008...................................................... 521,480
--------------
926,696
--------------
Montgomery, AL, Waterworks & Sanitation Rev.,
200,000 5.85%, due 03/01/2003...................................................... 213,598
400,000 5.60%, due 09/01/2009...................................................... 428,632
--------------
642,230
--------------
Montgomery Co., AL, GO,
100,000 5.20%, due 11/01/2006...................................................... 104,352
--------------
Mountain Brook, AL, Board of Education Capital Outlay Warrants,
405,000 4.80%, due 02/15/2011...................................................... 403,898
--------------
Muscle Shoals, AL, GO,
400,000 5.60%, due 08/01/2010...................................................... 427,020
--------------
Opelika, AL, GO,
100,000 4.60%, due 03/01/2003...................................................... 101,801
100,000 5.30%, due 07/01/2003...................................................... 105,128
--------------
206,929
--------------
Shelby Co., AL, GO,
205,000 5.20%, due 08/01/2000...................................................... 210,970
50,000 5.35%, due 08/01/2001...................................................... 52,010
--------------
262,980
--------------
Shelby Co., AL, Hospital Board Rev.,
35,000 6.60%, due 02/01/2001, ETM................................................. 37,296
25,000 6.60%, due 02/01/2002, ETM................................................. 27,084
40,000 6.60%, due 02/01/2003, ETM................................................. 44,028
--------------
108,408
--------------
Tuscaloosa, AL, Board of Education, GO,
300,000 4.625%, due 08/01/2001..................................................... 301,323
100,000 5.10%, due 02/01/2004...................................................... 104,135
--------------
405,458
--------------
Tuscaloosa, AL, Board of Education Special Tax Warrants,
75,000 5.70%, due 02/15/2005...................................................... 79,755
125,000 6.00%, due 02/15/2009...................................................... 134,805
--------------
214,560
--------------
University of Alabama General Fee Series A Rev.,
250,000 4.15%, due 10/01/1999...................................................... 251,317
50,000 5.00%, due 11/01/2000...................................................... 51,325
240,000 5.10%, due 10/01/2002...................................................... 249,271
400,000 5.25%, due 06/01/2010...................................................... 415,624
--------------
......................................................................... 967,537
--------------
Vestavia Hills, AL, Board of Education Capital Outlay Rev.,
55,000 5.25%, due 02/01/2004...................................................... 57,367
--------------
<PAGE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
==============================================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
Par Value OBLIGATION (GO) BONDS-- 95.0% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Vestavia Hills, AL, Warrants,
$ 125,000 4.90%, due 04/01/2005...................................................... $ 128,655
--------------
TOTAL ALABAMA (COST $18,209,517) ............................................ $ 18,940,692
--------------
<CAPTION>
==============================================================================================================
Shares MONEY MARKETS -- 3.9% Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
779,351 Star Tax-Free Money Market Fund (Cost $779,351).............................. $ 779,351
-------------
TOTAL INVESTMENTS AT VALUE (COST $18,988,868)-- 98.9% ...................... $19,720,043
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.1% ................................ 218,253
--------------
NET ASSETS-- 100.0% ......................................................... $ 19,938,296
==============
ETM - Escrowed to maturity.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
================================================================================
1. Significant Accounting Policies
The Government Street Equity Fund, The Government Street Bond Fund, and The
Alabama Tax Free Bond Fund (the Funds) are each a no-load series of The
Williamsburg Investment Trust (the Trust). The Trust, an open-end management
investment company registered under the Investment Company Act of 1940, as
amended, was organized as a Massachusetts business trust on July 18, 1988.
The Government Street Equity Fund's investment objective is to seek capital
appreciation through the compounding of dividends and capital gains, both
realized and unrealized, on its investments in common stocks. Current income is
of secondary importance.
The Government Street Bond Fund's investment objectives are to preserve capital,
to provide current income and to protect the value of the portfolio against the
effects of inflation by limiting investments to fixed income securities in the
four highest quality ratings.
Capital appreciation is of secondary importance.
The Alabama Tax Free Bond Fund's investment objectives are to provide current
income exempt from both federal income taxes and the personal income taxes of
Alabama and to preserve capital. Capital appreciation is of secondary
importance.
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- The Funds' portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded. It is expected that fixed income securities will ordinarily be traded
on the over-the-counter market, and common stocks will ordinarily be traded on a
national securities exchange, but may also be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued on the basis of prices provided by an independent
pricing service.
Repurchase agreements -- The Funds generally enter into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market value. At the time the Funds
enter into the joint repurchase agreement, the Funds take possession of the
underlying securities and the seller agrees that the value of the underlying
securities, including accrued interest, will at all times be equal to or exceed
the face amount of the repurchase agreement. In addition, each Fund actively
monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of each Fund's assets, less liabilities, by
the number of shares outstanding. The offering price and redemption price per
share of each Fund is equal to the net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized in accordance with income tax regulations which approximate
generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment income
are declared and paid quarterly to shareholders of The Government Street Equity
Fund; declared and paid monthly to shareholders of The Government Street Bond
Fund; and declared daily and paid monthly to shareholders of The Alabama Tax
Free Bond Fund. Net realized short-term capital gains, if any, may be
distributed throughout the year and net realized long-term capital gains, if
any, are distributed at least once each year. Income distributions and capital
gain distributions are determined in accordance with income tax regulations.
<PAGE>
Security transactions -- Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies,
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of each Fund as of March 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Government Government Alabama
Street Street Tax Free
Equity Fund Bond Fund Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized appreciation............................ $ 31,625,324 $ 744,768 $ 739,086
Gross unrealized depreciation............................ ( 229,352 ) ( 357,868 ) ( 7,911 )
--------------- --------------- ---------------
Net unrealized appreciation.............................. $ 31,395,972 $ 386,900 $ 731,175
--------------- --------------- ---------------
Federal income tax cost.................................. $ 38,594,955 $ 35,092,994 $ 18,988,868
=============== =============== ===============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1998, The Government Street Bond Fund and The Alabama Tax Free
Bond Fund had capital loss carryforwards for federal income tax purposes of
$434,110 and $198,936, respectively, which expire through the year 2006.
2. Investment Transactions
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $13,696,785 and $10,331,366, respectively, for The Government Street Equity
Fund, $9,890,780 and $3,220,454, respectively, for The Government Street Bond
Fund, and $2,686,769 and $436,170, respectively, for The Alabama Tax Free Bond
Fund.
3. Transactions with Affiliates
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by T. Leavell & Associates, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, The Government Street Equity Fund pays the
Adviser a fee, which is computed and accrued daily and paid monthly at an annual
rate of .60% of its average daily net assets up to $100 million and .50% of such
assets in excess of $100 million. The Government Street Bond Fund pays the
Adviser a fee at an annual rate of .50% of its average daily net assets up to
$100 million and .40% of such net assets in excess of $100 million. The Alabama
Tax Free Bond Fund pays the Adviser a fee at an annual rate of .35% of its
average daily net assets up to $100 million and .25% of such net assets in
excess of $100 million.
<PAGE>
The Adviser currently intends to limit the total operating expenses of The
Alabama Tax Free Bond Fund to .65% of its average daily net assets. Accordingly,
the Adviser voluntarily waived $18,821 of its investment advisory fees for the
Fund during the year ended March 31, 1998.
Certain trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement between the Trust and
Countrywide Fund Services, Inc. (CFS), CFS provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Funds. For these services, CFS receives a monthly fee from The
Government Street Equity Fund at an annual rate of .20% of its average daily net
assets up to $25 million; .175% of the next $25 million of such assets; and .15%
of such net assets in excess of $50 million. From The Government Street Bond
Fund, CFS receives a monthly fee of .075% of its average daily net assets up to
$200 million and .05% of such assets in excess of $200 million. From The Alabama
Tax Free Bond Fund, CFS receives a monthly fee of .15% of its average daily net
assets up to $200 million and .10% of such assets in excess of $200 million. The
fee for each Fund is subject to a $2,000 monthly minimum. In addition, each Fund
pays out-of-pocket expenses including, but not limited to, postage, supplies and
costs of pricing the Funds' portfolio securities.
Certain officers of the Trust are also officers of CFS.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
================================================================================
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statements of assets and liabilities
of The Government Street Equity Fund, The Government Street Bond Fund and The
Alabama Tax Free Bond Fund, (each a series of The Williamsburg Investment
Trust), including the portfolios of investments, as of March 31, 1998, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Government Street Equity Fund, The Government Street Bond Fund
and The Alabama Tax Free Bond Fund, as of March 31, 1998, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended and their financial highlights for the
periods referred to above, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
The Government Street Funds
The Alabama Tax Free Bond Fund
------------------------------
No Load Mutual Funds
Investment Adviser
T. Leavell & Associates, Inc.
150 Government Street
Post Office Box 1307
Mobile, AL 36633
Administrator
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, OH 45201-5354
1-800-443-4249
Legal Counsel
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Board of Trustees
Richard Mitchell, President
Austin Brockenbrough, III
John T. Bruce
Charles M. Caravati, Jr. M.D.
J. Finley Lee, Jr.
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt, III
Portfolio Managers
Thomas W. Leavell and
Stephen W. Simmons,
The Government Street Equity Fund
Mary Shannon Hope,
The Government Street Bond Fund
Timothy S. Healey,
The Alabama Tax Free Bond Fund
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE DAVENPORT EQUITY FUND
August 1, 1998
A Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES ......................................... 2
INVESTMENT LIMITATIONS .................................................... 5
TRUSTEES AND OFFICERS ..................................................... 6
INVESTMENT ADVISOR ........................................................ 11
ADMINISTRATOR ............................................................. 12
OTHER SERVICES ............................................................ 12
BROKERAGE ................................................................. 13
SPECIAL SHAREHOLDER SERVICES .............................................. 14
PURCHASE OF SHARES ........................................................ 16
REDEMPTION OF SHARES ...................................................... 16
NET ASSET VALUE DETERMINATION ............................................. 17
ALLOCATION OF TRUST EXPENSES .............................................. 17
ADDITIONAL TAX INFORMATION ................................................ 17
CAPITAL SHARES AND VOTING ................................................. 18
CALCULATION OF PERFORMANCE DATA ........................................... 19
FINANCIAL STATEMENTS AND REPORTS .......................................... 22
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Davenport Equity Fund (the
"Fund") dated August 1, 1998. The Prospectus may be obtained from the Fund at
the address and phone number shown above at no charge.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
WARRANTS AND RIGHTS. Warrants are essentially options to purchase equity
securities at specific prices and are valid for a specific period of time.
Prices of warrants do not necessarily move in concert with the prices of the
underlying securities. Rights are similar to warrants but generally have a short
duration and are distributed directly by the issuer to its shareholders. Rights
and warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
FOREIGN SECURITIES. The Fund may invest in foreign securities if the Advisor
believes such investment would be consistent with the Fund's investment
objective. The same factors would be considered in selecting foreign securities
as with domestic securities, as discussed in the Prospectus. Foreign securities
investment presents special considerations not typically associated with
investments in domestic securities. Foreign taxes may reduce income. Currency
exchange rates and regulations may cause fluctuation in the value of foreign
securities. Foreign securities are subject to different regulatory environments
than in the United States and, compared to the United States, there may be a
lack of uniform accounting, auditing and financial reporting standards, less
volume and liquidity and more volatility, less public information, and less
regulation of foreign issuers. Countries have been known to expropriate or
nationalize assets, and foreign investments may be subject to political,
financial or social instability or adverse diplomatic developments. There may be
difficulties in obtaining service of process on foreign issuers and difficulties
in enforcing judgments with respect to claims under the U.S. securities laws
against such issuers. Favorable or unfavorable differences between U.S. and
foreign economies could affect foreign securities values. The U.S. Government
has, in the past, discouraged certain foreign investments by U.S. investors
through taxation or other restrictions and it is possible that such restrictions
could be imposed again.
SHARES OF OTHER INVESTMENT COMPANIES. The Fund may invest up to 5% of its net
assets in shares of other investment companies, including Standard & Poor's
Depository Receipts ("SPDRs") and shares of the DIAMONDS Trust ("DIAMONDs").
SPDRs are exchange-traded securities that represent ownership in the SPDR Trust,
a long-term unit investment trust which has been established to
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<PAGE>
accumulate and hold a portfolio of common stocks that is intended to track the
price performance and dividend yield of the Standard & Poor's Composite Stock
Price Index. Holders of SPDRs are entitled to receive proportionate quarterly
distributions corresponding to the dividends which accrue on the S&P 500 stocks
in the underlying portfolio, less accumulated expenses of the SPDR Trust.
DIAMONDs operate similarly to SPDRs, except that the DIAMONDS Trust is intended
to track the price performance and dividend yield of the Dow Jones Industrial
Average. SPDRs and DIAMONDs are unlike traditional mutual funds in that they are
available for purchase or sale during the trading day like a share of stock,
rather than at closing net asset value per share. This characteristic of SPDRs
and DIAMONDs is a risk separate and distinct from the risk that its net asset
value will decrease.
To the extent the Fund invests in securities of other investment companies, Fund
shareholders would indirectly pay a portion of the operating costs of such
companies. These costs include management, brokerage, shareholder servicing and
other operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time the
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Fund holds a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Advisor will carefully consider the creditworthiness during the
term of the repurchase agreement.
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<PAGE>
Repurchase agreements are considered as loans collateralized by the Repurchase
Securities, such agreements being defined as "loans" under the Investment
Company Act of 1940 (the "1940 Act"). The return on such "collateral" may be
more or less than that from the repurchase agreement. The market value of the
resold securities will be monitored so that the value of the "collateral" is at
all times as least equal to the value of the loan, including the accrued
interest earned thereon. All Repurchase Securities will be held by the Fund's
custodian either directly or through a securities depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Fund. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquire a Bankers' Acceptance, the bank
which "accepted" the time draft is liable for payment of interest and principal
when due. The Bankers' Acceptance, therefore, carries the full faith and credit
of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an unsecured interest-bearing
debt obligation of a bank. CDs acquired by the Fund would generally be in
amounts of $100,000 or more. COMMERCIAL PAPER is an unsecured, short term debt
obligation of a bank, corporation or other borrower. Commercial Paper maturity
generally ranges from two to 270 days and is usually sold on a discounted basis
rather than as an interest-bearing instrument. The Fund will invest in
Commercial Paper only if it is rated in the highest rating category by any
nationally recognized statistical rating organization (NRSRO) or, if not rated,
the issuer must have an outstanding unsecured debt issue rated in the three
highest categories by any NRSRO or, if not so rated, be of equivalent quality in
the Advisor's assessment. Commercial Paper may include Master Notes of the same
quality. MASTER NOTES are unsecured obligations which are redeemable upon demand
of the holder and which permit the investment of fluctuating amounts at varying
rates of interest. Master Notes are acquired by the Fund only through the Master
Note program of the Fund's custodian, acting as administrator thereof. The
Advisor will monitor, on a continuous basis, the earnings power, cash flow and
other liquidity ratios of the issuer of a Master Note held by the Fund.
- 4 -
<PAGE>
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations, in addition to those
described in the Prospectus, which cannot be changed without approval by holders
of a majority of the outstanding voting shares of the Fund. A "majority" for
this purpose, means the lesser of (i) 67% of the Fund's outstanding shares
represented in person or by proxy at a meeting at which more than 50% of its
outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, the Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one corporate issuer or purchase more than 10% of the outstanding
voting securities or of any class of securities of any one corporate
issuer;
(2) Invest 25% or more of the value of its total assets in any one industry
(except that securities of the U.S. Government, its agencies and
instrumentalities are not subject to these limitations);
(3) Invest for the purpose of exercising control or management of another
issuer;
(4) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Fund may
invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things, and the Fund may
invest in mortgage-backed securities;
(5) Underwrite securities issued by others, except to the extent the Fund may
be deemed to be an underwriter under the federal securities laws in
connection with the disposition of portfolio securities;
(6) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
(7) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);
- 5 -
<PAGE>
(8) Make loans of money or securities, except that the Fund may invest in
repurchase agreements;
(9) Write, purchase or sell commodities, commodities contracts, commodities
futures contracts, warrants on commodities or related options; or
(10) Issue or sell any senior security as defined by the Investment Company Act
of 1940 except insofar as any borrowing that the Fund may engage in may be
deemed to be an issuance of a senior security.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation. However, in the case of the
borrowing limitation (the first restriction in the Prospectus) the Fund will, to
the extent necessary, reduce its existing borrowings to comply with the
limitation.
While the Fund has reserved the right to make short sales "against the box"
(limitation number 7, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Fund, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ---------------- ------------------- ---------------
<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
- 6 -
<PAGE>
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
- 7 -
<PAGE>
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
- 8 -
<PAGE>
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary
Cincinnati, Ohio 45202 of Countrywide Investments, Inc. and Countrywide
Financial Services, Inc.; Secretary of Countrywide
Investment Trust, Countrywide Tax-Free Trust
and Countrywide Strategic Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
- 9 -
<PAGE>
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
As of July 2, 1998, the Trustees and Officers of the Trust as a group owned
beneficially (i.e., had voting and/or investment power) less than 1% of the then
outstanding shares of the Fund.
- 10 -
<PAGE>
INVESTMENT ADVISOR
Davenport & Company LLC (the "Advisor") supervises the Fund's investments
pursuant to an Advisory Agreement (the "Advisory Agreement") described in the
Prospectus. The Advisory Agreement is effective until April 1, 1999 and will be
renewed thereafter for one year periods only so long as such renewal and
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of the Fund's outstanding voting securities, provided
the continuance is also approved by a majority of the Trustees who are not
"interested persons" of the Trust or the Advisor by vote cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement is terminable without penalty on sixty days notice by the Board of
Trustees of the Trust or by the Advisor. The Advisory Agreement provides that it
will terminate automatically in the event of its assignment.
Compensation of the Advisor with respect to the Fund is at the annual rate of
0.75% of the Fund's average daily net assets. For the fiscal period ended March
31, 1998, the Advisor voluntarily waived its entire investment advisory fee of
$24,350 and reimbursed the Fund for $7,571 of other operating expenses.
The Advisor was originally organized in 1863, re-organized as a Virginia
corporation in 1972, and subsequently converted to a Limited Liability
Corporation in 1997. Through two Sub-S corporation unitholders, the Advisor has
99 owners all of whom are employees of the Advisor and none of whom own in
excess of 10% of the Advisor. In addition to acting as Advisor to the Fund, the
Advisor provides investment advice to corporations, trusts, pension and profit
sharing plans, other business and institutional accounts and individuals.
The Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Fund. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Fund, and does
so in accordance with the investment objective and policies of the Fund as
described herein and in the Prospectus. The Advisor places all securities orders
for the Fund, determining with which broker, dealer, or issuer to place the
orders. The Advisor must adhere to the brokerage policies of the Fund in placing
all orders, the substance of which policies are that the Advisor must seek at
all times the most favorable price and execution for all securities brokerage
transactions.
- 11 -
<PAGE>
The Advisor also provides, at its own expense, certain executive officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Fund to clients of such dealers or others or based on the average balance of all
accounts in the Fund for which such dealers or others are designated as the
person responsible for the account.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Fund and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Fund pays the
Administrator a fee at the annual rate of 0.20% of the average value of its
daily net assets up to $25,000,000, 0.175% of such assets from $25,000,000 to
$50,000,000 and 0.15% of such assets in excess of $50,000,000; provided,
however, that the minimum fee is $2,000 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
For the fiscal period ended March 31, 1998, the Administrator received from the
Fund fees of $6,011.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Fund's federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
- 12 -
<PAGE>
The Custodian of the Fund's assets is Star Bank, N.A, 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Fund
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Fund.
BROKERAGE
It is the Fund's practice to seek the best price and execution for all portfolio
securities transactions. The Advisor (subject to the general supervision of the
Board of Trustees) directs the execution of the Fund's portfolio transactions.
The Fund's common stock portfolio transactions will normally be exchange traded
and may be effected through broker-dealers who will charge brokerage
commissions. With respect to securities traded only in the over-the-counter
market, orders will be executed on a principal basis with primary market makers
in such securities except where better prices or executions may be obtained on
an agency basis or by dealing with other than a primary market maker.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of the Fund's brokerage commissions to persons or firms
providing the Advisor with research services, which may typically include, but
are not limited to, investment recommendations, financial, economic, political,
fundamental and technical market and interest rate data, and other statistical
or research services. Much of the information so obtained may also be used by
the Advisor for the benefit of the other clients it may have. Conversely, the
Fund may benefit from such transactions effected for the benefit of other
clients. In all cases, the Advisor is obligated to effect transactions for the
Fund based upon obtaining the most favorable price and execution. Factors
considered by the Advisor in determining whether the Fund will receive the most
favorable price and execution include, among other things: the size of the
order, the broker's ability to effect and settle the transaction promptly and
efficiently and the Advisor's perception of the broker's reliability, integrity
and financial condition.
During the fiscal period ended March 31, 1998, all of the Fund's portfolio
transactions were effected through the Advisor. The Advisor did not receive any
commissions or other compensation from the Fund for execution of the Fund's
portfolio transactions.
- 13 -
<PAGE>
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see "Signature Guarantees"). A corporation (or partnership)
must also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Fund. Shareholders should be aware that such systematic withdrawals
may deplete or use up entirely their initial investment and may result in
realized long-term or short-term capital gains or losses. The Systematic
Withdrawal Plan may be terminated at any time by the Fund upon sixty days'
written notice or by a shareholder upon
- 14 -
<PAGE>
written notice to the Fund. Applications and further details may be obtained by
calling the Fund at 1-800-443-4249, or by writing to:
The Davenport Equity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares of the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein the Fund commits itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the existing account registration; (2) signature(s) of the
registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (see the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
- 15 -
<PAGE>
PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m., Eastern time,
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Fund until
confirmed in writing (or unless other arrangements have been made with the Fund,
for example in the case of orders utilizing wire transfer of funds) and payment
has been received.
The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUND. The Fund has adopted initial investment
minimums for the purpose of reducing the cost to the Fund (and consequently to
the shareholders) of communicating with and servicing their shareholders.
However, a reduced minimum initial investment requirement of $1,000 applies to
Trustees, officers and employees of the Fund, the Advisor and certain parties
related thereto, including clients of the Advisor or any sponsor, officer,
committee member thereof, or the immediate family of any of them. In addition,
accounts having the same mailing address may be aggregated for purposes of the
minimum investment if they consent in writing to share a single mailing of
shareholder reports, proxy statements (but each such shareholder would receive
his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Fund for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Fund.
- 16 -
<PAGE>
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund, and they have
adopted procedures to do so, as follows. The net asset value of the Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.,
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
The Fund pays all of its own expenses not assumed by the Advisor or the
Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the Trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Fund. General Trust expenses are allocated among
the series, or funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, the Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, the Fund must derive at least 90% of its gross
income each taxable year from dividends, interest, payments with respect to
securities' loans, gains from the disposition of stock or securities, and
certain other income.
- 17 -
<PAGE>
While the above requirements are aimed at qualification of the Fund as a
regulated investment company under Subchapter M of the Code, the Fund also
intends to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Fund remains qualified under Subchapter M,
it will not be subject to federal income tax to the extent it distributes its
taxable net investment income and net realized capital gains. A nondeductible 4%
federal excise tax will be imposed on the Fund to the extent it does not
distribute at least 98% of its ordinary taxable income for a calendar year, plus
98% of its capital gain net taxable income for the one year period ending each
October 31, plus certain undistributed amounts from prior years. While the Fund
intends to distribute its taxable income and capital gains in a manner so as to
avoid imposition of the federal excise and income taxes, there can be no
assurance that the Fund indeed will make sufficient distributions to avoid
entirely imposition of federal excise or income taxes.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUND'S DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the Fund
derived from net investment income or net short-term capital gains are taxable
to shareholders as ordinary income, whether received in cash or reinvested in
additional shares. Distributions, if any, of long-term capital gains are taxable
to shareholders as long-term capital gains, whether received in cash or
reinvested in additional shares, regardless of how long Fund shares have been
held. For information on "backup" withholding, see "How to Purchase Shares" in
the Prospectus.
For corporate shareholders, the dividends received deduction, if applicable,
should apply to dividends from the Fund. The Fund will send shareholders
information each year on the tax status of dividends and disbursements. A
dividend or capital gains distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income taxation. Dividends from net investment income, along with capital gains,
will be taxable to shareholders, whether received in cash or shares and no
matter how long you have held Fund shares, even if they reduce the net asset
value of shares below your cost and thus in effect result in a return of a part
of your investment.
CAPITAL SHARES AND VOTING
Shares of the Fund, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a
- 18 -
<PAGE>
fractional vote for each fractional share held. Shares have noncumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees and, in this event, the
holders of the remaining shares voting will not be able to elect any Trustees.
The Trustees will hold office indefinitely, except that: (1) any Trustee may
resign or retire and (2) any Trustee may be removed with or without cause at any
time (a) by a written instrument, signed by at lease two-thirds of the number of
Trustees prior to such removal; or (b) by vote of shareholders holding not less
than two-thirds of the outstanding shares of the Trust, cast in person or by
proxy at a meeting called for that purpose; or (c) by a written declaration
signed by shareholders holding not less than two-thirds of the outstanding
shares of the Trust and filed with the Trust's custodian. Shareholders have
certain rights, as set forth in the Declaration of Trust, including the right to
call a meeting of the shareholders for the purpose of voting on the removal of
one or more Trustees. Shareholders holding not less than ten percent (10%) of
the shares then outstanding may require the Trustees to call such a meeting and
the Trustees are obligated to provide certain assistance to shareholders
desiring to communicate with other shareholders in such regard (e.g., providing
access to shareholder lists, etc.). In case a vacancy or an anticipated vacancy
shall for any reason exist, the vacancy shall be filled by the affirmative vote
of a majority of the remaining Trustees, subject to the provisions of Section
16(a) of the 1940 Act. The Trust does not expect to have an annual meeting of
shareholders.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Fund for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of the Fund ("T") is computed by using the redeemable value at the end of
a specified period of time ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of time ("n") according to the formula P(l+T)n=ERV.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or
- 19 -
<PAGE>
depreciation); it assumes reinvestment of all dividends and capital gain
distributions. Nonstandardized Return may consist of a cumulative percentage of
return, actual year-by-year rates or any combination thereof. The total return
of the Fund for the period since inception (January 15, 1998) to March 31, 1998
is 11.40%.
From time to time, the Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day prior
to the start of the 30-day (or one month) period for which yield is being
calculated, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest). The Fund's yield for the 30 days
ended March 31, 1998 was 0.69%.
The Fund's performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Fund may compare its performance to the S&P 500
Index, which is generally considered to be representative of the performance of
unmanaged common stocks that are publicly traded in the United States securities
markets. Comparative performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service, such as Lipper Analytical
Services, Inc. or Morningstar, Inc., or by one or more newspapers, newsletters
or financial periodicals. Performance comparisons may be useful to investors who
wish to compare the Fund's past performance to that of other mutual funds and
investment products. Of course, past performance is not a guarantee of future
results.
- 20 -
<PAGE>
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use standardized indices in addition to the Fund's Prospectus to
obtain a more complete view of the Fund's performance before investing. Of
course, when comparing the Fund's performance to any index, factors such as
composition of the index and prevailing market conditions should be considered
in assessing the significance of such comparisons. When comparing funds using
reporting services, or total return, investors should take into consideration
any relevant differences in funds such as permitted portfolio compositions and
methods used to value portfolio securities and compute offering price.
Advertisements and other sales literature for the Fund may quote total returns
that are calculated on non-standardized base periods. The total returns
represent the historic change in the value of an investment in the Fund based on
monthly reinvestment of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
- 21 -
<PAGE>
FINANCIAL STATEMENTS AND REPORTS
The books of the Fund will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published, and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Fund as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
- 22 -
<PAGE>
LOGO:
DAVENPORT
EQUITY FUND
ANNUAL REPORT
March 31, 1998
<PAGE>
LETTER TO SHAREHOLDERS
================================================================================
We are pleased to report that The Davenport Equity Fund began on January 15,
1998, at $10.00 a share and ended its first short fiscal year on March 31,1998,
at $11.14 for a gain of 11.4%. Despite a market that just a few months ago had
investors preoccupied with the effects of the Asian currency crisis, possible
deflation/recession and slowing corporate profits, your Fund has gotten off to a
strong start.
The market was driven to new highs by a narrow list of large multi-national and
technology-related companies. In fact, the top five stocks in the S&P 500 were
responsible for approximately 18% of the market's performance. Investors bid up
the prices of established growth companies, taking comfort in their global
strength, strong financial position and their ability to produce predictable
results. Fortunately your Fund owned a number of these companies: General
Electric, Schering-Plough, Merck and Coca-Cola to name a few.
We consider these types of well-known large growth stocks as a core holding in
The Davenport Equity Fund. Over the years, the management of these companies has
proven their ability to increase sales, earnings and their stock prices. Given
these stocks' higher than average growth rates and their relative valuation,
which in many cases is far from historical peaks, we believe they represent
strong long-term holdings.
During the period your Fund initiated positions in Lockheed Martin, Philips
Electronics, and Chesapeake. As primarily a value manager, we believe the stock
prices of these companies represent good value in a market that, by some
traditional valuation measures, seems a little frothy. In addition, management
of each of these companies has demonstrated their commitment to increasing
shareholder value. A few other large value-oriented stocks in your Fund include
Mobil, DuPont, and Ford Motor Co.
In addition to owning large value and growth-oriented stocks, your Fund owns a
number of smaller companies that operate in niche markets. Typically, Davenport
& Company LLC's Research Department has followed the smaller companies in your
Fund for more than a decade. These securities may not be as familiar to the
investing public, but are very well known to us at Davenport. Stocks such as
Markel, Tredegar and Owens & Minor have been staple holdings in our Davenport
Asset Management Program for years.
We believe that combining a healthy mix of large value and growth stocks,
carefully balanced with a sprinkling of smaller companies operating in niche
markets, should enable your Fund to incur less risk and achieve consistent
performance over a market cycle. The most common theme among the diverse
holdings in The Davenport Equity Fund is strong management. The cornerstone of
our investment philosophy is investing in well-run companies that have a history
of earnings increases, sales growth, a strong balance sheet and a proven
management team.
The five members of the Investment Policy Committee who manage your Fund will
continue to insist on finding value in every stock that we buy, controlling risk
through diversification and establishing price targets on our stocks. While
there are some concerns in the market about Asia, slowing corporate profits and
higher interest rates, we continue to believe that future opportunities
available to equity investors outweigh any near-term worries.
The U.S. economy continues to be strong with the lowest unemployment since the
1970's, the first projected budget surplus in decades and relatively low
interest rates. This is creating a near perfect backdrop for a strong equity
market. After all, the consumer, who represents approximately two thirds of the
economy, is gainfully employed and making good wages, spending money on housing,
computers and travel. The economy is almost in perfect balance and that in
itself is bothersome to those searching for pitfalls in our market outlook.
Our Investment Policy Committee will continue to search for attractive companies
led by management with a relentless focus on the bottom line. We believe that
over time solid companies in industries with strong fundamentals will continue
to reward shareholders. We look forward to future periods of uncovering
attractive investment opportunities for your Fund. We welcome your questions and
comments.
Sincerely,
Davenport & Company LLC
For additional Fund inquiries please contact your investment executive or
call Davenport Asset Management at (888) 285-1863 or (804) 697-2999 to discover
how we can add value to your portfolio.
<PAGE>
<TABLE>
<CAPTION>
THE DAVENPORT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
=============================================================================================================
<S> <C>
ASSETS
Investments in securities:
At acquisition cost.................................................................... $ 21,195,237
===============
At market value (Note 1)............................................................... $ 22,714,148
Investments in repurchase agreements (Note 1)............................................ 657,000
Cash..................................................................................... 731
Receivable for capital shares sold....................................................... 1,316,597
Dividends and interest receivable........................................................ 19,155
Due from Adviser (Note 3)................................................................ 7,571
Other assets............................................................................. 5,522
---------------
TOTAL ASSETS........................................................................... 24,720,724
---------------
LIABILITIES
Payable for capital shares redeemed...................................................... 1,710
Accrued administration fees (Note 3)..................................................... 3,600
Other accrued expenses................................................................... 21,239
---------------
TOTAL LIABILITIES...................................................................... 26,549
---------------
NET ASSETS ................................................................................. $ 24,694,175
===============
Net assets consist of:
Paid-in capital............................................................................. $ 23,128,088
Undistributed net investment income......................................................... 24,604
Accumulated net realized gains from security transactions................................... 22,572
Net unrealized appreciation on investments.................................................. 1,518,911
---------------
Net assets.................................................................................. $ 24,694,175
===============
Shares of beneficial interest outstanding (unlimited number of shares authorized,
no par value)............................................................................ 2,217,354
===============
Net asset value, offering price and redemption price per share (Note 1)..................... $ 11.14
===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE DAVENPORT EQUITY FUND
STATEMENT OF OPERATIONS
Period Ended March 31, 1998(a)
=============================================================================================================
<S> <C>
INVESTMENT INCOME
Dividends................................................................................ $ 48,186
Interest................................................................................. 13,754
---------------
TOTAL INVESTMENT INCOME................................................................ 61,940
---------------
EXPENSES
Investment advisory fees (Note 3)........................................................ 24,350
Custodian fees........................................................................... 16,795
Professional fees........................................................................ 8,917
Registration fees........................................................................ 8,340
Administration fees (Note 3)............................................................. 6,011
Postage and supplies..................................................................... 3,213
Trustees' fees and expenses.............................................................. 1,390
Pricing costs............................................................................ 241
---------------
TOTAL EXPENSES......................................................................... 69,257
Fees waived and expenses reimbursed by the Adviser (Note 3).............................. ( 31,921 )
---------------
NET EXPENSES........................................................................... 37,336
---------------
NET INVESTMENT INCOME ...................................................................... 24,604
---------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions............................................ 22,572
Net change in unrealized appreciation/depreciation on investments........................ 1,518,911
---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................................... 1,541,483
---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................................................. $ 1,566,087
===============
(a) Represents the period from the commencement of operations (January 15,
1998) through March 31, 1998.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE DAVENPORT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
Period Ended March 31, 1998(a)
=============================================================================================================
<S> <C>
FROM OPERATIONS:
Net investment income.................................................................... $ 24,604
Net realized gains from security transactions............................................ 22,572
Net change in unrealized appreciation/depreciation on investments........................ 1,518,911
---------------
Net increase in net assets from operations.................................................. 1,566,087
---------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold................................................................ 23,577,618
Payments for shares redeemed............................................................. ( 449,530 )
---------------
Net increase in net assets from capital share transactions.................................. 23,128,088
---------------
TOTAL INCREASE IN NET ASSETS ............................................................... 24,694,175
NET ASSETS:
Beginning of period...................................................................... --
---------------
End of period (including undistributed net investment income of $24,604)................. $ 24,694,175
===============
Capital share activity:
Sold..................................................................................... 2,259,111
Redeemed................................................................................. ( 41,757 )
---------------
Net increase in shares outstanding....................................................... 2,217,354
Shares outstanding, beginning of period.................................................. --
---------------
Shares outstanding, end of period........................................................ 2,217,354
===============
(a) Represents the period from the commencement of operations (January 15,
1998) through March 31, 1998.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE DAVENPORT EQUITY FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout the Period
- -------------------------------------------------------------------------------------------------------------
Period
Ended
March 31,
1998 (a)
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value at beginning of period...................................................... $ 10.00
---------------
Income from investment operations:
Net investment income.................................................................... 0.01
Net realized and unrealized gains on investments......................................... 1.13
---------------
Total from investment operations............................................................ 1.14
---------------
Net asset value at end of period............................................................ $ 11.14
===============
Total return................................................................................ 11.40%
===============
Net assets at end of period (000's)......................................................... $ 24,694
===============
Ratio of net expenses to average net assets(b) ............................................. 1.15% (c)
Ratio of net investment income to average net assets........................................ 0.76% (c)
Portfolio turnover rate..................................................................... 17% (c)
Average commission rate per share........................................................... $ 0.0000
(a) Represents the period from the commencement of operations (January 15,
1998) through March 31, 1998.
(b) Absent investment advisory fees waived and expenses reimbursed by the
Adviser, the ratio of expenses to average net assets would have been
2.13%(c) (Note 3).
(c) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE DAVENPORT EQUITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
============================================================================================================
Market
Shares COMMON STOCKS -- 91.3% Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic Materials -- 4.8%
4,161 Aluminum Company of America............................................... $ 286,329
5,547 Barrick Gold Corporation.................................................. 119,954
9,246 Chesapeake Corporation.................................................... 318,987
6,472 Cleveland - Cliffs, Inc................................................... 347,870
6,472 Lydall, Inc.(a) .......................................................... 116,900
---------------
1,190,040
---------------
Chemicals and Drugs -- 9.0%
4,623 Air Products & Chemicals, Inc............................................. 383,131
12,019 ChemFirst Inc............................................................. 318,504
6,472 duPont (E.I.) de Nemours & Company........................................ 440,096
3,698 Merck & Company, Inc...................................................... 474,731
7,396 Schering-Plough Corporation............................................... 604,161
---------------
2,220,623
---------------
Computers/Computer Technology Services -- 7.7%
9,246 Allied Signal, Inc........................................................ 388,332
7,396 Hewlett-Packard Company................................................... 468,722
3,236 Lockheed Martin Corporation............................................... 364,050
9,246 Media General, Inc........................................................ 454,788
3,698 Motorola, Inc............................................................. 224,191
---------------
1,900,083
---------------
Consumer Products -- 15.7%
4,623 American Home Products.................................................... 440,919
3,698 Amgen, Inc.(a) ........................................................... 225,116
5,547 Bristol-Myers Squibb Company.............................................. 578,621
9,246 Cendant Corporation(a) ................................................... 366,373
7,130 Ford Motor Company........................................................ 462,113
5,547 International Flavors & Fragrances........................................ 261,402
6,657 Johnson & Johnson......................................................... 488,041
7,396 Mattel, Inc............................................................... 293,067
15,718 Owens & Minor, Inc. Holding Company....................................... 283,906
18,491 Sysco Corporation......................................................... 473,832
---------------
3,873,390
---------------
Durable Goods -- 12.3%
5,547 CSX Corporation........................................................... 330,047
5,547 Deere & Company........................................................... 343,567
5,351 Fluor Corporation......................................................... 266,212
4,623 General Electric Company.................................................. 398,445
9,246 Martin Marietta Materials................................................. 399,312
9,708 Norfolk Southern Corporation.............................................. 362,837
4,800 Philips Electronics NV-NY................................................. 352,500
8,090 Tredegar Industries, Inc.................................................. 586,019
---------------
3,038,939
---------------
<PAGE>
<CAPTION>
THE DAVENPORT EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
=============================================================================================================
Market
Shares COMMON STOCKS -- 91.3% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Entertainment -- 1.4%
3,236 The Walt Disney Company................................................... $ 345,443
---------------
Financial Services -- 21.0%
4,161 American International Group.............................................. 524,026
4,623 BB&T Corporation.......................................................... 312,919
7,396 Capital One Financial..................................................... 583,360
3,190 CCB Financial Corporation................................................. 352,694
5,547 Crestar Financial Corporation............................................. 327,966
11,095 Federal Realty Investments Trust.......................................... 272,521
5,547 First Union Corporation................................................... 314,792
1,849 General RE Corporation.................................................... 407,936
3,698 Markel Corporation(a) .................................................... 639,523
20,340 MGI Properties Inc........................................................ 499,601
9,237 The Pioneer Group, Inc.................................................... 288,656
18,491 United Dominion Realty.................................................... 268,120
4,623 Wachovia Corporation...................................................... 392,088
---------------
5,184,202
---------------
Food/Beverages -- 3.1%
7,396 Anheuser-Busch Company, Inc............................................... 342,527
5,547 Coca-Cola Company......................................................... 429,546
---------------
772,073
---------------
Oil/Energy -- 11.0%
3,236 Amoco Corporation......................................................... 279,510
3,328 Atlantic Richfield Company................................................ 261,664
4,623 Chevron Corporation....................................................... 371,285
6,934 Enron Corporation......................................................... 321,564
4,623 Mobil Corporation......................................................... 354,237
5,547 Schlumberger Limited...................................................... 420,185
9,246 Tidewater, Inc............................................................ 405,090
9,246 Valero Energy Corporation................................................. 308,585
---------------
2,722,120
---------------
Retail Stores -- 3.4%
9,246 Circuit City Stores, Inc.................................................. 395,267
12,482 Walgreen Company.......................................................... 439,210
---------------
834,477
---------------
Utilities -- 1.9%
11,095 SBC Communications, Inc................................................... 484,019
---------------
Total Common Stocks (Cost $21,057,788) ................................... $ 22,565,409
---------------
<PAGE>
<CAPTION>
THE DAVENPORT EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
=============================================================================================================
Market
Shares CLOSED-END MUTUAL FUNDS -- 0.6% Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
7,555 Central European Equity Fund (Cost $137,449).............................. $ 148,739
---------------
Total Investments at Value (Cost $21,195,237)-- 91.9% .................... $ 22,714,148
---------------
<CAPTION>
=============================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(b)-- 2.7% Value
- -------------------------------------------------------------------------------------------------------------
$ 657,000 Star Bank, N.A., 5.25%, dated 03/31/98, due 04/01/98,
repurchase proceeds $657,096 (Cost $657,000).............................. $ 657,000
---------------
Total Investments and Repurchase Agreements at Value-- 94.6% ............. $ 23,371,148
Other Assets in Excess of Liabilities-- 5.4% ............................. 1,323,027
---------------
Net Assets-- 100.0% ...................................................... $ 24,694,175
===============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/24; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/22; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/24. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985.
The Fund's pro-rata interest in the collateral at March 31, 1998
was $665,827.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE DAVENPORT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
================================================================================
1. Significant Accounting Policies
The Davenport Equity Fund (the Fund) is a no-load, diversified series of the
Williamsburg Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Trust was organized as a Massachusetts business trust on July 18, 1988. The Fund
began operations on January 15, 1998.
The Fund's investment objective is long-term growth of capital through
investment in a diversified portfolio of common stocks. Current income is
incidental to this objective and may not be significant.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded.
Repurchase agreements -- The Fund generally enters into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market. At the time the Fund enters
into the joint repurchase agreement, the seller agrees that the value of the
underlying securities, including accrued interest, will at all times be equal to
or exceed the face amount of the repurchase agreement. In addition, the Fund
actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Dividend income is recorded on the ex-dividend date.
Dividends arising from net investment income are declared and paid quarterly to
shareholders of the Fund. Net realized short-term capital gains, if any, may be
distributed throughout the year and net realized long-term capital gains, if
any, are distributed at least once each year. Income distributions and capital
gain distributions are determined in accordance with income tax regulations,
which may differ from generally accepted accounting principles.
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are valued on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
<PAGE>
THE DAVENPORT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
===============================================================================
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of $21,195,237 as of March 31, 1998:
- -------------------------------------------------------------------------------
Gross unrealized appreciation................................. $ 1,653,917
Gross unrealized depreciation................................. (135,006)
--------------
Net unrealized appreciation................................... $ 1,518,911
==============
- -------------------------------------------------------------------------------
2. Investment Transactions
During the period ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $21,618,434 and $445,769, respectively.
3. Transactions with Affiliates
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Davenport & Company LLC (the Adviser)
under the terms of an Investment Advisory Agreement. Under the Investment
Advisory Agreement, the Fund pays the Adviser a fee, which is computed and
accrued daily and paid monthly, at an annual rate of .75% of its average daily
net assets.
The Adviser currently intends to limit the total operating expenses of the Fund
to 1.15% of its average daily net assets. Accordingly, the Adviser voluntarily
waived its entire investment advisory fee of $24,350 and reimbursed the Fund for
$7,571 of other operating expenses for the period ended March 31, 1998. Certain
trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .20% of its average daily net assets up to $25
million; .175% of the next $25 million of such net assets; and .15% of such net
assets in excess of $50 million, subject to a $2,000 minimum monthly fee. In
addition, the Fund pays out-of-pocket expenses including, but not limited to,
postage, supplies and costs of pricing the Fund's portfolio securities. Certain
officers of the Trust are also officers of CFS.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
===============================================================================
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Davenport Equity Fund (a series of The Williamsburg Investment Trust),
including the portfolio of investments, as of March 31, 1998, and the related
statement of operations, changes in net assets, and financial highlights for the
period January 15, 1998 (commencement of operations) to March 31, 1998. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Davenport Equity Fund as of March 31, 1998, the results of its
operations, the changes in its net assets, and financial highlights for the
period January 15, 1998 to March 31, 1998, in conformity with generally accepted
accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
THE DAVENPORT EQUITY FUND
Investment Adviser
Davenport & Company LLC
One James Center
901 East Cary Street
Richmond, Virginia 23219-4037
1-800-281-3217
Administrator
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
Independent Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, Pennsylvania 19102
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. M.D.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Fred T. Tattersall
Erwin H. Will, Jr.
Samuel B. Witt III
Officers
Joseph L. Antrim III, President
Coleman Wortham III, Vice President
J. Lee Keiger III, Vice President
John P. Ackerly IV, Vice President
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN BOND FUNDS
THE JAMESTOWN BOND FUND
THE JAMESTOWN SHORT TERM BOND FUND
August 1, 1998
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES ........................................ 2
DESCRIPTION OF BOND RATINGS ............................................... 5
INVESTMENT LIMITATIONS .................................................... 8
TRUSTEES AND OFFICERS ..................................................... 10
INVESTMENT ADVISOR ........................................................ 15
ADMINISTRATOR ............................................................. 16
OTHER SERVICES ............................................................ 16
BROKERAGE ................................................................. 17
SPECIAL SHAREHOLDER SERVICES .............................................. 18
PLAN OF DISTRIBUTION ...................................................... 19
PURCHASE OF SHARES ........................................................ 20
REDEMPTION OF SHARES ...................................................... 21
NET ASSET VALUE DETERMINATION ............................................. 22
ALLOCATION OF TRUST EXPENSES .............................................. 22
ADDITIONAL TAX INFORMATION ................................................ 22
CAPITAL SHARES AND VOTING ................................................. 24
CALCULATION OF PERFORMANCE DATA ........................................... 25
FINANCIAL STATEMENTS AND REPORTS .......................................... 27
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Jamestown Bond Funds (the
"Funds") dated August 1, 1998. The Prospectus may be obtained from the Funds, at
the address and phone number shown above, at no charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both The Jamestown Bond Fund (the
"Bond Fund") and The Jamestown Short Term Bond Fund (the "Short Term Fund")
unless otherwise noted.
The investment objectives and policies of the Funds are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time a
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Funds' risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Funds hold a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Advisor will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Funds' custodian either directly or through a securities depository.
- 2 -
<PAGE>
SECURITIES OF UNSEASONED COMPANIES. The securities of unseasoned companies
(those in business less than three years, including predecessors and, in the
case of bonds, guarantors) may have a limited trading market, which may
adversely affect disposition. If other investors attempt to dispose of such
holdings when the Funds desire to do so, the Funds could receive lower prices
than might otherwise be obtained. Because of the increased risk over larger,
better known companies, each Fund limits its investments in the securities of
unseasoned issuers to no more than 5% of its total assets.
U.S. GOVERNMENT SECURITIES. Each Fund may invest in debt obligations which are
issued or guaranteed by the U.S. Government, its agencies and instrumentalities
("U.S. Government Securities") as described herein. U.S. Government Securities
include the following securities: (1) U.S. Treasury obligations of various
interest rates, maturities and issue dates, such as U.S. Treasury bills (mature
in one year or less), U.S. Treasury notes (mature in one to seven years), and
U.S. Treasury bonds (mature in more than seven years), the payments of principal
and interest of which are all backed by the full faith and credit of the U.S.
Government; (2) obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, some of which are backed by the full faith and credit of the
U.S. Government, e.g., obligations of the Government National Mortgage
Association ("GNMA"), the Farmers Home Administration and the Export Import
Bank; some of which do not carry the full faith and credit of the U.S.
Government but which are supported by the right of the issuer to borrow from the
U.S. Government, e.g., obligations of the Tennessee Valley Authority, the U.S.
Postal Service, the Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan Mortgage Corporation ("FHLMC"); and some of which are backed
only by the credit of the issuer itself, e.g., obligations of the Student Loan
Marketing Association, the Federal Home Loan Banks and the Federal Farm Credit
Bank; and (3) any of the foregoing purchased subject to repurchase agreements as
described herein. The Funds do not intend to invest in "zero coupon" Treasury
securities. The guarantee of the U.S. Government does not extend to the yield or
value of the Funds' shares.
Obligations of GNMA, FNMA and FHLMC may include direct pass-through
"Certificates," representing undivided ownership interests in pools of
mortgages. Such Certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the U.S. Government or the issuing
agency. Mortgage Certificates are subject to more rapid prepayment than their
stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates and, as a result, the
proceeds from such prepayments may be reinvested in instruments which have lower
yields. To the extent such securities were purchased at a premium, such
prepayments could result in capital losses. The U.S. Government does not
guarantee premiums and market value of U.S. Government Securities.
- 3 -
<PAGE>
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Funds. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Funds acquire a Bankers' Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Bankers' Acceptance, therefore, carries the full faith
and credit of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an unsecured
interest-bearing debt obligation of a bank. CDs acquired by the Funds would
generally be in amounts of $100,000 or more. COMMERCIAL PAPER is an unsecured,
short-term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Funds will
invest in Commercial Paper only if it is rated in the highest rating category by
any nationally recognized statistical rating organization ("NRSRO") or, if not
rated, the issuer must have an outstanding unsecured debt issue rated in the
three highest categories by any NRSRO or, if not so rated, be of equivalent
quality in the Advisor's assessment. Commercial Paper may include Master Notes
of the same quality. MASTER NOTES are unsecured obligations which are redeemable
upon demand of the holder and which permit the investment of fluctuating amounts
at varying rates of interest. Master Notes are acquired by the Funds only
through the Master Note program of the Funds' custodian, acting as administrator
thereof. The Advisor will monitor, on a continuous basis, the earnings power,
cash flow and other liquidity ratios of the issuer of a Master Note held by the
Funds.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Funds may purchase securities
on a when-issued basis or for settlement at a future date if the Funds hold
sufficient assets to meet the purchase price. In such purchase transactions the
Funds will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Funds will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
- 4 -
<PAGE>
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Funds would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Funds may sell such a security prior to
the settlement date if the Advisor felt such action was appropriate. In such a
case, the Funds could incur a short-term gain or loss.
RESTRICTED SECURITIES. Each Fund may purchase securities that are not registered
("restricted securities") under the 1933 Act, but can be offered and sold to
"qualified institutional buyers" under Rule 144A of the 1933 Act. However, a
Fund will not invest more than 10% of its assets in illiquid investments, which
includes securities that are not readily marketable and restricted securities,
unless the Board of Trustees determines, based upon a continuing review of the
trading markets for the specific restricted security, that such restricted
securities are liquid. The Board of Trustees may adopt guidelines and delegate
to the Advisor the daily function of determining and monitoring liquidity of
restricted securities. It is not possible to predict with accuracy how the
markets for certain restricted securities will develop. Investing in restricted
securities could have the effect of increasing the level of a Fund's illiquidity
to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities. Each Fund currently intends to
limit its investments in restricted securities to no more than 5% of its net
assets.
DESCRIPTION OF BOND RATINGS
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Advisor believes that the quality of fixed-income securities in which the Funds
may invest should be continuously reviewed and that individual analysts give
different weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one NRSRO, each
rating is evaluated independently. Ratings are based on current information
furnished by the issuer or obtained by the NRSROs from other sources that they
consider reliable. Ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of such information, or for other reasons.
- 5 -
<PAGE>
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS:
Aaa: Bonds rated Aaa are judged to be of the best quality. These bonds
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large in Aa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements that make the long term
risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present that suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S BOND RATINGS:
AAA: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated AA also qualify as high quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
- 6 -
<PAGE>
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S BOND RATINGS:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
DESCRIPTION OF DUFF & PHELPS CREDIT RATING CO.'S BOND RATINGS:
AAA: This is the highest rating credit quality. The risk factors are
negligible, being only slightly more than for risk- free U.S. Treasury debt.
- 7 -
<PAGE>
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average protection factors. However risk factors are
more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
INVESTMENT LIMITATIONS
The Funds have adopted the following investment limitations, in addition to
those described in the Prospectus, which cannot be changed without approval by
holders of a majority of the outstanding voting shares of the Funds. A
"majority" for this purpose, means the lesser of (i) 67% of a Fund's outstanding
shares represented in person or by proxy at a meeting at which more than 50% of
its outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, each Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one issuer or acquire more than 10% of the outstanding voting
securities of any one issuer (except that securities of the U.S.
Government, its agencies or instrumentalities are not subject to these
limitations);
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Advisor who own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5% of the
outstanding securities of such issuer;
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Funds
may invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things, and the Funds may
invest in certain mortgage backed securities as described in the Prospectus
under "Investment Objectives, Investment Policies and Risk Considerations";
- 8 -
<PAGE>
(6) Underwrite securities issued by others, except to the extent a Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Funds may obtain such short-term
credits as may be necessary for the clearance of transactions);
(8) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent the Fund
contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);
(9) Participate on a joint or joint and several basis in any trading account in
securities;
(10) Purchase real estate or interests in real estate, except that securities in
which the Funds invest may themselves have investment in real estate or
interests in real estate (the Funds do invest in securities composed of
mortgages against real estate);
(11) Invest more than 10% of the value of its net assets in the aggregate in
illiquid securities (potentially including repurchase agreements with a
maturity of greater than 7 days, Interest Only or Principal Only
securities, and mortgage backed strips which may not be readily
marketable); or
(12) Write, purchase or sell puts, calls or combinations thereof, or purchase or
sell commodities, commodities contracts, futures contracts or related
options, or purchase, sell or write warrants.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation.
While the Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
- 9 -
<PAGE>
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- --------------- ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
- 10 -
<PAGE>
Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.,
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
- 11 -
<PAGE>
Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
- 12 -
<PAGE>
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary of
Cincinnati, Ohio 45202 Countrywide Investments, Inc. and Countrywide Financial
Services, Inc.; Secretary of Countrywide Investment Trust;
Countrywide Tax-Free Trust and Countrywide Strategic
Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
- -----------------------------
</TABLE>
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
- 13 -
<PAGE>
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Bond Fund
and 28.2% of the then outstanding shares of the Short Term Fund. On the same
date, Rockingham Health Care, Inc., 235 Cantrell Avenue, Harrisonburg, Virginia
22801, owned of record 36.6% of the then outstanding shares of the Short Term
Fund and may therefore be deemed to control the Short Term Fund. On the same
date, Rockingham Health Care, Inc. owned of record 14.4% of the then outstanding
shares of the Bond Fund; Rockingham Memorial Hospital Retirement Plan, 235
Cantrell Avenue, Harrisonburg, Virginia 22801, owned of record 8.7% of the then
outstanding shares of the Bond Fund; Halifax Regional Hospital, 2204 Wilborn
Avenue, South Boston, Virginia 24592, owned of record 10.0% of the then
outstanding shares of the Bond Fund; First National Bank of Maryland as trustee
for Hourly Employees Norshipco Pension Plans, P.O. Box 1596, Baltimore, Maryland
21203, owned of record 5.1% of the then outstanding shares of the Bond Fund;
Calvert Memorial Hospital, 100 Hospital Road, Prince Frederick, Maryland 20678,
owned of record 8.2% of the then outstanding shares of the Bond Fund; Virginia
International Terminals, Inc. Pension Plan, P.O. Box 1387, Norfolk, Virginia
23501, owned of record 9.3% of the then outstanding shares of the Bond Fund;
Portland Museum of Art, Seven Congress Square, Portland, Maine 04101, owned of
record 5.8% of the then outstanding shares of the Bond Fund; Lowe, Brockenbrough
& Tattersall Inc., together with its Money Purchase Pension Plan, 6620 West
Broad Street, Richmond, Virginia 23230, owned of record 16.6% of the then
outstanding shares of the Short Term Fund; the Tattersall Advisory Group, Inc.
Money Purchase Pension Plan, 6620 West Broad Street, Richmond, Virginia 23230,
owned of record 11.6% of the then outstanding shares of the Short Term Fund; the
McKay-Dee Foundation, 3939 Harrison Boulevard, Ogden, Utah 84403, owned of
record 8.2% of the then outstanding shares of the Short Term Fund; and Centura
Investment Management & Trust Services, P.O. Box 1220, Rocky Mount, North
Carolina 27802, owned of record 6.5% of the then outstanding shares of the Short
Term Fund.
- 14 -
<PAGE>
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Strategic Advisors, Inc. (the "Advisor")
supervises each Fund's investments pursuant to an Investment Advisory Agreement
(the "Advisory Agreement") described in the Prospectus. The Advisory Agreement
is effective until February 28, 1999 and will be renewed thereafter for one year
periods only so long as such renewal and continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority of the Funds'
outstanding voting securities, provided the continuance is also approved by a
majority of the Trustees who are not "interested persons" of the Trust or the
Advisor by vote cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement is terminable without penalty on sixty
days notice by the Board of Trustees of the Trust or by the Advisor. The
Advisory Agreement provides that it will terminate automatically in the event of
its assignment.
The Advisor is a Virginia corporation controlled by its sole shareholder, Fred
T. Tattersall. Prior to February 28, 1997, the investment advisor to each Fund
was Lowe, Brockenbrough & Tattersall, Inc. ("LB&T"), of which Mr. Tattersall and
Austin Brockenbrough III were the controlling shareholders. On February 28,
1997, LB&T was reorganized by means of a corporate restructuring into two
separate legal entities: LB&T, owned by Mr. Brockenbrough, and the Advisor,
owned by Mr. Tattersall. The Advisor manages the fixed-income accounts formerly
managed by LB&T. In addition to acting as Advisor to the Funds, the Advisor
provides investment advice to corporations, trusts, pension and profit sharing
plans, other business and institutional accounts and individuals.
Compensation of the Advisor, with respect to each Fund, is at the annual rate of
0.375% of such Fund's average daily net assets. For the fiscal years ended March
31, 1998, 1997 and 1996, the Advisor and/or LB&T received investment advisory
fees of $310,227, $289,094 and $305,247, respectively, from the Bond Fund. For
the fiscal years ended March 31, 1998 and 1997, the Advisor and/or LB&T each
waived its entire investment advisory fee from the Short Term Fund and
reimbursed the Fund for $6,909 and $6,864, respectively, of other operating
expenses. For the fiscal year ended March 31, 1996, LB&T received investment
advisory fees of $3,786 (which was net of voluntary fee waivers of $43,635) from
the Short Term Fund.
The Advisor provides a continuous investment program for the Funds, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Funds. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Funds, and
- 15 -
<PAGE>
does so in accordance with the investment objectives and policies of the Funds
as described herein and in the Prospectus. The Advisor places all securities
orders for the Funds, determining with which broker, dealer, or issuer to place
the orders.
The Advisor must adhere to the brokerage policies of the Funds in placing all
orders, the substance of which policies are that the Advisor must seek at all
times the most favorable price and execution for all securities brokerage
transactions.
The Advisor also provides, at its own expense, certain Executive Officers to the
Trust.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Funds and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Funds, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, each Fund pays the
Administrator a base fee at the annual rate of 0.075% of the average value of
its daily net assets up to $200,000,000 and 0.05% of such assets in excess of
$200,000,000 (subject to a minimum fee of $2,000 per month for each Fund) plus a
surcharge of $1,000 per month. In addition, the Funds pay out-of-pocket
expenses, including but not limited to, postage, envelopes, checks, drafts,
forms, reports, record storage and communication lines.
For the fiscal years ended March 31, 1998, 1997 and 1996, the Administrator
received fees of $67,341, $57,859 and $61,029, respectively, from the Bond Fund
and $24,000, $24,000 and $24,000, respectively, from the Short Term Fund.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Funds' federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
- 16 -
<PAGE>
The Custodian of the Funds' assets is Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Funds
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Funds.
BROKERAGE
It is the Funds' practice to seek the best price and execution for all portfolio
securities transactions. The Advisor (subject to the general supervision of the
Board of Trustees) directs the execution of the Funds' portfolio transactions.
The Trust has adopted a policy which prohibits the Advisor from effecting Fund
portfolio transactions with broker-dealers which may be interested persons of
either Fund, the Trust, any Trustee, officer or director of the Trust or its
investment advisors or any interested person of such persons.
The Funds' portfolio transactions will normally be principal transactions
executed in over-the-counter markets and will be executed on a "net" basis,
which may include a dealer markup. However, the Bond Fund typically transacts in
shares of closed-end investment companies on an agency basis, and pays
commissions in connection with these transactions.
For the fiscal years ended March 31, 1998, 1997 and 1996, the total amount of
brokerage commissions paid by the Bond Fund was $14,820, $25,248 and $126,787,
respectively. No brokerage commissions were paid by the Short Term Fund for the
last three fiscal years.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of either Fund's brokerage commissions to persons or firms
providing the Advisor with research services, which may typically include, but
are not limited to, investment recommendations, financial, economic, political,
fundamental and technical market and interest rate data, and other statistical
or research services. Much of the information so obtained may also be used by
the Advisor for the benefit of the other clients it may have. Conversely, the
Funds may benefit from such transactions effected for the benefit of other
clients. In all cases, the Advisor is obligated to effect transactions for the
Funds based upon obtaining the most favorable price and execution. Factors
considered by the Advisor in determining whether the Funds will receive the most
favorable price and execution include, among other things: the size of the
order, the broker's ability to effect and settle the transaction promptly and
efficiently and the Advisor's perception of the broker's reliability, integrity
and financial condition.
- 17 -
<PAGE>
In an effort to reduce the total operating expenses of the Bond Fund, a portion
of the Fund's custodian fees have been paid through an arrangement with a third
party broker-dealer who is compensated through security trades. Expenses
reimbursed through the directed brokerage arrangement for the year ended March
31, 1998 were $9,678.
As of March 31, 1998, the Bond Fund held securities issued by Lehman Brothers
Holdings (having a market value of $929,227). During the fiscal year ended March
31, 1998, the Short Term Fund acquired securities issued by Merill Lynch &
Company, Inc. (having a market value of $392,707 as of March 31, 1998). Lehman
Brothers Holdings and Merrill Lynch & Company, Inc. are the parents of two of
the Trust's "regular broker-dealers" as defined in the 1940 Act.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Funds offer the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Funds, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
PURCHASES IN KIND. The Funds may accept securities in lieu of cash in payment
for the purchase of shares of the Funds. The acceptance of such securities is at
the sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Funds, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Funds. Securities delivered in payment of
redemptions would be valued at the same
- 18 -
<PAGE>
value assigned to them in computing the net asset value per share. Shareholders
receiving them would incur brokerage costs when these securities are sold. An
irrevocable election may be filed under Rule 18f-1 of the 1940 Act, wherein each
Fund commits itself to pay redemptions in cash, rather than in kind, to any
shareholder of record of the Funds who redeems during any ninety day period, the
lesser of (a) $250,000 or (b) one percent (1%) of a Fund's net assets at the
beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Funds at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (see the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Funds.
PLAN OF DISTRIBUTION
As described in the Prospectus, Service Group Shares of the Fund have adopted a
plan of distribution (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940 which permits Service Group Shares to pay for expenses
incurred in the distribution and promotion of the Funds' Service Group Shares,
including but not limited to, the printing of prospectuses, statements of
additional information and reports used for sales purposes, advertisements,
expenses of preparation and printing of sales literature, promotion, marketing
and sales expenses, and other distribution related expenses, including any
distribution fees paid to securities dealers or other firms who have executed a
distribution or service agreement with the Advisor. The Plan expressly limits
payment of distribution expenses listed above in any fiscal year to a maximum of
.15% of the average daily net assets of Service Group Shares of the Fund.
Unreimbursed expenses will not be carried over from year to year.
For the fiscal year ended March 31, 1998, Service Group Shares of the Bond Fund
incurred distribution expenses of $2,672, which amount was paid to financial
intermediaries for the retention of Service Group Shares.
Agreements implementing the Plan (the "Implementation Agreements"), including
agreements with financial consultants and other intermediaries wherein such
financial consultants and other intermediaries agree for a fee to act as agents
for the sale of the Fund's Service Group Shares, are in writing and have been
approved by the Board of Trustees. All payments made pursuant to the Plan are
made in accordance with written agreements.
- 19 -
<PAGE>
The continuance of the Plan and the Implementation Agreements must be
specifically approved at least annually by a vote of the Trustees who are not
interested persons of the Trust and have no direct or indirect financial
interest in the Plan or any Implementation Agreement (the "Independent
Trustees") at a meeting called for the purpose of voting on such continuance.
The Plan may be terminated at any time by a vote of the majority of the
Independent Trustees or by a vote of the holders of a majority of the
outstanding Service Group Shares of the Fund. In the event the Plan is
terminated in accordance with its terms, Service Group Shares will not be
required to make any payments for expenses incurred by the Advisor after the
termination date. Each Implementation Agreement terminates automatically in the
event of its assignment and may be terminated at any time by a vote of a
majority of the Independent Trustees or by a vote of the holders of a majority
of the outstanding Service Group Shares on not more than 60 days' written notice
to any other party to the Implementation Agreement.The Plan may not be amended
to increase materially the amount to be spent for distribution without
shareholder approval. All material amendments to the Plan must be approved by a
vote of the Independent Trustees.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a reasonable likelihood that the Plan will benefit the Funds and the holders
of their Service Group Shares. The Board of Trustees believes that the
expenditure of assets of Service Group Shares for distribution expenses under
the Plan should assist in the growth of such shares which will benefit the Funds
and the holders of their Service Group Shares through increased economies of
scale, greater investment flexibility, greater portfolio diversification and
less chance of disruption of planned investment strategies. The Plan will be
renewed only if the Trustees make a similar determination for each subsequent
year of the Plan. There can be no assurance that the benefits anticipated from
the expenditure of Service Group Shares' assets for distribution will be
realized. While the Plan is in effect, all amounts spent by Service Group Shares
pursuant to the Plan and the purposes for which such expenditures were made must
be reported quarterly to the Board of Trustees for its review. The selection and
nomination of those Trustees who are not interested persons of the Trust are
committed to the discretion of the Independent Trustees during such period.
PURCHASE OF SHARES
The purchase price of shares of each Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m., Eastern time
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business
- 20 -
<PAGE>
Day. An order to purchase shares is not binding on the Funds until confirmed in
writing (or unless other arrangements have been made with the Funds, for example
in the case of orders utilizing wire transfer of funds) and payment has been
received.
Each Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUNDS. The Funds have adopted initial investment
minimums for the purpose of reducing the cost to the Funds (and consequently to
the shareholders) of communicating with and servicing their shareholders.
However, a reduced minimum initial investment requirement of $5,000 applies to
Trustees, officers and employees of the Funds, the Advisor and certain parties
related thereto, including clients of the Advisor or any sponsor, officer,
committee member thereof, or the immediate family of any of them. In addition,
accounts having the same mailing address may be aggregated for purposes of the
minimum investment if they consent in writing to share a single mailing of
shareholder reports, proxy statements (but each such shareholder would receive
his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
Each Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Funds for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Funds.
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<PAGE>
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Funds, and they have
adopted procedures to do so, as follows. The net asset value of each Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.,
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the Trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Funds. General Trust expenses are allocated among
the series, or funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, each Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, each Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities' loans, gains from the disposition of stock or securities, and
certain other income.
- 22 -
<PAGE>
While the above requirements are aimed at qualification of the Funds as
regulated investment companies under Subchapter M of the Code, the Funds also
intend to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Funds remain qualified under Subchapter M,
they will not be subject to federal income tax to the extent they distribute
their taxable net investment income and net realized capital gains. A
nondeductible 4% federal excise tax will be imposed on each Fund to the extent
it does not distribute at least 98% of its ordinary taxable income for a
calendar year, plus 98% of its capital gain net taxable income for the one year
period ending each October 31, plus certain undistributed amounts from prior
years. While each Fund intends to distribute its taxable income and capital
gains in a manner so as to avoid imposition of the federal excise and income
taxes, there can be no assurance that the Funds indeed will make sufficient
distributions to avoid entirely imposition of federal excise or income taxes.
As of March 31, 1998, the Short Term Fund had capital loss carryforwards for
federal income tax purposes of $586,098, which expire on March 31, 2005. In
addition, the Short Term Fund had net realized capital losses of $5,918 during
the period from November 1, 1997 through March 31, 1998, which are treated for
federal income tax purposes as arising during the Fund's fiscal year ending
March 31, 1999. These capital loss carryforwards and "post-October" losses may
be utilized in future years to offset net realized gains prior to distributing
such gains to shareholders.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUNDS' DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the
Funds derived from net investment income or net short-term capital gains are
taxable to shareholders as ordinary income, whether received in cash or
reinvested in additional shares. Distributions, if any, of long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held. For information on "backup" withholding, see "How to Purchase
Shares" in the Prospectus.
Each Fund will send shareholders information each year on the tax status of
dividends and disbursements. A dividend or capital gains distribution paid
shortly after shares have been purchased, although in effect a return of
investment, is subject to federal income taxation. Dividends from net investment
income, along with capital gains, will be taxable to shareholders, whether
received in cash or shares and no matter how long you have held
- 23 -
<PAGE>
Fund shares, even if they reduce the net asset value of shares below your cost
and thus in effect result in a return of part of your investment.
CAPITAL SHARES AND VOTING
Shares of the Funds, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not less
than ten percent (10%) of the shares then outstanding may require the Trustees
to call such a meeting and the Trustees are obligated to provide certain
assistance to shareholders desiring to communicate with other shareholders in
such regard (e.g., providing access to shareholder lists, etc.). In case a
vacancy or an anticipated vacancy shall for any reason exist, the vacancy shall
be filled by the affirmative vote of a majority of the remaining Trustees,
subject to the provisions of Section 16(a) of the 1940 Act. The Trust does not
expect to have an annual meeting of shareholders.
Both Service Group Shares and Institutional Shares of a Fund represent an
interest in the same assets of the Fund, have the same rights and are identical
in all material respects except that (i) Service Group Shares bear the expenses
of distribution fee; (ii) certain class specific expenses will be borne solely
by the class to which such expenses are attributable, including transfer agent
fees attributable to a specific class of shares, printing and postage expenses
related to preparing and distributing materials to current shareholders of a
specific class, registration fees incurred by a specific class of shares, the
expenses of administrative personnel and services required to support the
shareholders of a specific class, litigation or other legal expenses relating to
a class of shares, Trustees' fees or
- 24 -
<PAGE>
expenses incurred as a result of issues relating to a specific class of shares
and accounting fees and expenses relating to a specific class of shares; and
(iii) each class has exclusive voting rights with respect to matters affecting
only that class. The Board of Trustees may classify and reclassify shares of the
Funds into additional classes of shares at a future date.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, each Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Funds for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of a Fund ("T") is computed by using the redeemable value at the end of a
specified period of time ("ERV") of a hypothetical initial investment of $1,000
("P") over a period of time ("n") according to the formula P(l+T)n=ERV. The
average annual total return quotations for Institutional Shares of the Bond Fund
for the one year period ended March 31, 1998, for the five year period ended
March 31, 1998 and for the period since inception (December 13, 1990) to March
31, 1998 are 12.06%, 7.03% and 8.05%, respectively. The average annual total
return quotations for the Short Term Fund for the one year period ended March
31, 1998, for the five year period ended March 31, 1998 and for the period since
inception (January 21, 1992) to March 31, 1998 are 5.76%, 5.08% and 5.16%,
respectively.
In addition, each Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, each Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
- 25 -
<PAGE>
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The yields of the Bond Fund's Institutional Shares and Service Group
Shares for the 30 days ended March 31, 1998 were 5.78% and 5.63%, respectively.
The yield of the Short Term Fund for the 30 days ended March 31, 1998 was 5.28%.
The Funds' performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Bond Fund may compare its performance to the
Lehman Brothers Government/Corporate Index and the Lehman Brothers Aggregate
Index, which are generally considered to be representative of the performance of
taxable bonds, and the Short Term Fund may compare its performance to the
Merrill Lynch 1-3 Year Treasury Index. Comparative performance may also be
expressed by reference to a ranking prepared by a mutual fund monitoring
service, such as Lipper Analytical Services, Inc. or Morningstar, Inc., or by
one or more newspapers, newsletters or financial periodicals. Performance
comparisons may be useful to investors who wish to compare the Funds' past
performance to that of other mutual funds and investment products. Of course,
past performance is not a guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
- 26 -
<PAGE>
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of the Funds' performance before investing. Of course, when
comparing the Funds' performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Funds may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Funds based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Funds may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Funds may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Funds may also depict the historical performance
of the securities in which the Funds may invest over periods reflecting a
variety of market or economic conditions either alone or in comparison with
alternative investments, performance indices of those investments, or economic
indicators. The Funds may also include in advertisements and in materials
furnished to present and prospective shareholders statements or illustrations
relating to the appropriateness of types of securities and/or mutual funds that
may be employed to meet specific financial goals, such as saving for retirement,
children's education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Funds will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Funds as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
- 27 -
<PAGE>
THE JAMESTOWN BOND FUND
-----------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
------------------ -------------
Tattersall Advisory Group, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN BOND FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1998
PERFORMANCE OF THE JAMESTOWN BOND FUND
FISCAL YEAR ENDED MARCH 31, 1998
There is something about the beginning of a year that encourages thoughts of a
slowdown. It could be that after the normal Christmas retail frenzy, consumers
are expected to be "spent out." Or it could be that during the inclement weather
of the winter months, consumers are supposed to stay at home. Not only did they
not stay at home, but they were out buying homes! During the so-called slow
months, housing activity soared in response to the unbeatable combination of
unusually mild weather and low interest rates. Consumer and business spending
more than offset the Asian-induced weakness from the trade sector so that the
economy is on track to turn in a 1st quarter performance that will most likely
exceed the 3% level. Activity in Europe was also brisk, with inflation as
elusive there as it is in the U.S. Interest rates fell for all G-7 countries
with rates in Japan and the U.S. falling the least. With interest rates
basically unchanged for the first quarter of 1998, the bond market's performance
was dominated by coupon return. The Jamestown Bond Fund's Institutional Shares
provided a return of 12.06% for the fiscal year ended March 31, 1998, and the
Service Group Shares provided a return of 8.55% for the period from October 2,
1998 through March 31, 1998. For the year ended March 31, 1998, the Lehman
Aggregate Index returned 11.99% while the Lehman Government/Corporate Index
returned 12.39%.
With no clear trend in the direction of rates, duration strategy for us or for
any manager was a non-event as sectors saw all of the action. Battered by huge
new issuance and Asian credit concerns, corporates started the year with
historically attractive yield spreads versus Treasuries, reached a peak in late
January, before narrowing again with the help of decent earnings reports and a
strong stock market. Our strategy was to be overweighted in corporates relative
to the Index. We were also overweighted in mortgages. This sector was initially
hurt by the acceleration in prepayment speeds, an event for which we had
prepared the portfolio, but began to outperform as low interest rate volatility
helped to calm investors' concerns. The asset-backed market outperformed
Treasuries, which was quite an accomplishment considering the huge amount of new
issues the market was forced to digest during the quarter. Closed-end funds
basically held their own.
<PAGE>
LOOKING AHEAD
We expect the market to establish a trend before this year ends, and that trend
will most likely be to lower rates. Between now and then, however, the market
will stay on edge purely from inflation worries associated with a strong
economy. The Federal Reserve should remain firmly on hold. The risk to bond
holders is that domestic demand remains too strong and the effect of the Asian
slowdown too weak for the Federal Reserve to pursue price stability with
unchanged interest rates. The latest unemployment report should help to mitigate
this risk, and we expect to extend the duration if more weakness materializes.
As opposed to this time last year when we were frustrated by the lack of
opportunity in sectors, we are energized by what we see this year. Having
claimed victory in the first quarter with long industrials and REITS, we start
the second quarter equally weighted in corporates versus the Index. We will
watch carefully the trend of corporate earnings, realizing that the stock
market, and thus, corporate spreads are vulnerable to negative surprises. We are
currently overweighted in the mortgage sector with an emphasis on those
securities that are protected from prepayments. This strategy has worked well
since the end of last year, and we expect it to continue to work well with call
protection priced as cheaply as it is. Asset-backed securities provide another
cheap source of prepayment protection and we plan to remain overweighted in this
sector as well. Finally, we expect closed-end funds to continue to provide a
steady source of outperformance as prices converge to net asset values.
Although interest rates are essentially unchanged so far this year, there
certainly have been opportunities to outperform the bond market. We not only
expect these opportunities to continue, but we intend to fully participate in
all of them.
<PAGE>
THE JAMESTOWN BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown Bond
Fund, the Lehman Government/Corporate Index, the Lehman Aggregate Index and the
Consumer Price Index.
LINE CHART:
LEHMAN GOVERNMENT/ THE JAMESTOWN BOND FUND:
CORPORATE INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
12/31/90 10,000 12/31/90 10,000
03/31/91 2.52% 10,252 03/31/91 1.63% 10,163
06/30/91 1.78% 10,434 06/30/91 1.39% 10,305
09/30/91 4.77% 10,932 09/30/91 5.02% 10,822
12/31/91 5.33% 11,515 12/31/91 5.18% 11,382
03/31/92 -1.50% 11,342 03/31/92 -1.49% 11,213
06/30/92 4.06% 11,803 06/30/92 3.35% 11,588
09/30/92 4.88% 12,379 09/30/92 3.83% 12,033
12/31/92 0.07% 12,387 12/31/92 0.27% 12,065
03/31/93 4.66% 12,965 03/31/93 3.81% 12,524
06/30/93 3.01% 13,355 06/30/93 2.26% 12,807
09/30/93 3.32% 13,798 09/30/93 2.22% 13,091
12/31/93 -0.29% 13,758 12/31/93 0.25% 13,124
03/31/94 -3.15% 13,325 03/31/94 -2.55% 12,789
06/30/94 -1.24% 13,160 06/30/94 -1.04% 12,656
09/30/94 0.50% 13,225 09/30/94 0.51% 12,719
12/31/94 0.37% 13,274 12/31/94 0.26% 12,752
03/31/95 4.98% 13,935 03/31/95 4.87% 13,372
06/30/95 6.49% 14,840 06/30/95 5.87% 14,157
09/30/95 1.91% 15,123 09/30/95 2.45% 14,505
12/31/95 4.66% 15,828 12/31/95 4.49% 15,156
03/31/96 -2.34% 15,458 03/31/96 -1.86% 14,874
06/30/96 0.47% 15,530 06/30/96 0.82% 14,996
09/30/96 1.76% 15,804 09/30/96 1.84% 15,272
12/31/96 3.06% 16,287 12/31/96 3.29% 15,775
03/31/97 -0.86% 16,147 03/31/97 -0.50% 15,696
06/30/97 3.64% 16,735 06/30/97 3.75% 16,285
09/30/97 3.50% 17,321 09/30/97 3.15% 16,798
12/31/97 3.21% 17,876 12/31/97 3.10% 17,318
03/31/98 1.52% 18,148 03/31/98 1.56% 17,589
LEHMAN AGGREGATE INDEX: CONSUMER PRICE INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
12/31/90 10,000 12/31/90 10,000
03/31/91 2.81% 10,281 03/31/91 0.90% 10,090
06/30/91 1.62% 10,448 06/30/91 0.40% 10,130
09/30/91 5.68% 11,041 09/30/91 0.60% 10,191
12/31/91 5.07% 11,601 12/31/91 0.90% 10,283
03/31/92 -1.27% 11,453 03/31/92 0.70% 10,355
06/30/92 4.04% 11,916 06/30/92 0.80% 10,438
09/30/92 4.30% 12,429 09/30/92 0.70% 10,511
12/31/92 0.26% 12,461 12/31/92 0.80% 10,595
03/31/93 4.14% 12,977 03/31/93 0.90% 10,690
06/30/93 2.66% 13,322 06/30/93 0.60% 10,754
09/30/93 2.61% 13,670 09/30/93 0.40% 10,797
12/31/93 0.05% 13,676 12/31/93 0.70% 10,873
03/31/94 -2.87% 13,284 03/31/94 0.50% 10,927
06/30/94 -1.03% 13,147 06/30/94 0.60% 10,993
09/30/94 0.61% 13,227 09/30/94 0.90% 11,092
12/31/94 0.38% 13,278 12/31/94 0.60% 11,158
03/31/95 5.04% 13,947 03/31/95 0.80% 11,248
06/30/95 6.09% 14,796 06/30/95 0.90% 11,349
09/30/95 1.96% 15,086 09/30/95 0.40% 11,395
12/31/95 4.26% 15,729 12/31/95 0.50% 11,452
03/31/96 -1.77% 15,450 03/31/96 0.80% 11,544
06/30/96 0.57% 15,538 06/30/96 1.10% 11,671
09/30/96 1.85% 15,826 09/30/96 0.44% 11,723
12/31/96 3.00% 16,301 12/31/96 0.82% 11,819
03/31/97 -0.56% 16,209 03/31/97 0.69% 11,901
06/30/97 3.67% 16,804 06/30/97 0.19% 11,924
09/30/97 3.32% 17,362 09/30/97 0.44% 11,976
12/31/97 2.94% 17,873 12/31/97 0.62% 12,050
03/31/98 1.56% 18,151 03/31/98 0.12% 12,064
The Jametown Bond Fund Average Annual Total Returns
1 Year 5 Years Since Inception*
12.06% 7.03% 8.05%
*The chart above represents the performance of Institution shares only, which
will vary from the performance of Service Group Shares based on the difference
in fees paid by shareholders in the different classes. The Fund commenced
operations on December 13, 1990, and the initial public offering of Service
Group Shares commenced on October 2, 1997.
Past performance is not predictive of future performance.
<PAGE>
THE JAMESTOWN BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 91,630,430
==============
At value (Note 1) $ 93,694,603
Investments in repurchase agreements (Note 1) 6,753,000
Cash 9,739
Receivable for securities sold 3,192,094
Interest receivable 1,027,791
Other assets 1,985
--------------
TOTAL ASSETS 104,679,212
--------------
LIABILITIES
Dividends payable 45,034
Payable for securities purchased 5,283,937
Accrued advisory fees (Note 3) 14,308
Accrued administration fees (Note 3) 5,980
Accrued distribution expenses (Note 3) 1,291
Other accrued expenses 9,962
--------------
TOTAL LIABILITIES 5,360,512
--------------
NET ASSETS $ 99,318,700
==============
Net assets consist of:
Paid-in capital $ 96,949,176
Accumulated net realized gains from security transactions 297,227
Undistributed net investment income 8,124
Net unrealized appreciation on investments 2,064,173
--------------
Net assets $ 99,318,700
==============
PRICING OF INSTITUTIONAL SHARES
Net assets attributable to Institutional Shares $ 96,250,111
==============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 8,886,698
==============
Net asset value, offering price and redemption price per share (Note 1) $ 10.83
==============
PRICING OF SERVICE GROUP SHARES
Net assets applicable to Service Group Shares $ 3,068,589
==============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 283,310
==============
Net asset value, offering price and redemption price per share (Note 1) $ 10.83
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1998
<S> <C>
INVESTMENT INCOME
Interest $ 5,328,394
Dividends 383,282
--------------
TOTAL INVESTMENT INCOME 5,711,676
--------------
EXPENSES
Investment advisory fees (Note 3) 326,338
Administration fees (Note 3) 67,341
Custodian fees 16,026
Professional fees 15,996
Pricing costs 10,442
Registration fees 8,212
Trustees' fees and expenses 5,405
Insurance expense 4,675
Printing of shareholder reports 2,917
Distribution expenses, Service Group Shares (Note 3) 2,672
Other expenses 3,555
--------------
TOTAL EXPENSES 463,579
Fees waived by the Adviser (Note 3) (16,111)
Expenses reimbursed through a directed brokerage arrangement (Note 4) (9,678)
--------------
NET EXPENSES 437,790
--------------
NET INVESTMENT INCOME 5,273,886
--------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 1,826,210
Net change in unrealized appreciation/depreciation on investments 2,574,722
--------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 4,400,932
--------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,674,818
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 5,273,886 $ 5,005,951
Net realized gains (losses) from security transactions 1,826,210 (391,414)
Net change in unrealized appreciation/depreciation
on investments 2,574,722 (405,910)
-------------- --------------
Net increase in net assets from operations 9,674,818 4,208,627
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Institutional Shares (5,189,396) (5,104,234)
From net investment income, Service Group Shares (99,842) --
-------------- --------------
Decrease in net assets from distributions from shareholders (5,289,238) (5,104,234)
-------------- --------------
FROM CAPITAL SHARE TRANSACTIONS:
INSTITUTIONAL SHARES
Proceeds from shares sold 15,597,164 9,262,915
Net asset value of shares issued in reinvestment
of distributions to shareholders 5,049,237 4,238,186
Payments for shares redeemed (5,227,155) (10,880,119)
-------------- --------------
Net increase in net assets from Institutional Shares transactions 15,419,246 2,620,982
-------------- --------------
SERVICE GROUP SHARES
Proceeds from shares sold 4,316,277 --
Net asset value of shares issued in reinvestment
of distributions to shareholders 99,842 --
Payments for shares redeemed (1,401,739) --
-------------- --------------
Net increase in net assets from Service Group Shares transactions 3,014,380 --
-------------- --------------
TOTAL INCREASE IN NET ASSETS 22,819,206 1,725,375
NET ASSETS:
Beginning of year 76,499,494 74,774,119
-------------- --------------
End of year - (including undistributed net investment
income of $8,124 and $23,476, respectively) $ 99,318,700 $ 76,499,494
============== ==============
Capital share activity:
Institutional Shares
Sold 1,446,450 892,247
Reinvested 472,113 409,635
Redeemed (486,114) (1,043,163)
-------------- --------------
Net increase in shares outstanding 1,432,449 258,719
Shares outstanding, beginning of year 7,454,249 7,195,530
-------------- --------------
Shares outstanding, end of year 8,886,698 7,454,249
============== ==============
Service Group Shares
Sold 402,367 --
Reinvested 9,229 --
Redeemed (128,286) --
-------------- --------------
Net increase in shares outstanding 283,310 --
Shares outstanding, beginning of year -- --
-------------- --------------
Shares outstanding, end of year 283,310 --
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND - Institutional Shares
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
<CAPTION>
Years Ended March 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $10.26 $10.39 $9.97 $10.15 $10.82
------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.58 0.68 0.70 0.62 0.55
Net realized and unrealized gains (losses) on investments 0.63 (0.12) 0.41 (0.18) (0.30)
------ ------ ------ ------ ------
Total from investment operations 1.21 0.56 1.11 0.44 0.25
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (0.64) (0.69) (0.69) (0.62) (0.55)
Distributions from net realized gains -- -- -- -- (0.19)
Distributions in excess of net realized gains -- -- -- -- (0.18)
------ ------ ------ ------ ------
Total distributions (0.64) (0.69) (0.69) (0.62) (0.92)
------ ------ ------ ------ ------
Net asset value at end of year $10.83 $10.26 $10.39 $9.97 $10.15
====== ====== ====== ====== ======
Total return 12.06% 5.52% 11.23% 4.56% 2.12%
====== ====== ====== ====== ======
Net assets at end of year (000's) $96,250 $76,499 $74,774 $72,029 $64,029
======= ======= ======= ======= =======
Ratio of gross expenses to average net assets 0.53% 0.53% 0.56% 0.57% 0.60%
Ratio of net expenses to average net assets (a) 0.50% 0.50% 0.53% 0.53% 0.60%
Ratio of net investment income to average net assets 6.06% 6.48% 6.54% 6.28% 5.03%
Portfolio turnover rate 235% 207% 268% 381% 381%
(a) Ratios were determined based on net expenses after reimbursements through
a directed brokerage arrangement for periods after March 31, 1994 (Note 4) and
investment advisory fees waived for the year ended March 31, 1998 (Note 3).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND - Service Group Shares
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout the Period
<CAPTION>
Period
Ended
March 31,
1998 (a)
<S> <C>
Net asset value at beginning of period $10.69
------
Income from investment operations:
Net investment income 0.37
Net realized and unrealized gains on investments 0.08
------
Total from investment operations 0.45
------
Less distributions:
Dividends from net investment income (0.31)
------
Net asset value at end of period $10.83
======
Total return 8.55%(c)
======
Net assets at end of period (000's) $3,069
======
Ratio of gross expenses to average net assets 0.68%(c)
Ratio of net expenses to average net assets (b) 0.65%(c)
Ratio of net investment income to average net assets 5.96%(c)
Portfolio turnover rate 235%
(a) Represents the period from the initial public offering of Service Group
Shares (October 2, 1997) through March 31, 1998.
(b) Ratios were determined based on net expenses after reimbursements through
a directed brokerage arrangement (Note 4) and investment advisory fees waived
for the year ended March 31, 1998 (Note 3).
(c) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
Par Value Value
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 20.9%
U.S. Treasury Bonds - 9.9%
$ 7,535,000 8.50%, due 02/15/2020 $ 9,789,623
---------------
U.S. Treasury Notes - 8.6%
8,380,000 6.50%, due 05/31/2001 8,582,964
---------------
U.S. Treasury Inflation-Protection Notes - 2.4%
1,600,000 3.625%, due 07/15/2002 1,598,288
760,000 3.375%, due 01/15/2007 751,557
---------------
2,349,845
---------------
Total U.S. Treasury Obligations (Cost $19,648,349) $ 20,722,432
---------------
MORTGAGE-BACKED SECURITIES - 36.2%
Federal Home Loan Mortgage Corporation - 6.0%
$ 975,000 Pool #1472, 6.75%, due 05/15/2006 $ 986,573
1,118,285 Pool #1561-ZB, 6.00%, due 08/15/2006 1,118,285
825,000 Pool #1197-H, 6.75%, due 02/15/2007 839,437
1,000,000 Pool #1221-I, 7.00%, due 03/15/2007 1,018,750
825,000 Pool #1655-HB, 6.50%, due 10/15/2008 831,955
1,246,864 Pool #C80393, 6.00%, due 03/15/2026 1,205,406
---------------
6,000,406
---------------
Federal National Mortgage Association - 9.7%
817,497 Pool #313443, 6.775%, due 04/01/2004 839,467
1,191,744 Pool #375139, 7.13% due 05/01/2004 1,245,744
1,467,421 Pool #375299, 6.81%, due 08/01/2004 1,512,361
601,498 Pool #73061, 8.66%, due 01/01/2005 667,005
626,778 Pool #73126, 7.00%, due 07/01/2005 649,687
603,222 Series #92-61-ZB, 7.50%, due 05/25/2007 640,923
765,000 Series #92-179-H, 7.00%, due 09/01/2007 785,081
548,352 Pool #375538, 6.70%, due 11/01/2007 564,631
750,000 Series #98-M3, 6.45%, due 01/01/2011 747,422
1,100,000 Series #97-M3, 7.20%, adjustable rate, due 08/17/2018 1,162,219
746,312 Series #G92-44-Z, 8.00%, due 07/25/2022 811,846
---------------
9,626,386
---------------
<CAPTION>
Par Value Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES - Continued
Government National Mortgage Association - 11.1%
$ 80,114 Pool #223997, 8.85%, due 05/15/2018 $ 86,382
607,105 Pool #224002, 8.85%, due 07/15/2018 654,599
398,317 Pool #333658, 7.50%, due 01/15/2023 409,402
859,923 Pool #342526, 7.50%, due 02/15/2023 883,855
995,361 Pool #349314, 7.50%, due 02/15/2023 1,023,062
733,877 Pool #352143, 7.50%, due 07/15/2023 754,300
726,327 Pool #346772, 7.50%, due 09/15/2023 746,540
755,992 Pool #372822, 7.50%, due 11/15/2023 777,032
999,619 Pool #359451, 7.50%, due 12/15/2023 1,027,438
415,962 Pool #354831, 7.50%, due 06/15/2024 427,018
860,611 Pool #8459, 7.00%, adjustable rate, due 07/20/2024 882,393
604,064 Pool #28484, 7.00%, adjustable rate, due 08/20/2024 619,262
519,837 Pool #8482, 7.00%, adjustable rate, due 08/20/2024 532,916
739,638 Pool #8542, 7.00%, adjustable rate, due 11/20/2024 757,323
486,214 Pool #441273, 8.00%, due 10/15/2026 503,460
900,000 TBA, 8.00%, due 04/15/2028 932,062
---------------
11,017,044
---------------
Student Loan Marketing Association - 3.3%
499,735 Series #96-2-A1, 5.678%, adjustable rate, due 10/25/2004 498,174
2,468,492 Series #97-2-A1, 5.704%, adjustable rate, due 10/25/2005 2,460,778
331,516 Series #97-3-A1, 5.884%, adjustable rate, due 04/25/2006 330,791
---------------
3,289,743
---------------
Other Mortgage-Backed Securities - 6.1%
Deutsche Mortgage and Asset Receiving Corporation #98-C1-A2,
1,915,000 6.538%, due 06/01/2031 1,928,764
First Union-Lehman Brothers Commercial Mortgage Trust #97-C2-A1,
825,869 6.479%, due 03/01/2004 832,579
LB Commercial Conduit Mortgage Trust #98-C1-A3,
975,000 6.48%, due 02/01/2030 978,656
Lehman Brothers Mortgage Trust #91-2-A1,
380,286 8.00%, due 03/20/1999 383,257
Morgan Stanley Capital I #98-WF1-A2,
1,065,000 6.55%, due 12/15/2007 1,076,482
Resolution Funding Mortgage Security I #94-S12-A2,
800,000 6.50%, due 04/25/2009 801,248
---------------
6,000,986
---------------
Total Mortgage-Backed Securities (Cost $35,765,832) $ 35,934,565
---------------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
ASSET-BACKED SECURITIES - 5.6%
Bank America Manufactured Housing Contract #96-1-A6,
$ 650,000 8.00%, due 10/10/2026 $ 696,995
CIT RV Trust #95-B-A1,
242,235 6.50%, due 04/15/2011 243,824
CIT RV Trust #96-A-A1,
613,215 5.40%, due 12/15/2011 607,273
Fleetwood Credit Corporation Grantor Trust #94-A-A,
461,658 4.70%, due 07/15/2009 453,432
Fleetwood Credit Corporation Grantor Trust #96-A-A,
455,884 6.75%, due 10/15/2011 459,586
Green Tree Financial Corporation, #97-2-A6,
775,000 7.24%, due 06/15/2028 800,908
Green Tree Financial Corporation, #97-2-A7,
700,000 7.62%, due 04/15/2028 726,467
Green Tree Financial Corporation, #98-A,
1,550,000 6.18%, due 04/01/2018 1,546,590
--------------
Total Asset-Backed Securities (Cost $5,459,617) $ 5,535,075
--------------
CORPORATE BONDS - 24.4%
Allmerica Financial Corporation,
$ 390,000 7.625%, due 10/15/2025 $ 411,575
Associates Corporation,
700,000 5.75%, due 10/15/2003 684,775
Avalon Properties, Inc.,
485,000 6.625%, due 01/15/2005 479,573
Baltimore Gas & Electric Corporation,
1,000,000 8.90%, due 07/01/1998 1,007,470
Bank of New York,
610,000 6.50%, due 12/01/2003 617,265
Beneficial Corporation Medium Term Notes,
800,000 6.33%, due 10/09/2001 801,952
BRE Properties, Inc.,
425,000 7.125%, due 02/15/2013 422,450
Chrysler Corporation,
340,000 7.45%, due 03/01/2027 364,970
Coca-Cola Enterprises,
440,000 6.75%, due 01/15/2038 434,500
Dayton Hudson Corporation,
370,000 6.75%, due 01/01/2028 363,862
Dominion Capital Trust,
310,000 7.83%, due 12/01/2027 316,808
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
CORPORATE BONDS - Continued
Duke Realty Limited Partnership,
$ 470,000 7.05%, due 03/01/2016 $ 473,351
Equity Residential Properties Trust,
875,000 6.55%, due 11/15/2001 877,153
Firstar Bank Milwaukee,
2,450,000 6.25%, due 12/01/2002 2,461,638
Ford Motor Company,
275,000 8.875%, due 01/15/2022 336,465
Ford Motor Credit Medium Term Notes,
950,000 7.45%, due 04/13/2000 975,498
General Motors,
235,000 8.80%, due 03/01/2021 286,265
General Motors Acceptance Corporation Medium Term Notes,
1,400,000 6.80%, due 04/17/2001 1,425,886
IBM Corporation,
420,000 6.50%, due 01/15/2028 411,247
International Lease Finance Medium Term Notes,
1,315,000 6.42%, due 09/11/2000 1,325,112
JDN Realty Corporation,
375,000 6.95%, due 08/01/2007 372,011
JP Realty, Inc.,
485,000 7.29%, due 03/11/2008 487,692
Lehman Brothers Holdings,
925,000 6.40%, due 12/27/1999 929,227
May Department Stores Company,
275,000 7.45%, due 09/15/2011 299,107
Mellon Financial Company,
915,000 7.625%, due 11/15/1999 935,505
Morgan Stanley Group,
500,000 6.09%, due 03/09/2011 499,975
National City Corporation,
900,000 7.20%, due 05/15/2005 942,444
Norfolk Southern Corporation,
370,000 7.80%, due 05/15/2027 413,960
Norwest Financial, Inc.,
450,000 6.05%, due 11/19/1999 451,138
SBC Communications, Inc.,
600,000 6.625%, due 11/01/2009 614,034
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
CORPORATE BONDS - Continued
Sears Roebuck & Company,
$ 750,000 6.86%, due 07/03/2001 $ 765,525
750,000 6.99%, due 09/30/2002 770,947
Spieker Properties LP,
370,000 6.75%, due 01/15/2008 364,361
Suntrust Bank,
340,000 6.125%, due 02/15/2004 337,175
Textron, Inc.,
510,000 6.625%, due 11/15/2007 518,399
TRW Inc.,
425,000 6.25%, due 01/15/2010 411,816
Union Camp Corporation,
325,000 6.50%, due 11/15/2007 326,905
United Parcel Service of America, Inc.,
300,000 8.375%, due 04/01/2030 368,007
--------------
Total Corporate Bonds (Cost $24,078,849) $ 24,286,043
--------------
Shares
CLOSED-END MUTUAL FUNDS - 7.2%
37,400 Blackrock 1999 Term Trust, Inc. $ 352,963
180,600 Blackrock 2001 Term Trust, Inc. 1,568,963
1,200 Blackrock Broad Investment Grade 2009 Term Trust, Inc. 15,225
53,900 Blackrock Investment Quality Term Trust, Inc. 454,781
10,000 Blackrock North American Government Income Trust 106,250
125,300 Blackrock Strategic Term Trust, Inc. 1,080,713
12,000 Dean Witter Government Income Trust 103,500
7,400 Excelsior Income Shares, Inc. 126,262
202,200 Hyperion 1999 Term Trust, Inc. 1,415,400
201,000 Hyperion 2002 Term Trust, Inc. 1,608,000
4,100 Hyperion 2005 Investment Grade Opportunity Term Trust, Inc. 34,337
16,400 Income Opportunities Fund, Inc. - 1999 156,825
28,900 MFS Government Markets Income Trust 193,269
--------------
Total Closed-End Funds (Cost $6,677,783) $ 7,216,488
--------------
Total Investments at Value (Cost $91,630,430) - 94.3% $ 93,694,603
--------------
<PAGE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (a) - 6.8%
Star Bank, N.A., 5.25%, dated 03/31/1998, due 04/01/1998
$ 6,753,000 repurchase proceeds $6,753,985 (Cost $6,753,000) $ 6,753,000
---------------
Total Investments and Repurchase Agreements
at Value - 101.1% $ 100,447,603
Liabilities in Excess of Other Assets - (1.1)% (1,128,903)
---------------
Net Assets - 100.0% $ 99,318,700
===============
(a) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA
II, Pool #8421, 7.375%, due 05/20/24; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/22; and $1,120,000 GNMA II, Pool #8359, 7.00% due 01/20/24. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985. The
Fund's pro-rata interest in the collateral at March 31, 1998 was $6,947,756.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN BOND FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Bond Fund (the Fund) is a no-load, diversified series of the
Williamsburg Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Trust was organized as a Massachusetts business trust on July 18, 1988. The Fund
began operations on December 13, 1990.
The Fund offers two classes of shares: Service Group Shares, sold subjuect to a
12b-1 fee up to 0.15% of average daily net assets, and Institutional Shares,
sold without a 12b-1 fee. Each Service Group and Institutional Share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except thta (i) Service Group Shares bear the expenses of the
distribution fees, which will cause Service Group Shares to have a higher
expense ratio and to pay lower dividends than Institutional Shares; (ii) certain
class specific expenses will be borne solely by the class to which such expenses
are attributable; and (iii) each class has exclusive voting rights with respect
to matters affecting only that class.
The Fund's investment objective is to maximize total return, consisting of
current income and capital appreciation (both realized and unrealized),
consistent with the preservation of capital through active management of
investment grade fixed income securities.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national exchange are valued
based upon the closing price on the principal exchange where the security is
traded. It is expected that fixed income securities of the Fund will ordinarily
be traded on the over-the-counter market. When market quotations are not readily
available, securities may be valued on the basis of prices provided by an
independent pricing service. If a pricing service cannot provide a valuation,
securities will be valued in good faith at fair market value using methods
consistent with those determined by the Board of Trustees.
Repurchase agreements -- The Fund generally enters into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market. At the time the Fund enters
into the joint repurchase agreement, the seller agrees that the value of the
underlying securities, including accrued interest, will at all times be equal to
or exceed the face amount of the repurchase agreement. In addition, the Fund
actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each class of shares of the
Fund is calculated daily by dividing the total value of the Fund's assets
attributable to that class, less liabilities attributable to that class, by the
number of shares of that class outstanding. The offering price and redemption
price per share of each class of shares of the Fund is equal to the net asset
value per share.
<PAGE>
Investment income and distributions to shareholders -- Dividend income is
recorded on the ex-dividend date. Interest income is accrued as earned.
Discounts and premiums on securities purchased are amortized in accordance with
income tax regulations. Dividends arising from net investment income are
declared and paid quarterly to shareholders of the Fund. Net realized short-term
capital gains, if any, may be distributed throughout the year and net realized
long-term capital gains, if any, are distributed at least once each year. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles.
Allocations between classes -- Investment income earned, realized capital gains
and losses, and unrealized appreciation and depreciation for the Fund are
allocated daily to each class of shares based upon its proportionate share of
total net assets of the Fund. Class specific expenses are charged directly to
the class incurring the expense. Common expenses which are not attributable to a
specific class are allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund.
Security transactions -- Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
Securities traded on a "to-be-announced" basis -- The Fund occasionally trades
securities on a "to-be-announced" (TBA) basis. In a TBA transaction, the Fund
has committed to purchase securities for which all specific information is not
yet known at the time of the trade, particularly the face amount in
mortgage-backed securities transactions. Securities purchased on a TBA basis are
not settled until they are delivered to the Fund, normally 15 to 45 days later.
These transactions are subject to market fluctuations and their current value is
determined in the same manner as for other portfolio securities.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting priciples requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
<PAGE>
The following information is based upon the Federal income tax cost of
portfolio investments of $91,682,263 as of March 31, 1998:
Gross unrealized appreciation....................................$ 2,271,814
Gross unrealized depreciation.......................................(259,474)
----------
Net unrealized appreciation......................................$ 2,012,340
===========
The difference between the Federal income tax cost of portfolio investments and
financial statement cost is due to certain timing differences in the recognition
of capital losses under generally accepted accounting principles and income tax
regulations.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $204,131,539 and $194,635,139, respectively.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Tattersall Advisory Group, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .375% of its
average daily net assets. The Adviser currently intends to limit the total
operating expenses of the Institutional Shares of the Fund to .50% of its
average daily net assets, and to limit the total operating expenses of the
Service Group Shares of the Fund to .65% of its average daily net assets;
accordingly, the Adviser waived $16,111 of its investment advisory fee for the
year ended March 31, 1998. Certain trustees and officers of the Trust are also
officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .075% of its average daily net assets up to $200
million and .05% of such net assets in excess of $200 million, subject to a
$2,000 minimum monthly fee, plus a surcharge of $1,000 per month. In addition,
the Fund pays out-of-pocket expenses including, but not limited to, postage,
supplies and cost of pricing the Fund's portfolio securities. Certain officers
of the Trust are also officers of CFS.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the Plan) with respect to Service
Group Shares pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that
the Fund may incur certain costs related to the distribution of Service Group
Shares, not to exceed 0.15% of average daily net assets applicable to Service
Group Shares. For the period ended March 31, 1998, Service Group Shares incurred
$2,672 of distribution expenses under the Plan.
<PAGE>
4. DIRECTED BROKERAGE ARRANGEMENT
In order to reduce the total operating expenses of the Fund, a portion of the
Fund's custodian fees have been paid through an arrangement with a third-party
broker-dealer who is compensated through security trades. Expenses reimbursed
through the directed brokerage arrangement totaled $9,678 for the year ended
March 31, 1998.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Bond Fund (a series of The Williamsburg Investment Trust),
including the portfolio of investments, as of March 31, 1998, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Bond Fund as of March 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
----------------------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
------------------ -------------
Tattersall Advisory Group, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
MANAGEMENT AND DISCUSSION AND ANALYSIS
March 31, 1998
PERFORMANCE OF THE JAMESTOWN SHORT TERM BOND FUND
FISCAL YEAR ENDED MARCH 31, 1998
There is something about the beginning of a year that encourages thoughts of a
slowdown. It could be that after the normal Christmas retail frenzy, consumers
are expected to be "spent out." Or it could be that during the inclement weather
of the winter months, consumers are supposed to stay at home. Not only did they
not stay at home, but they were out buying homes! During the so-called slow
months, housing activity soared in response to the unbeatable combination of
unusually mild weather and low interest rates. Consumer and business spending
more than offset the Asian-induced weakness from the trade sector so that the
economy is on track to turn in a 1st quarter performance that will most likely
exceed the 3% level. Activity in Europe was also brisk, with inflation as
elusive there as it is in the U.S. Interest rates fell for all G-7 countries
with rates in Japan and the U.S. falling the least. With short term interest
rates falling slightly for the quarter of 1998, the bond market's performance
was dominated by coupon return. The Jamestown Short Term Bond Fund provided a
return of 5.76% for the fiscal year ended March 31, 1998. The 3-Month Treasury
Bill Index returned 5.35%, while the Merrill Lynch 1-3 Year Treasury Index
returned 7.51% for the same period.
With no clear trend in the direction of rates, duration strategy for us or for
any manager was a non-event as sectors saw all of the action. Battered by huge
new issuance and Asian credit concerns, corporates started the year with
historically attractive yield spreads versus Treasuries, reached a peak in late
January, before narrowing again with the help of decent earnings reports and a
strong stock market. Our strategy was to be overweighted in shorter liquid
securities as well as corporates and mortgages. The latter sector was initially
hurt by the acceleration in prepayment speeds, an event for which we had
prepared the portfolio, but began to outperform as low interest rate volatility
helped to calm investors' concerns. The asset-backed market outperformed
Treasuries, which was quite an accomplishment considering the huge amount of new
issues the market was forced to digest during the quarter.
<PAGE>
LOOKING AHEAD
We expect the market to establish a trend before this year ends, and that trend
will most likely be to lower rates. Between now and then, however, the market
will stay on edge purely from inflation worries associated with a strong
economy. The Federal Reserve should remain firmly on hold. The risk to bond
holders is that domestic demand remains too strong and the effect of the Asian
slowdown too weak for the Federal Reserve to pursue price stability with
unchanged interest rates. The latest unemployment report should help to mitigate
this risk, and we expect to extend durations if more weakness materializes.
As opposed to this time last year when we were frustrated by the lack of
opportunity in sectors, we are energized by what we see this year. We start the
second quarter very liquid, with a moderate weighting in corporates. We will
watch carefully the trend of corporate earnings, realizing that the stock
market, and thus, corporate spreads are vulnerable to negative surprises. We are
currently looking to add to our mortgage position with an emphasis on those
securities that are protected from prepayments. This strategy has worked well
since the end of last year, and we expect it to continue to work well with call
protection priced as cheaply as it is. Asset-backed securities provide another
cheap source of prepayment protection and we plan to remain overweighted in this
sector as well. Finally, we expect closed-end funds to continue to provide a
steady source of outperformance as prices converge to net asset values.
Although interest rates are essentially unchanged so far this year, there
certainly have been opportunities to outperform the bond market. We not only
expect these opportunities to continue, but we intend to fully participate in
all of them.
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown
Short Term Bond Fund, the Merrill Lynch 1-3 Year Treasury Index, the 90-Day
Treasury Bill Index and the Consumer Price Index.
MERRILL LYNCH 1-3 YEAR TREASURY INDEX: THE JAMESTOWN SHORT TERM
BOND FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
01/31/92 10,000 01/31/92 10,000
03/31/92 0.31% 10,031 03/31/92 0.25% 10,025
06/30/92 2.88% 10,319 06/30/92 2.03% 10,229
09/30/92 2.98% 10,627 09/30/92 2.14% 10,448
12/31/92 0.18% 10,646 12/31/92 0.15% 10,463
03/31/93 2.21% 10,882 03/31/93 1.95% 10,667
06/30/93 1.08% 10,999 06/30/93 1.27% 10,803
09/30/93 1.44% 11,157 09/30/93 1.34% 10,947
12/31/93 0.59% 11,222 12/31/93 0.61% 11,015
03/31/94 -0.50% 11,166 03/31/94 -0.48% 10,962
06/30/94 0.08% 11,176 06/30/94 0.23% 10,987
09/30/94 0.99% 11,286 09/30/94 0.93% 11,090
12/31/94 0.00% 11,286 12/31/94 -0.05% 11,084
03/31/95 3.36% 11,665 03/31/95 3.38% 11,458
06/30/95 3.21% 12,039 06/30/95 3.01% 11,803
09/30/95 1.50% 12,220 09/30/95 1.33% 11,960
12/31/95 2.52% 12,528 12/31/95 2.62% 12,273
03/31/96 0.33% 12,570 03/31/96 0.25% 12,304
06/30/96 1.01% 12,696 06/30/96 0.77% 12,399
09/30/96 1.65% 12,906 09/30/96 1.56% 12,592
12/31/96 1.90% 13,151 12/31/96 1.56% 12,788
03/31/97 0.66% 13,239 03/31/97 1.04% 12,920
06/30/97 2.20% 13,530 06/30/97 1.56% 13,122
09/30/97 1.96% 13,795 09/30/97 1.46% 13,313
12/31/97 1.68% 14,027 12/31/97 1.35% 13,493
03/31/98 1.47% 14,233 03/31/98 1.27% 13,665
CONSUMER PRICE INDEX: 90-DAY TREASURY BILL INDEX:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
01/31/92 10,000 01/31/92 10,000
03/31/92 0.40% 10,040 03/31/92 0.64% 10,064
06/30/92 0.80% 10,120 06/30/92 1.10% 10,174
09/30/92 0.70% 10,191 09/30/92 1.01% 10,277
12/31/92 0.80% 10,273 12/31/92 0.77% 10,357
03/31/93 0.90% 10,365 03/31/93 0.78% 10,437
06/30/93 0.60% 10,427 06/30/93 0.77% 10,518
09/30/93 0.40% 10,469 09/30/93 0.82% 10,604
12/31/93 0.70% 10,542 12/31/93 0.78% 10,687
03/31/94 0.50% 10,595 03/31/94 0.77% 10,768
06/30/94 0.60% 10,659 06/30/94 0.96% 10,872
09/30/94 0.90% 10,755 09/30/94 1.08% 10,989
12/31/94 0.60% 10,819 12/31/94 1.33% 11,135
03/31/95 0.80% 10,906 03/31/95 1.50% 11,302
06/30/95 0.90% 11,004 06/30/95 1.50% 11,472
09/30/95 0.40% 11,048 09/30/95 1.42% 11,635
12/31/95 0.50% 11,104 12/31/95 1.47% 11,806
03/31/96 0.80% 11,193 03/31/96 1.23% 11,951
06/30/96 1.10% 11,316 06/30/96 1.29% 12,105
09/30/96 0.44% 11,366 09/30/96 1.38% 12,273
12/31/96 0.82% 11,460 12/31/96 1.30% 12,433
03/31/97 0.69% 11,539 03/31/97 1.28% 12,591
06/30/97 0.19% 11,561 06/30/97 1.36% 12,763
09/30/97 0.44% 11,611 09/30/97 1.34% 12,934
12/31/97 0.62% 11,683 12/31/97 1.25% 13,096
03/31/98 0.12% 11,697 03/31/98 1.30% 13,266
The Jamestown Short Term Bond Fund Average Annual Total Returns
1 Year 5 Years Since Inception*
5.76% 5.08% 5.16%
*Initial public offering of shares was January 21, 1992.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 8,930,770
============
At value (Note 1) $ 8,927,938
Investments in repurchase agreements (Note 1) 1,224,000
Cash 799
Principal paydowns receivable 6,681
Interest receivable 51,519
Due from Adviser (Note 3) 4,206
Other assets 251
------------
TOTAL ASSETS 10,215,394
------------
LIABILITIES
Accrued administration fees (Note 3) 2,000
Other accrued expenses 1,530
------------
TOTAL LIABILITIES 3,530
------------
NET ASSETS $ 10,211,864
============
Net assets consist of:
Paid-in capital $ 10,805,414
Accumulated net realized losses from security transactions (592,016)
Undistributed net investment income 1,298
Net unrealized depreciation on investments (2,832)
------------
Net assets $ 10,211,864
============
Shares of beneficial interest outstanding
(unlimited number of shares
authorized, no par value) 1,062,311
============
Net asset value, offering price and redemption price
per share (Note 1) $ 9.61
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1998
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest $ 616,998
---------
EXPENSES
Investment advisory fees (Note 3) 37,708
Administration fees (Note 3) 24,000
Professional fees 12,496
Trustees' fees and expenses 5,405
Pricing costs 4,809
Custodian fees 3,600
Postage and supplies 2,080
Printing of shareholder reports 1,859
Registration fees 1,464
Other expenses 1,474
---------
TOTAL EXPENSES 94,895
Fees waived and expenses reimbursed by the Adviser (Note 3) (44,617)
---------
NET EXPENSES 50,278
---------
NET INVESTMENT INCOME 566,720
---------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions (45,768)
Net change in unrealized appreciation/depreciation on investments 48,104
---------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 2,336
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 569,056
=========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 566,720 $ 581,834
Net realized losses from security transactions (45,768) (101,843)
Net change in unrealized appreciation/depreciation
on investments 48,104 (3,365)
------------- ------------
Net increase in net assets from operations 569,056 476,626
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (568,054) (582,861)
------------- ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 2,162,478 2,203,737
Net asset value of shares issued in reinvestment
of distributions to shareholders 568,054 582,861
Payments for shares redeemed (2,444,148) (2,181,641)
------------- ------------
Net increase in net assets from capital share transactions 286,384 604,957
------------- ------------
TOTAL INCREASE IN NET ASSETS 287,386 498,722
NET ASSETS:
Beginning of year 9,924,478 9,425,756
------------- ------------
End of year - (including undistributed net investment
income of $1,298 and $2,632, respectively) $ 10,211,864 $ 9,924,478
============= ============
Capital share activity:
Sold 223,127 226,810
Reinvested 59,049 60,494
Redeemed (252,774) (224,329)
------------- ------------
Net increase in shares outstanding 29,402 62,975
Shares outstanding, beginning of year 1,032,909 969,934
------------- ------------
Shares outstanding, end of year 1,062,311 1,032,909
============= ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
<CAPTION>
Years Ended March 31,
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
Net asset value at beginning of year $9.61 $9.72 $9.64 $9.82 $10.07
------- ------ ------ ------- -------
Income from investment operations:
Net investment income 0.54 0.58 0.62 0.60 0.51
Net realized and unrealized gains (losses)
on investments 0.00 (0.11) 0.08 (0.17) (0.23)
------- ------ ------ ------- -------
Total from investment operations 0.54 0.47 0.70 0.43 0.28
------- ------ ------ ------- -------
Less distributions:
Dividends from net investment income (0.54) (0.58) (0.62) (0.61) (0.51)
Distributions from net realized gains -- -- -- -- (0.02)
------- ------ ------ ------- -------
Total distributions (0.54) (0.58) (0.62) (0.61) (0.53)
------- ------ ------ ------- -------
Net asset value at end of year $9.61 $9.61 $9.72 $9.64 $9.82
======= ====== ====== ======= =======
Total return 5.76% 5.01% 7.38% 4.53% 2.76%
======= ====== ====== ======= =======
Net assets at end of year (000's) $10,212 $9,924 $9,426 $14,122 $18,715
======= ====== ====== ======= =======
Ratio of net expenses to average net assets (a) 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to average net assets 5.64% 5.96% 6.27% 6.04% 5.22%
Portfolio turnover rate 109% 62% 157% 144% 324%
(a) Absent investment advisory fees waived and expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been 0.95%,
0.94%, 0.85%, 0.85%, and 0.81% for the years ended March 31, 1998, 1997, 1996,
1995, and 1994, respectively (Note 3).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN SHORT TERM BOND FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
Par Value Value
<S> <C> <C>
COMMERCIAL PAPER - 39.8%
$ 400,000 American Express Company, due 06/30/1998 $ 394,550
400,000 American General, due 07/07/1998 394,072
400,000 E. I. DuPont de Nemours & Company, due 08/13/1998 391,952
425,000 Household Finance, due 05/14/1998 422,269
400,000 John Deere Capital Corporation, due 06/24/1998 394,904
400,000 Merrill Lynch, due 07/30/1998 392,707
400,000 Procter & Gamble Company, due 04/09/1998 399,500
425,000 Prudential Funding Corporation, due 04/17/1998 423,950
425,000 Stanley Works Corporation, due 05/15/1998 422,179
425,000 Walt Disney Company, due 04/29/1998 423,235
---------------
Total Commercial Paper (Cost $4,059,318) $ 4,059,318
---------------
U.S. TREASURY AND AGENCY OBLIGATIONS - 6.4%
U.S. Treasury Notes - 0.6%
$ 50,000 5.125%, due 04/30/1998 $ 49,985
10,000 6.50%, due 05/31/2001 10,242
---------------
60,227
---------------
U.S. Treasury Inflation-Protection Notes - 1.9%
200,000 3.625%, due 07/15/2002 199,785
---------------
Federal National Mortgage Association - 3.9%
400,000 due 04/22/1998 398,704
---------------
Total U.S. Treasury and Agency Obligations (Cost $659,303) $ 658,716
---------------
MORTGAGE-BACKED SECURITIES - 16.9%
Federal Home Loan Mortgage Corporation - 1.3%
$ 100,024 Pool #1272-D, 7.50%, due 11/15/2005 $ 100,805
36,975 Pool #162-E, 7.00%, due 02/15/2020 36,905
---------------
137,710
---------------
Federal National Mortgage Association - 3.5%
141,909 Pool #124029, 8.00%, due 12/01/2002 144,256
210,000 Series #94-13-PE, 5.8%, due 12/25/2006 208,688
---------------
352,944
---------------
Government National Mortgage Association - 2.3%
231,221 Pool #8484, 7.00%, adjustable rate, due 08/20/2024 237,038
---------------
Student Loan Marketing Association - 4.3%
438,453 Series #97-2-A1, 5.704%, adjustable rate, due 10/25/2005 437,083
---------------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES - Continued
Other Mortgage-Backed Securities - 5.5%
Lehman Brothers Mortgage Trust #91-2-A1,
$ 241,512 8.00%, due 03/20/1999 $ 243,399
GE Capital Mortgage Services, Inc. #93-4A-A1,
88,720 6.45%, adjustable rate, due 03/25/2023 88,914
GE Capital Mortgage Services, Inc. #94-2-A4,
230,000 6.00%, due 01/25/2009 228,850
---------------
561,163
---------------
Total Mortgage-Backed Securities (Cost $1,724,470) $ 1,725,938
---------------
ASSET-BACKED SECURITIES - 6.9%
CIT RV Trust #96-A-A1,
$ 229,289 5.40%, due 12/15/2011 $ 227,068
Fleetwood Credit Corp. Grantor Trust #97-B-A,
237,075 6.40%, due 05/15/2013 237,815
Premier Auto Trust #95-1-A6,
238,346 8.05%, due 04/04/2000 240,281
---------------
Total Asset-Backed Securities (Cost $705,679) $ 705,164
---------------
CORPORATE BONDS - 17.4%
Caterpillar Financial, Inc.,
$ 400,000 5.81%, due 07/05/2000 $ 398,964
Enron Corporation,
290,000 6.45%, due 11/15/2001 291,119
International Bank Reconstruction and Development,
265,000 5.10%, due 09/15/1999 262,627
International Lease Finance Medium Term Notes,
245,000 6.55%, due 09/15/2000 247,600
Norwest Financial Corporation,
400,000 6.05%, due 11/19/1999 401,012
Xerox Corporation Medium Term Notes,
175,000 7.13%, due 04/30/1999 177,480
---------------
Total Corporate Bonds (Cost $1,782,000) $ 1,778,802
---------------
Total Investments at Value (Cost $8,930,770) - 87.4% $ 8,927,938
---------------
<PAGE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (a) - 12.0%
$ 1,224,000 Star Bank, N.A., 5.25%, dated 03/31/1998, due 04/01/1998
repurchase proceeds $1,224,179 (Cost $1,224,000) $ 1,224,000
---------------
Total Investments and Repurchase Agreements
at Value - 99.4% $ 10,151,938
Other Assets in Excess of Liabilities - 0.6% 59,926
---------------
Net Assets - 100.0% $ 10,211,864
===============
(a) Joint repurchase agreement is fully collaterized by $12,715,000 GNMA II,
Pool #8421, 7.375%, due 05/20/2024, $14,335,000 GNMA II; Pool #8932 , 7.00%, due
03/20/2022; and $1,120,000 GNMA II, Pool #8359, 7.00%, due 01/20/2024. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985. The
Fund's pro-rata interest in the collateral at March 31, 1998 was $1,244,806.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Short Term Bond Fund (the Fund) is a no-load, diversified series
of the Williamsburg Investment Trust (the Trust), an open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Trust was organized as a Massachusetts business trust on July 18,
1988. The Fund began operations on January 21, 1992.
The Fund's investment objective is to maximize total return, consisting of
current income and capital appreciation (both realized and unrealized),
consistent with the preservation of capital through active management of high
quality short-term fixed income securities.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national exchange are valued
based upon the closing price on the principal exchange where the security is
traded. It is expected that securities of the Fund will ordinarily be traded on
the over-the-counter market. When market quotations are not readily available,
securities may be valued on the basis of prices provided by an independent
pricing service. If a pricing service cannot provide a valuation, securities
will be valued in good faith at fair market value using methods consistent with
those determined by the Board of Trustees.
Repurchase agreements -- The Fund generally enters into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market. At the time the Fund enters
into the joint repurchase agreement, the seller agrees that the value of the
underlying securities, including accrued interest, will at all times be equal to
or exceed the face amount of the repurchase agreement. In addition, the Fund
actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Discounts and premiums on securities purchased are amortized
in accordance with income tax regulations. Dividends arising from net investment
income are declared and paid quarterly to shareholders of the Fund. Net realized
short-term capital gains, if any, may be distributed throughout the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income distributions and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles.
Security transactions -- Security transactions are accounted for on trade
date. Cost of securities sold is determined on a specific identification basis.
<PAGE>
Securities traded on a "to-be-announced" basis -- The Fund occasionally trades
securities on a "to-be-announced" (TBA) basis. In a TBA transaction, the Fund
has committed to purchase securities for which all specific information is not
yet known at the time of the trade, particularly the face amount in
mortgage-backed securities transactions. Securities purchased on a TBA basis are
not settled until they are delivered to the Fund, normally 15 to 45 days later.
These transactions are subject to market fluctuations and their current value is
determined in the same manner as for other portfolio securities.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of $8,930,770 as of March 31, 1998:
Gross unrealized appreciation.......................................$ 12,111
Gross unrealized depreciation....................................... (14,943)
--------
Net unrealized depreciation.........................................$ (2,832)
=========
The difference between the Federal income tax cost of portfolio investments and
financial statement cost is due to certain timing differences in the recognition
of capital losses under generally accepted accounting principles and income tax
regulations. As if March 31, 1998, the Fund had capital loss carryforwards for
federal income tax purposes of $586,098 which expire on March 31, 2005. In
addition, the Fund had net realized capital losses of $5,918 during the period
from November 1, 1997 through March 31, 1998, which are treated for federal
income tax purposes as arising during the Fund's tax year ending March 31, 1999.
These capital loss carryforwards and "post-October" losses may be utilized in
the current and future years to offset net realized capital gains prior to
distributing such gains to shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $4,987,978 and $6,352,933, respectively.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Tattersall Advisory Group, Inc. (the
Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .375% of its
average daily net assets. The Adviser currently intends to limit the total
operating expenses of the Fund to .50% of its average daily net assets;
accordingly, the Adviser waived its entire investment advisory fee of $37,708
and reimbursed the Fund for $6,909 of other operating expenses for the year
ended March 31, 1998. Certain trustees and officers of the Trust are also
officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .075% of its average daily net assets up to $200
million and .05% of such net assets in excess of $200 million, subject to a
$2,000 minimum monthly fee. In addition, the Fund pays out-of-pocket expenses
including, but not limited to, postage, supplies and cost of pricing the Fund's
portfolio securities. Certain officers of the Trust are also officers of CFS.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Short Term Bond Fund (a series of The Williamsburg Investment
Trust), including the portfolio of investments, as of March 31, 1998, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Short Term Bond Fund as of March 31, 1998, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN BALANCED FUND
THE JAMESTOWN EQUITY FUND
August 1, 1998
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES ........................................ 2
DESCRIPTION OF BOND RATINGS ............................................... 5
INVESTMENT LIMITATIONS .................................................... 8
TRUSTEES AND OFFICERS ..................................................... 10
INVESTMENT ADVISOR ........................................................ 15
SUB-ADVISOR ............................................................... 16
ADMINISTRATOR ............................................................. 17
OTHER SERVICES ............................................................ 17
BROKERAGE ................................................................. 18
SPECIAL SHAREHOLDER SERVICES .............................................. 19
PURCHASE OF SHARES ........................................................ 21
REDEMPTION OF SHARES ...................................................... 22
NET ASSET VALUE DETERMINATION ............................................. 22
ALLOCATION OF TRUST EXPENSES .............................................. 22
ADDITIONAL TAX INFORMATION ................................................ 23
CAPITAL SHARES AND VOTING ................................................. 24
CALCULATION OF PERFORMANCE DATA ........................................... 25
FINANCIAL STATEMENTS AND REPORTS .......................................... 28
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of both The Jamestown Balanced Fund and
The Jamestown Equity Fund (the "Funds") dated August 1, 1998. The Prospectus may
be obtained from the Funds, at the address and phone number shown above, at no
charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both The Jamestown Balanced Fund
(the "Balanced Fund") and The Jamestown Equity Fund (the "Equity Fund") unless
otherwise noted.
The investment objectives and policies of the Funds are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
WARRANTS AND RIGHTS. Warrants are essentially options to purchase equity
securities at specific prices and are valid for a specific period of time.
Prices of warrants do not necessarily move in concert with the prices of the
underlying securities. Rights are similar to warrants but generally have a short
duration and are distributed directly by the issuer to its shareholders. Rights
and warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
FOREIGN SECURITIES. Because of the inherent risk of foreign securities over
domestic issues, the Funds will not invest in foreign investments except those
traded domestically as American Depository Receipts (ADRs). The Funds may invest
in foreign securities if the Advisor believes such investment would be
consistent with the Funds' investment objectives. The same factors would be
considered in selecting foreign securities as with domestic securities, as
discussed in the Prospectus. Foreign securities investment presents special
considerations not typically associated with investments in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuation in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial or social instability or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
- 2 -
<PAGE>
REPURCHASE AGREEMENTS. The Funds may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time a
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Funds' risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Funds hold a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Advisor will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Funds' custodian either directly or through a securities depository.
U.S. GOVERNMENT SECURITIES. The Balanced Fund may invest in debt obligations
which are issued or guaranteed by the U.S. Government, its agencies and
instrumentalities ("U.S. Government Securities") as described herein. U.S.
Government Securities include the following securities: (1) U.S. Treasury
obligations of various interest rates, maturities and issue dates, such as U.S.
Treasury bills (mature in one year or less), U.S. Treasury notes (mature in one
to seven years), and U.S. Treasury bonds (mature in more than seven years), the
payments of principal and interest of which are all backed by the full faith and
credit of the U.S. Government; (2) obligations issued or guaranteed by U.S.
Government agencies or instrumentalities, some of which are backed by the full
faith and credit of the U.S. Government, e.g., obligations of the Government
National Mortgage Association ("GNMA"), the Farmers Home Administration and the
Export Import
- 3 -
<PAGE>
Bank; some of which do not carry the full faith and credit of the U.S.
Government but which are supported by the right of the issuer to borrow from the
U.S. Government, e.g., obligations of the Tennessee Valley Authority, the U.S.
Postal Service, the Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan Mortgage Corporation ("FHLMC"); and some of which are backed
only by the credit of the issuer itself, e.g., obligations of the Student Loan
Marketing Association, the Federal Home Loan Banks and the Federal Farm Credit
Bank; and (3) any of the foregoing purchased subject to repurchase agreements as
described herein. The Balanced Fund does not intend to invest in "zero coupon"
Treasury securities. The guarantee of the U.S. Government does not extend to the
yield or value of the Fund's shares.
Obligations of GNMA, FNMA and FHLMC may include direct pass-through
"Certificates," representing undivided ownership interests in pools of
mortgages. Such Certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the U.S. Government or the issuing
agency. Mortgage Certificates are subject to more rapid prepayment than their
stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates and, as a result, the
proceeds from such prepayments may be reinvested in instruments which have lower
yields. To the extent such securities were purchased at a premium, such
prepayments could result in capital losses. The U.S. Government does not
guarantee premiums and market value of U.S. Government Securities.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Funds. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Funds acquire a Bankers' Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Bankers' Acceptance, therefore, carries the full faith
and credit of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an unsecured
interest-bearing debt obligation of a bank. CDs acquired by the Funds would
generally be in amounts of $100,000 or more. COMMERCIAL PAPER is an unsecured,
short term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity
- 4 -
<PAGE>
generally ranges from two to 270 days and is usually sold on a discounted basis
rather than as an interest-bearing instrument. The Funds will invest in
Commercial Paper only if it is rated in the highest rating category by any
nationally recognized statistical rating organization (NRSRO) or, if not rated,
the issuer must have an outstanding unsecured debt issue rated in the three
highest categories by any NRSRO or, if not so rated, be of equivalent quality in
the Advisor's assessment. Commercial Paper may include Master Notes of the same
quality. MASTER NOTES are unsecured obligations which are redeemable upon demand
of the holder and which permit the investment of fluctuating amounts at varying
rates of interest. Master Notes are acquired by the Funds only through the
Master Note program of the Funds' custodian, acting as administrator thereof.
The Advisor will monitor, on a continuous basis, the earnings power, cash flow
and other liquidity ratios of the issuer of a Master Note held by the Funds.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Balanced Fund may purchase
securities on a when-issued basis or for settlement at a future date if the Fund
holds sufficient assets to meet the purchase price. In such purchase
transactions the Fund will not accrue interest on the purchased security until
the actual settlement. Similarly, if a security is sold for a forward date, the
Balanced Fund will accrue the interest until the settlement of the sale.
When-issued security purchases and forward commitments have a higher degree of
risk of price movement before settlement due to the extended time period between
the execution and settlement of the purchase or sale. As a result, the exposure
to the counterparty of the purchase or sale is increased. Although the Balanced
Fund would generally purchase securities on a forward commitment or when-issued
basis with the intention of taking delivery, the Fund may sell such a security
prior to the settlement date if the Advisor felt such action was appropriate. In
such a case, the Fund could incur a short-term gain or loss.
DESCRIPTION OF BOND RATINGS
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Advisor believes that the quality of fixed-income securities in which the
Balanced Fund may invest should be continuously reviewed and that individual
analysts give different weightings to the various factors involved in credit
analysis. A rating is not a recommendation to purchase, sell or hold a security
because it does not take into account market value or
- 5 -
<PAGE>
suitability for a particular investor. When a security has received a rating
from more than one NRSRO, each rating is evaluated independently. Ratings are
based on current information furnished by the issuer or obtained by the NRSROs
from other sources that they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS:
Aaa: Bonds rated Aaa are judged to be of the best quality. These bonds
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large in Aa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements that make the long term
risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present that suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
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<PAGE>
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S BOND RATINGS:
AAA: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated AA also qualify as high quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S BOND RATINGS:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment.
- 7 -
<PAGE>
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
DESCRIPTION OF DUFF & PHELPS CREDIT RATING CO.'S BOND RATINGS:
AAA: This is the highest rating credit quality. The risk factors are
negligible, being only slightly more than for risk- free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average protection factors. However risk factors are
more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
INVESTMENT LIMITATIONS
The Funds have adopted the following investment limitations, in addition to
those described in the Prospectus, which cannot be changed without approval by
holders of a majority of the outstanding voting shares of the Funds. A
"majority" for this purpose, means the lesser of (i) 67% of a Fund's outstanding
shares represented in person or by proxy at a meeting at which more than 50% of
its outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, each Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one corporate issuer or purchase more than 10% of the outstanding
voting securities or of any class of securities of any one corporate
issuer;
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Advisor who own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5% of the
outstanding securities of such issuer;
- 8 -
<PAGE>
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Funds
may invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things, and the Funds may
invest in certain mortgage backed securities as described in the Prospectus
under "Investment Objectives, Investment Policies and Risk Considerations";
(6) Underwrite securities issued by others, except to the extent a Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Funds may obtain such short-term
credits as may be necessary for the clearance of transactions);
(8) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);
(9) Participate on a joint or joint and several basis in any trading account in
securities;
(10) Make loans of money or securities, except that the Funds may invest in
repurchase agreements;
(11) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors); or
(12) Write, purchase or sell commodities, commodities contracts, commodities
futures contracts, warrants on commodities or related options.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation. However, in the case of the
borrowing limitation (the first restriction in the Prospectus) each Fund will,
to the extent necessary, reduce its existing borrowings to comply with the
limitation.
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<PAGE>
While the Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- --------------- ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
- 10 -
<PAGE>
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.,
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
- 11 -
<PAGE>
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
- 12 -
<PAGE>
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary of
Cincinnati, Ohio 45202 Countrywide Investments, Inc. and Countrywide Financial
Services, Inc.; Secretary of Countrywide Investment Trust;
Countrywide Tax-Free Trust and Countrywide Strategic
Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
- 13 -
<PAGE>
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) 1.4% of the then outstanding shares of the Balanced Fund and
4.1% of the then outstanding shares of the Equity Fund. On the same date,
Wachovia Bank of North Carolina as trustee for the Halifax Hospital Pension
Plans, P.O. Box 3073, Winston-Salem, North Carolina 27150, owned of record 7.0%
of the then outstanding shares of the Balanced Fund; Bova & Co., 1525 West
Harris Boulevard, Charlotte, North Carolina 28288, owned of record 6.2% of the
then outstanding shares of the Balanced Fund; John M. Street and Joanne N.
Street, 315 Cheswick Lane, Richmond, Virginia 23229, owned of record 7.1% of the
then outstanding
- 14 -
<PAGE>
shares of the Equity Fund; and Crestar Bank, as trustee for the Virginia
Multispecialty Services Organization LLC 401(K) Profit Sharing Plan and Trust
and Money Purchase Pension Plan and Trust, P.O. Box 26246, Richmond Virginia
23260, owned of record 10.1% of the then outstanding shares of the Equity Fund.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Inc. (the "Advisor") supervises each Fund's
investments pursuant to an Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement is effective until February
28, 1999 and will be renewed thereafter for one year periods only so long as
such renewal and continuance is specifically approved at least annually by the
Board of Trustees or by vote of a majority of the Funds' outstanding voting
securities, provided the continuance is also approved by a majority of the
Trustees who are not "interested persons" of the Trust or the Advisor by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement is terminable without penalty on sixty days notice by the
Board of Trustees of the Trust or by the Advisor. The Advisory Agreement
provides that it will terminate automatically in the event of its assignment.
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 years ended March 31, 1998, 1997 and 1996, the
Balanced Fund paid the Advisor advisory fees of $561,887, $430,381 and $373,945,
respectively.
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
years ended March 31, 1998, 1997 and 1996, the Equity Fund paid the Advisor
advisory fees of $259,757, $160,646 and $79,891, respectively.
The Advisor, organized as a Virginia corporation in 1970, is controlled by its
sole shareholder, Austin Brockenbrough, III. In addition to acting as Advisor to
the Funds, the Advisor serves as investment advisor to two additional investment
companies, the subjects of separate prospectuses, and also provides investment
advice to corporations, trusts, pension and profit sharing plans, other business
and institutional accounts and individuals.
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<PAGE>
The Advisor provides a continuous investment program for the Funds, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Funds. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Funds, and does
so in accordance with the investment objectives and policies of the Funds as
described herein and in the Prospectus. The Advisor places all securities orders
for the Funds, determining with which broker, dealer, or issuer to place the
orders. The Advisor must adhere to the brokerage policies of the Funds in
placing all orders, the substance of which policies are that the Advisor must
seek at all times the most favorable price and execution for all securities
brokerage transactions.
The Advisor also provides, at its own expense, certain Executive Officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Funds to clients of such dealers or others or based on the average balance of
all accounts in the Funds for which such dealers or others are designated as the
person responsible for the account.
SUB-ADVISOR
Tattersall Advisory Group, Inc. (the "Sub-Advisor") supervises the Balanced
Fund's fixed income investments pursuant to a Sub-Advisory Agreement (the
"Sub-Advisory Agreement") between the Sub-Advisor, the Advisor and the Trust.
The Sub-Advisory Agreement is effective until February 28, 1999, and will be
renewed thereafter for one year periods only so long as such renewal and
continuance is specifically approved at least annually by the Board of Trustees
or by a vote of a majority of the Balanced Fund's outstanding voting securities,
provided the continuance is also approved by a majority of the Trustees who are
not "interested persons" of the Trust, the Advisor, or the Sub-Advisor by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Sub-Advisory Agreement is terminable without penalty on sixty days notice by
the Board of Trustees of the Trust, by the Advisor, or by the Sub-Advisor. The
Sub-Advisory Agreement provides that it will terminate automatically in the
event of its assignment.
Compensation of the Sub-Advisor is paid by the Advisor (not the Balanced Fund)
in the amount of $5,000 per year.
The Sub-Advisor provides a continuous investment program for the fixed income
portion of the Balanced Fund, including investment research and management with
respect to all fixed income
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<PAGE>
securities of the Balanced Fund. The Sub-Advisor determines what fixed income
securities will be purchased, retained or sold by the Balanced Fund, and does so
in accordance with the investment objective and policies of the Balanced Fund,
as described herein and in the Prospectus. The Sub-Advisor places all fixed
income securities orders for the Balanced Fund, determining which broker,
dealer, or issuer to place the orders. The Sub-Advisor must adhere to the
brokerage policies of the Balanced Fund in placing all orders, the substance of
which policies are that the Sub-Advisor must seek at all times the most
favorable price and execution for all securities brokerage transactions.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Funds and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Funds, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, each Fund pays the
Administrator a fee at the annual rate of 0.20% of the average value of its
daily net assets up to $25,000,000, 0.175% of such assets from $25,000,000 to
$50,000,000 and 0.15% of such assets in excess of $50,000,000; provided,
however, that the minimum fee is $2,000 per month for each Fund. In addition,
the Funds pay out-of-pocket expenses, including but not limited to, postage,
envelopes, checks, drafts, forms, reports, record storage and communication
lines.
For the fiscal years ended March 31, 1998, 1997 and 1996, the Administrator
received fees of $148,539, $118,380 and $105,023, respectively, from the
Balanced Fund and $76,276, $49,129 and $26,514, respectively, from the Equity
Fund.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Funds' federal and state tax
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returns and to consult with the Trust as to matters of accounting and federal
and state income taxation.
The Custodian of the Funds' assets is Star Bank, N.A, 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Funds
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Funds.
BROKERAGE
It is the Funds' practice to seek the best price and execution for all portfolio
securities transactions. The Advisor (subject to the general supervision of the
Board of Trustees) directs the execution of the Funds' portfolio transactions.
The Trust has adopted a policy which prohibits the Advisor from effecting Fund
portfolio transactions with broker-dealers which may be interested persons of
either Fund, the Trust, any Trustee, officer or director of the Trust or its
investment advisors or any interested person of such persons.
The Balanced Fund's fixed income portfolio transactions will normally be
principal transactions executed in over-the-counter markets and will be executed
on a "net" basis, which may include a dealer markup. The Funds' common stock
portfolio transactions will normally be exchange traded and will be effected
through broker-dealers who will charge brokerage commissions. With respect to
securities traded only in the over-the-counter market, orders will be executed
on a principal basis with primary market makers in such securities except where
better prices or executions may be obtained on an agency basis or by dealing
with other than a primary market maker.
For the fiscal years ended March 31, 1998, 1997 and 1996, the total amount of
brokerage commissions paid by the Balanced Fund was $91,394, $63,382 and
$63,217, respectively. For the fiscal years ended March 31, 1998, 1997 and 1996,
the total amount of brokerage commissions paid by the Equity Fund was $66,628,
$47,290 and $26,512, respectively.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of either Fund's brokerage commissions to persons or firms
providing the Advisor with research services, which may typically include, but
are not limited to, investment recommendations, financial, economic, political,
fundamental and technical market and interest rate data, and other statistical
or research services. Much of the information so obtained may also be used by
the Advisor for the benefit of the other clients it may have. Conversely, the
Funds
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<PAGE>
may benefit from such transactions effected for the benefit of other clients. In
all cases, the Advisor is obligated to effect transactions for the Funds based
upon obtaining the most favorable price and execution. Factors considered by the
Advisor in determining whether the Funds will receive the most favorable price
and execution include, among other things: the size of the order, the broker's
ability to effect and settle the transaction promptly and efficiently and the
Advisor's perception of the broker's reliability, integrity and financial
condition.
In order to reduce the total operating expenses of the Funds, each Fund's
custodian fees and a portion of other operating expenses have been paid through
an arrangement with a third party broker-dealer who is compensated through
commission trades. Expenses reimbursed through the directed brokerage
arrangement for the fiscal year ended March 31, 1998 were $24,000 for the
Balanced Fund and $12,000 for the Equity Fund.
As of March 31, 1998, the Balanced Fund held securities issued by Merrill Lynch
& Company, Inc. (the market value of which was $414,502). Merrill Lynch &
Company, Inc. is the parent of one of the Trust's "regular broker-dealers" (as
defined in the 1940 Act).
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Funds offer the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Funds, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
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<PAGE>
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see "Signature Guarantees"). A corporation (or partnership)
must also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Funds. Shareholders should be aware that such systematic
withdrawals may deplete or use up entirely their initial investment and may
result in realized long-term or short-term capital gains or losses. The
Systematic Withdrawal Plan may be terminated at any time by the Funds upon sixty
days' written notice or by a shareholder upon written notice to the Funds.
Applications and further details may be obtained by calling the Funds at
1-800-443-4249, or by writing to:
The Jamestown Balanced Fund
or
The Jamestown Equity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Funds may accept securities in lieu of cash in payment
for the purchase of shares of the Funds. The acceptance of such securities is at
the sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Funds, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Funds. Securities delivered in payment of
redemptions would be valued at the same
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<PAGE>
value assigned to them in computing the net asset value per share. Shareholders
receiving them would incur brokerage costs when these securities are sold. An
irrevocable election may be filed under Rule 18f-1 of the 1940 Act, wherein each
Fund commits itself to pay redemptions in cash, rather than in kind, to any
shareholder of record of the Funds who redeems during any ninety day period, the
lesser of (a) $250,000 or (b) one percent (1%) of a Fund's net assets at the
beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Funds at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (see the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Funds.
PURCHASE OF SHARES
The purchase price of shares of each Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m. Eastern time
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Funds until
confirmed in writing (or unless other arrangements have been made with the
Funds, for example in the case of orders utilizing wire transfer of funds) and
payment has been received.
Each Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUNDS. The Funds have adopted initial investment
minimums for the purpose of reducing the cost to the Funds (and consequently to
the shareholders) of communicating with and servicing their shareholders.
However, a reduced minimum initial investment requirement of $1,000 applies to
Trustees, officers and employees of the Funds, the Advisor and certain parties
related thereto, including clients of the Advisor
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<PAGE>
or any sponsor, officer, committee member thereof, or the immediate family of
any of them. In addition, accounts having the same mailing address may be
aggregated for purposes of the minimum investment if they consent in writing to
share a single mailing of shareholder reports, proxy statements (but each such
shareholder would receive his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
Each Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Funds for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Funds.
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Funds, and they have
adopted procedures to do so, as follows. The net asset value of each Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and
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<PAGE>
junior level officers of the Trust as and if approved by the Board of Trustees;
taxes; expenses of the issuance and redemption of shares (including registration
and qualification fees and expenses); costs and expenses of membership and
attendance at meetings of certain associations which may be deemed by the
Trustees to be of overall benefit to each Fund and its shareholders; legal and
auditing expenses; and the cost of stationery and forms prepared exclusively for
the Funds. General Trust expenses are allocated among the series, or funds, on a
fair and equitable basis by the Board of Trustees, which may be based on
relative net assets of each fund (on the date the expense is paid) or the nature
of the services performed and the relative applicability to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS. Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, each Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, each Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities' loans, gains from the disposition of stock or securities, and
certain other income.
While the above requirements are aimed at qualification of the Funds as
regulated investment companies under Subchapter M of the Code, the Funds also
intend to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Funds remain qualified under Subchapter M,
they will not be subject to federal income tax to the extent they distribute
their taxable net investment income and net realized capital gains. A
nondeductible 4% federal excise tax will be imposed on each Fund to the extent
it does not distribute at least 98% of its ordinary taxable income for a
calendar year, plus 98% of its capital gain net taxable income for the one year
period ending each October 31, plus certain undistributed amounts from prior
years. While each Fund intends to distribute its taxable income and capital
gains in a manner so as to avoid imposition of the federal excise and income
taxes, there can be no assurance that the Funds indeed will make sufficient
distributions to avoid entirely imposition of federal excise or income taxes.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
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<PAGE>
TAX STATUS OF THE FUNDS' DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the
Funds derived from net investment income or net short-term capital gains are
taxable to shareholders as ordinary income, whether received in cash or
reinvested in additional shares. Distributions, if any, of long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held. For information on "backup" withholding, see "How to Purchase
Shares" in the Prospectus.
For corporate shareholders, the dividends received deduction, if applicable,
should apply to dividends from each Fund. Each Fund will send shareholders
information each year on the tax status of dividends and disbursements. A
dividend or capital gains distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income taxation. Dividends from net investment income, along with capital gains,
will be taxable to shareholders, whether received in cash or shares and no
matter how long you have held Fund shares, even if they reduce the net asset
value of shares below your cost and thus in effect result in a return of a part
of your investment.
CAPITAL SHARES AND VOTING
Shares of the Funds, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at lease
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not less
than ten percent (10%) of the shares then outstanding may require the Trustees
to call such a meeting and the Trustees are obligated to provide certain
assistance to shareholders desiring
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<PAGE>
to communicate with other shareholders in such regard (e.g., providing access to
shareholder lists, etc.). In case a vacancy or an anticipated vacancy shall for
any reason exist, the vacancy shall be filled by the affirmative vote of a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act. The Trust does not expect to have an annual meeting of
shareholders.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, each Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Funds for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of a Fund ("T") is computed by using the redeemable value at the end of a
specified period of time ("ERV") of a hypothetical initial investment of $1,000
("P") over a period of time ("n") according to the formula P(l+T)n=ERV. The
average annual total return quotations for the Balanced Fund for the one year
period ended March 31, 1998, for the five year period ended March 31, 1998 and
for the period since inception (July 3, 1989) to March 31, 1998 are 32.42%,
15.29% and 12.71%, respectively. The average annual total return quotations for
the Equity Fund for the one year period ended March 31, 1998, for the five year
period ended March 31, 1998, and for the period since inception (December 1,
1992) to March 31, 1998 are 43.74%, 19.12% and 18.31%, respectively.
In addition, each Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, each Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
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6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest earned (for the purpose of "a" above) on
debt obligations is computed by reference to the yield to maturity of each
obligation held based on the market value of the obligation (including actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month) period for which yield is being calculated,
or, with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest). The yields of the Balanced Fund and the Equity
Fund for the 30 days ended March 31, 1998 were 1.91% and 0.45%, respectively.
The Funds' performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, each Fund may compare its performance to the S&P 500
Index, which is generally considered to be representative of the performance of
unmanaged common stocks that are publicly traded in the United States securities
markets. Comparative performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service, such as Lipper Analytical
Services, Inc. or Morningstar, Inc., or by one or more newspapers, newsletters
or financial periodicals. Performance comparisons may be useful to investors who
wish to compare the Funds' past performance to that of other mutual funds and
investment products. Of course, past performance is not a guarantee of future
results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
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<PAGE>
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of the Funds' performance before investing. Of course, when
comparing the Funds' performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Funds may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Funds based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Funds may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Funds may also disclose from time to
time information about their portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Funds may also depict the historical performance
of the securities in which the Funds may invest over periods reflecting a
variety of market or economic conditions either alone or in comparison with
alternative investments, performance indices of those investments, or economic
indicators. The Funds may also include in advertisements and in materials
furnished to present and prospective shareholders statements or illustrations
relating to the appropriateness of types of securities and/or mutual funds that
may be employed to meet specific financial goals, such as saving for retirement,
children's education, or other future needs.
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<PAGE>
FINANCIAL STATEMENTS AND REPORTS
The books of the Funds will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published, and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Funds as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
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<PAGE>
THE JAMESTOWN BALANCED FUND
---------------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
------------------ -------------
Lowe, Brockenbrough & Tattersall, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN BALANCED FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1998
Performance of The Jamestown Balanced Fund
The twelve months ending March 31, 1998, were rewarding ones for The Jamestown
Balanced Fund in both absolute results as well as in relative results. For the
year, your fund returned 32.4% after expenses versus 29.0% for the comparable
Lipper Balanced Index. The Standard & Poor's Index was up 48% for the same 12
month period with your fund invested approximately two-thirds in stocks and
one-third in bonds and cash.
The sectors outperforming the market were finance, communication services, and
consumer cyclicals in particular, with capital goods, health care, and
technology slightly ahead of the S&P. Those sectors lagging the market were
consumer staples, transportation, utility, energy, and basic industries. Your
fund was well represented in the finance, technology, and consumer staples
sectors. We had underweightings in the communication services, utility, and
transportation sectors.
For the past three years, the Jamestown Balanced Fund has appreciated at an
annualized rate of 22.2%, well ahead of the Lipper Balanced Fund Index of 19.9%.
With the stock market now selling at lofty price-to-earnings multiples (25x), it
is dangerous to be lulled into a belief that these strong returns will continue
each year. There will be a regression to the mean, i.e., a market correction,
but with interest rates and inflation rates staying low, we are hopeful that
this market can continue for at least a short period. Inflation appears to be
very well contained, and the same can be said for the wage component of the
consumer price index.
As in the past several years, the bond market portion of your fund provided
positive returns. The Lehman Intermediate Index was up 9.7%. While lagging the
returns of the stock portion, bonds provide an excellent source of funds for
equity employment should we see a significant market correction.
We will continue to invest in high quality stocks--those with low debt to equity
and strong earnings trends in place. Should we see a market correction in the
near future, we believe it will not be a significant one given the continued
"Goldilocks" fundamentals of the current economy.
For a comparison of the fund's performance since inception versus the Standard &
Poor's 500 Index and the Consumer Price Index, please refer to the chart below.
<PAGE>
THE JAMESTOWN BALANCED FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown
Balanced Fund, the Standard & Poor's 500 Index and the Consumer Price Index.
STANDARD & POOR'S 500 INDEX: THE JAMESTOWN BALANCED FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
07/03/89 10,000 07/03/89 10,000
09/30/89 10.71% 11,071 09/30/89 0.00% 10,000
12/31/89 2.06% 11,299 12/31/89 6.25% 10,625
03/31/90 -3.00% 10,960 03/31/90 -2.62% 10,347
06/30/90 6.28% 11,648 06/30/90 4.90% 10,853
09/30/90 -13.75% 10,047 09/30/90 -9.33% 9,841
12/31/90 8.97% 10,948 12/31/90 5.17% 10,350
03/31/91 14.53% 12,539 03/31/91 9.96% 11,380
06/30/91 -0.23% 12,510 06/30/91 -0.91% 11,277
09/30/91 5.35% 13,179 09/30/91 5.12% 11,854
12/31/91 8.38% 14,284 12/31/91 6.97% 12,681
03/31/92 -2.53% 13,922 03/31/92 -2.03% 12,423
06/30/92 1.90% 14,187 06/30/92 2.03% 12,675
09/30/92 3.15% 14,634 09/30/92 4.46% 13,241
12/31/92 5.03% 15,370 12/31/92 3.74% 13,736
03/31/93 4.36% 16,040 03/31/93 1.75% 13,976
06/30/93 0.48% 16,117 06/30/93 -0.26% 13,941
09/30/93 2.58% 16,533 09/30/93 2.49% 14,287
12/31/93 2.32% 16,916 12/31/93 0.32% 14,333
03/31/94 -3.79% 16,275 03/31/94 -1.58% 14,107
06/30/94 0.42% 16,343 06/30/94 0.91% 14,235
09/30/94 4.88% 17,141 09/30/94 1.64% 14,469
12/31/94 -0.02% 17,137 12/31/94 -0.83% 14,349
03/31/95 9.74% 18,807 03/31/95 8.67% 15,594
06/30/95 9.55% 20,602 06/30/95 7.60% 16,779
09/30/95 7.95% 22,239 09/30/95 5.50% 17,702
12/31/95 6.02% 23,578 12/31/95 4.75% 18,542
03/31/96 5.37% 24,844 03/31/96 3.27% 19,148
06/30/96 4.49% 25,959 06/30/96 3.05% 19,731
09/30/96 3.09% 26,761 09/30/96 2.41% 20,207
12/31/96 8.34% 28,992 12/31/96 6.21% 21,462
03/31/97 2.68% 29,769 03/31/97 0.18% 21,501
06/30/97 17.46% 34,966 06/30/97 11.31% 23,932
09/30/97 7.49% 37,585 09/30/97 4.97% 25,121
12/31/97 2.87% 38,665 12/31/97 2.43% 25,731
03/31/98 13.95% 44,059 03/31/98 10.65% 28,471
CONSUMER PRICE INDEX:
QTRLY
DATE RETURN BALANCE
07/03/89 10,000
09/30/89 0.75% 10,075
12/31/89 1.00% 10,176
03/31/90 2.01% 10,380
06/30/90 0.90% 10,474
09/30/90 1.71% 10,653
12/31/90 1.71% 10,835
03/31/91 0.90% 10,933
06/30/91 0.40% 10,977
09/30/91 0.60% 11,043
12/31/91 0.90% 11,142
03/31/92 0.70% 11,221
06/30/92 0.80% 11,311
09/30/92 0.70% 11,390
12/31/92 0.80% 11,481
03/31/93 0.90% 11,585
06/30/93 0.60% 11,654
09/30/93 0.40% 11,701
12/31/93 0.70% 11,783
03/31/94 0.50% 11,842
06/30/94 0.60% 11,913
09/30/94 0.90% 12,020
12/31/94 0.60% 12,093
03/31/95 0.80% 12,190
06/30/95 0.90% 12,300
09/30/95 0.40% 12,349
12/31/95 0.50% 12,411
03/31/96 0.80% 12,510
06/30/96 1.10% 12,649
09/30/96 0.44% 12,704
12/31/96 0.82% 12,809
03/31/97 0.69% 12,897
06/30/97 0.19% 12,922
09/30/97 0.44% 12,978
12/31/97 0.62% 13,059
03/31/98 0.12% 13,075
The Jamestown Balanced Fund Average Total Returns
1 Year 5 Years Since Inception*
28.40% 14.58% 12.31%
*Initial public offering of shares was July 3, 1989.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
THE JAMESTOWN BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 70,033,530
================
At value (Note 1) $ 96,403,552
Investments in repurchase agreements (Note 1) 4,833,000
Cash 589
Receivable for securities sold 977,601
Receivable for capital shares sold 304,390
Interest receivable 365,450
Dividends receivable 38,913
Other assets 6,639
----------------
TOTAL ASSETS 102,930,134
----------------
LIABILITIES
Dividends payable 30,345
Distributions payable 178,789
Payable for securities purchased 1,197,219
Payable for capital shares redeemed 25,180
Accrued advisory fees (Note 3) 54,647
Accrued administration fees (Note 3) 13,950
Other accrued expenses 21,717
----------------
TOTAL LIABILITIES 1,521,847
----------------
NET ASSETS $ 101,408,287
================
Net assets consist of:
Paid-in capital $ 75,047,485
Distributions in excess of net realized gains (12,198)
Undistributed net investment income 2,978
Net unrealized appreciation on investments 26,370,022
----------------
Net assets $ 101,408,287
================
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 5,835,774
================
Net asset value, offering price and redemption price per share (Note 1) $ 17.38
================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN BALANCED FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1998
<S> <C> <C>
INVESTMENT INCOME
Interest $ 1,980,449
Dividends 686,177
-------------
TOTAL INVESTMENT INCOME 2,666,626
-------------
EXPENSES
Investment advisory fees (Note 3) 561,887
Administrative fees (Note 3) 148,539
Professional fees 14,021
Custodian fees 13,983
Registration fees 11,035
Pricing costs 7,026
Trustees' fees and expenses 5,405
Postage and supplies 4,281
Insurance expense 4,163
Printing of shareholder reports 1,920
Other expenses 6,860
---------------
TOTAL EXPENSES 779,120
Expenses reimbursed through a directed
brokerage arrangement (Note 4) (24,000)
--------------
NET EXPENSES 755,120
-------------
NET INVESTMENT INCOME 1,911,506
--------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 9,533,601
Net change in unrealized appreciation/depreciation
on investments 12,603,990
--------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 22,137,591
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 24,049,097
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 1,911,506 $ 1,532,966
Net realized gains from security transactions 9,533,601 3,339,264
Net change in unrealized appreciation/depreciation
on investments 12,603,990 2,746,030
------------- ------------
Net increase in net assets from operations 24,049,097 7,618,260
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,934,092) (1,518,758)
From net realized gains from security transactions (10,800,423) (4,545,144)
------------- ------------
Decrease in net assets from distributions to shareholders (12,734,515) (6,063,902)
------------- ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 17,601,307 9,763,400
Net asset value of shares issued in reinvestment
of distributions to shareholders 12,174,707 5,853,635
Payments for shares redeemed (10,335,880) (8,094,099)
------------- ------------
Net increase in net assets from capital share transactions 19,440,134 7,522,936
------------- ------------
TOTAL INCREASE IN NET ASSETS 30,754,716 9,077,294
NET ASSETS:
Beginning of year 70,653,571 61,576,277
------------- ------------
End of year - (including undistributed net investment
income of $2,978 and $25,564, respectively) $ 101,408,287 $ 70,653,571
============= ============
Capital share activity:
Sold 1,041,126 631,119
Reinvested 735,126 383,386
Redeemed (599,080) (526,294)
------------- ------------
Net increase in shares outstanding 1,177,172 488,211
Shares outstanding, beginning of year 4,658,602 4,170,391
------------- ------------
Shares outstanding, end of year 5,835,774 4,658,602
============= ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN BALANCED FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
<CAPTION>
Years Ended March 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $15.17 $14.77 $12.76 $12.15 $12.49
------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.37 0.35 0.36 0.33 0.30
Net realized and unrealized gains (losses)
on investments 4.31 1.45 2.50 0.90 (0.18)
------- ------- ------- ------- -------
Total from investment operations 4.68 1.80 2.86 1.23 0.12
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.37) (0.35) (0.36) (0.33) (0.30)
Distributions from net realized gains (2.10) (1.05) (0.49) (0.29) (0.16)
------- ------- ------- ------- -------
Total distributions (2.47) (1.40) (0.85) (0.62) (0.46)
------- ------- ------- ------- -------
Net asset value at end of year $17.38 $15.17 $14.77 $12.76 $12.15
======= ======= ======= ======= =======
Total return 32.42% 12.29% 22.79% 10.54% 0.94%
======= ======= ======= ======= =======
Net assets at end of year (000's) $101,408 $70,654 $61,576 $52,062 $46,928
======== ======= ======= ======= =======
Ratio of gross expenses to average net assets 0.90% 0.91% 0.93% 0.99% 1.01%
Ratio of net expenses to average net assets (a) 0.87% 0.87% 0.88% 0.96% 0.98%
Ratio of net investment income to average net assets 2.21% 2.31% 2.52% 2.72% 2.47%
Portfolio turnover rate 90% 58% 72% 95% 123%
Average commission rate per share $0.0681 $0.0667 -- -- --
(a)Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement (Note 4).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 67.0%
Advertising - 1.1%
18,000 Interpublic Group of Companies, Inc. $ 1,118,250
-----------
Chemicals - 2.0%
24,500 Air Products & Chemicals, Inc. 2,030,438
-----------
Commercial Banking - 5.2%
25,300 Fannie Mae 1,600,225
33,400 First Union Corporation 1,895,450
25,000 NationsBank Corporation 1,823,438
-----------
5,319,113
-----------
Communications - 5.7%
61,000 Equifax, Inc. 2,226,500
11,500 Lucent Technologies, Inc. 1,470,562
42,000 MCI Communications 2,079,000
-----------
5,776,062
-----------
Computers/Computer Technology Services - 8.0%
21,000 Cisco Systems, Inc. (a) 1,435,875
28,200 Computer Sciences Corporation (a) 1,551,000
39,400 Diebold, Inc. 1,733,600
17,900 Intel Corporation 1,397,319
33,000 Sundstrand Corporation 1,996,500
-----------
8,114,294
-----------
Consumer Products - 14.5%
30,000 Avon Products, Inc. 2,340,000
15,000 Cendant Corporation (a) 594,375
38,200 Crane Company 2,024,600
27,000 General Electric Company 2,327,063
12,000 Gillette Company 1,424,250
27,000 Kimberly-Clark Corporation 1,353,375
23,000 Lilly (Eli) & Company 1,371,375
11,000 Procter & Gamble Company 928,125
35,000 Sherwin Williams Company 1,242,500
42,000 Sysco Corporation 1,076,250
-----------
14,681,913
-----------
Drugs/Medical Equipment - 5.2%
22,000 Abbott Laboratories 1,656,875
10,000 Merck and Company, Inc. 1,283,750
28,000 Schering-Plough Corporation 2,287,250
-----------
5,227,875
-----------
<PAGE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - Continued
Electronics - 1.6%
25,000 Hewlett-Packard Company $ 1,584,375
-----------
Entertainment - 0.7%
6,400 Walt Disney Company 683,200
-----------
Fire Systems - 2.3%
42,000 Tyco International Ltd. 2,294,250
-----------
Food Productions - 1.5%
48,000 Conagra, Inc. 1,542,000
-----------
Funeral Services - 1.6%
39,500 Service Corporation International 1,676,281
-----------
Health Care Centers - 1.0%
38,000 HealthSouth Corporation (a) 1,066,375
-----------
Hotels - 1.9%
105,000 Choice Hotel International, Inc. (a) 1,929,375
-----------
Insurance - 5.1%
11,000 American International Group 1,385,313
33,300 Conseco, Inc. 1,885,612
21,000 Jefferson-Pilot Corporation 1,867,688
-----------
5,138,613
-----------
Oil and Gas Drilling - 5.4%
31,000 Coastal Corporation 2,018,875
25,600 Schlumberger Ltd. 1,939,200
24,600 Texaco, Inc. 1,482,150
-----------
5,440,225
-----------
Oil Field Machinery and Equipment - 1.7%
36,500 Dresser Industries, Inc. 1,754,281
-----------
Retail Stores - 2.5%
50,000 AutoZone, Inc. (a) 1,693,750
20,000 Circuit City Stores, Inc. 855,000
-----------
2,548,750
-----------
Total Common Stocks (Cost $41,718,591) $ 67,925,670
-----------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
U.S. TREASURY & AGENCY OBLIGATIONS - 6.6%
U.S. Treasury Notes - 6.0%
$1,075,000 7.75%, due 11/30/1999 $ 1,111,109
2,050,000 6.50%, due 05/31/2001 2,099,651
2,935,000 5.625%, due 02/15/2006 2,912,518
-----------
6,123,278
-----------
U.S. Treasury Inflation-Protection Notes - 0.6%
393,518 3.625%, due 07/15/2002 389,583
209,094 3.375%, due 01/15/2007 202,723
-----------
592,306
-----------
Total U.S. Treasury & Agency Obligations
(Cost $6,702,500) $ 6,715,584
-----------
MORTGAGE-BACKED SECURITIES - 7.0%
Federal Home Loan Mortgage Corporation - 2.0%
$ 243,617 Pool #G50153, 4.50%, due 05/01/1999 $ 242,821
489,144 Pool #1490-PE, 5.75%, due 07/15/2006 488,072
592,033 Pool #1561-ZB, 6.00%, due 08/15/2006 592,033
475,000 Pool #1471, 7.00%, due 03/15/2008 488,357
175,000 Pool #1655-HB, 6.50%, due 10/01/2008 176,475
59,531 Pool #162-E, 7.00%, due 01/15/2020 59,419
-----------
2,047,177
-----------
Federal National Mortgage Association - 2.5%
388,338 Pool #73718, 7.23%, due 11/01/2003 406,177
348,674 Pool #375448, 6.66%, due 10/01/2004 356,846
400,000 Series #93-63-PE, 6.25%, due 06/25/2005 400,248
621,957 Pool #375296, 6.92%, due 08/01/2007 648,973
201,292 Pool #70, 8.50%, due 01/01/2012 211,811
178,976 Series #88-29-B, 9.50%, due 12/25/2018 193,125
295,632 Series #90-35-E, 9.50%, due 04/25/2020 320,113
-----------
2,537,293
-----------
Government National Mortgage Association - 1.1%
520,013 Pool #343536, 7.50%, due 02/15/2023 534,485
606,243 Pool #8482, 7.00%, adjustable rate, due 08/20/2024 621,496
-----------
1,155,981
-----------
Student Loan Marketing Association - 0.9%
875,000 Series #98-1-A1, 5.173%, due 01/25/2007 875,137
-----------
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES - Continued
Other Mortgage-Backed Securities - 0.5%
Lehman Brothers Mortgage Trust #91-2-A1,
$ 76,671 8.00%, due 03/20/1999 $ 77,270
Morgan Stanley Capital I #97-XL1-A1,
360,857 6.59%, due 10/03/2030 367,397
-----------
444,667
-----------
Total Mortgage-Backed Securities (Cost $6,981,572) $ 7,060,255
-----------
ASSET-BACKED SECURITIES - 2.1%
Advanta Mortgage Loan Trust #92-2-A2,
$ 351,053 7.03%, due 03/25/2011 $ 351,860
AFG Receivables Trust #95-A-A,
106,201 6.15%, due 09/15/2000 106,286
Fleetwood Credit Corporation Grantor Trust #95-A-A,
391,564 8.45%, due 11/15/2010 407,349
Green Tree Financial Corporation #98-A,
500,000 6.18%, due 04/01/2018 498,900
Nomura Asset Securities Corporation #98-D6-A1B,
475,000 6.59%, due 03/15/2030 481,457
NationsCredit Grantor Trust #96-1-A,
277,240 5.85%, due 09/15/2011 275,355
-----------
Total Asset-Backed Securities (Cost $2,124,391) $ 2,121,207
-----------
CORPORATE BONDS - 12.4%
Beneficial Corporation Medium Term Notes,
$ 275,000 9.35%, due 03/15/2001 $ 297,946
Caterpillar Financial Services Medium Term Notes,
450,000 6.80%, due 06/15/1999 454,932
Chrysler Financial Corporation,
1,000,000 5.90%, due 01/26/2001 995,120
Enron Corporation,
750,000 6.45%, due 11/15/2001 752,895
Equity Residential Properties,
875,000 6.65%, due 11/15/2003 877,765
Finova Capital Corporation,
1,000,000 6.25%, due 08/15/2000 1,002,590
Ford Motor Credit Medium Term Notes,
225,000 7.55%, due 07/19/1999 229,617
280,000 5.99%, due 02/27/2001 279,135
<PAGE>
<CAPTION>
Par Value Value
<S> <C> <C>
CORPORATE BONDS - Continued
GMAC Medium Term Notes,
$525,000 6.65%, due 05/24/2000 $ 531,431
International Paper Company,
735,000 8.68%, due 09/14/2001 794,491
International Lease Finance Corporation,
425,000 6.42%, due 09/11/2000 428,268
International Lease Finance Corporation Medium Term Notes,
425,000 6.55%, due 09/15/2000 429,509
KeyCorp Medium Term Notes,
675,000 6.75%, due 05/29/2001 684,909
Merrill Lynch and Company Medium Term Notes,
410,000 7.26%, due 03/25/2002 414,502
National City Corporation,
575,000 7.20%, due 05/15/2005 602,117
NationsBank Medium Term Notes,
500,000 5.80%, due 01/31/2001 496,795
Northern Trust Corporation Medium Term Notes,
100,000 9.00%, due 05/15/1998 100,347
Norwest Financial, Inc.,
140,000 6.05%, due 11/19/1999 140,354
Norfolk Southern Corporation,
210,000 7.35%, due 05/15/2007 223,507
SBC Communications, Inc.
400,000 6.875%, due 08/15/2006 417,540
185,000 6.625%, due 11/01/2009 189,327
Sears Roebuck Acceptance Corporation,
400,000 6.99%, due 09/30/2002 411,172
Southern California Edison Company,
700,000 6.17%, due 03/25/2003 704,060
Suntrust Banks,
310,000 6.125%, due 02/15/2004 307,424
TRW, Inc.,
400,000 6.25%, due 01/15/2010 387,592
Union Camp Corporation,
425,000 6.50%, due 11/15/2007 427,491
-----------
Total Corporate Bonds (Cost $12,506,476) $ 12,580,836
-----------
Total Investments at Value
(Cost $70,033,530) - 95.1% $ 96,403,552
-----------
<PAGE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (b) - 4.8%
Star Bank, N.A., 5.25%, dated 03/31/1998, due 04/01/1998
$4,833,000 repurchase proceeds $4,833,705 (Cost $4,833,000) $ 4,833,000
Total Investments and Repurchase Agreements
at Value - 99.9% $101,236,552
Other Assets in Excess of Liabilities - 0.1% 171,735
---------
Net Assets - 100.0% $101,408,287
============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA
II, Pool #8421, 7.375%, due 05/20/24; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/22; and $1,120,000 GNMA II, Pool #8359, 7.00% due 01/20/24. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985. The
Fund's pro-rata interest in the collateral at March 31, 1998 was $4,950,276.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Balanced Fund (the Fund) is a no-load, diversified series of the
Williamsburg Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Trust was organized as a Massachusetts business trust on July 18, 1988. The Fund
began operations on July 3, 1989.
The 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 following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded. It is expected that fixed income securities of the Fund will
ordinarily be traded on the over-the-counter market, and common stocks of the
Fund will ordinarily be traded on a national securities exchange, but may also
be traded on 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. If a pricing service cannot provide a
valuation, securities will be valued in good faith at fair market value using
methods consistent with those determined by the Board of Trustees.
Repurchase agreements -- The Fund generally enters into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market. At the time the Fund enters
into the joint repurchase agreement, the seller agrees that the value of the
underlying securities, including accrued interest, will at all times be equal to
or exceed the face amount of the repurchase agreement. In addition, the Fund
actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Discounts and premiums on securities purchased are amortized
in accordance with tax regulations. Dividend income is recorded on the
ex-dividend date. Dividends arising from net investment income are declared and
paid quarterly to shareholders of the Fund. Net realized short-term capital
gains, if any, may be distributed throughout the year and net realized long-term
capital gains, if any, are distributed at least once each year. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles.
<PAGE>
Security transactions -- Security transactions are accounted for on trade date.
Cost of securities sold is determined on a specific identification basis.
Securities traded on a "to-be-announced" basis -- The Fund occasionally trades
securities on a "to-be-announced" (TBA) basis. In a TBA transaction, the Fund
has committed to purchase securities for which all specific information is not
yet known at the time of the trade, particularly the face amount in
mortgage-backed securities transactions. Securities purchased on a TBA basis are
not settled until they are delivered to the Fund, normally 15 to 45 days later.
These transactions are subject to market fluctuations and their current value is
determined in the same manner as for other portfolio securities.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilites at the
date of the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of
portfolio investments of $70,046,130 as of March 31, 1998:
Gross unrealized appreciation....................................$26,558,490
Gross unrealized depreciation.................................... (201,068)
------------
Net unrealized appreciation..................................... $26,357,422
=============
The difference between the Federal income tax cost of portfolio investments and
financial statement cost is due to certain timing differences in the recognition
of capital losses under generally accepted accounting principles and income tax
regulations.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $79,927,043 and $74,274,121, respectively.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Lowe, Brockenbrough & Tattersall, Inc.
(the Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .65% of its
average daily net assets up to $250 million; .60% of the next $250 million of
such net assets; and .55% of such net assets in excess of $500 million. Certain
trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .20% of its average daily net assets up to $25
million; .175% of the next $25 million of such net assets; and .15% of such net
assets in excess of $50 million, subject to a $2,000 minimum monthly fee. In
addition, the Fund pays out-of-pocket expenses including, but not limited to,
postage, supplies, and cost of pricing the Fund's portfolio securities. Certain
officers of the Trust are also officers of CFS.
4. DIRECTED BROKERAGE ARRANGEMENT
In order to reduce the total operating expenses of the Fund, the Fund's
custodian fees and a portion of other operating expenses have been paid through
an arrangement with a third-party broker-dealer who is compensated through
commission trades. Payment of expenses by the broker-dealer is based on a
percentage of commissions earned. Expenses reimbursed through the directed
brokerage arrangement totaled $24,000 for the year ended March 31, 1998.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Balanced Fund (a series of The Williamsburg Investment Trust),
including the portfolio of investments, as of March 31, 1998, and the related
statement of operations for the year then ended, and the statement of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Balanced Fund as of March 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
THE JAMESTOWN EQUITY FUND
-------------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
------------------ -------------
Lowe, Brockenbrough & Tattersall, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1998
PERFORMANCE OF THE JAMESTOWN EQUITY FUND
The fiscal year ending March 31, 1998, was a very strong one for The Jamestown
Equity Fund in both absolute results as well as in relative results. For the 12
month period, your fund returned 43.7% after expenses versus 44.4% for the
comparable Lipper Index. The Standard & Poor's 500 Index was up 48% for the same
12 month period.
The sectors outperforming the market were finance, communication services, and
consumer cyclicals in particular, with capital goods, health care, and
technology slightly ahead of the S&P. Those sectors lagging the market were
consumer staples, transportation, utility, energy, and basic industries. Your
fund was well represented in the finance, technology, and consumer staples
sectors. We had underweightings in the communication services, utility, and
transportation sectors.
For the past three years, the Jamestown Equity Fund has appreciated at an
annualized rate of 28.5%, slightly ahead of the Lipper Growth Index of 27.9%.
With the market now selling at lofty price-to-earnings multiples (25x), it is
dangerous to be lulled into a belief that these strong returns will continue
each year. There will be a regression to the mean, but with interest rates and
inflation rates staying low, we are hopeful that this market can continue for at
least a short period. Inflation appears to be very well contained, and the same
can be said for the wage component of the consumer price index.
We will continue to invest in high quality stocks--those with low debt to equity
and strong earnings trends in place. Should we see a market correction in the
near future, we believe it will not be a significant one given the continued
"Goldilocks" fundamentals of the current economy.
For a comparison of the fund's performance since inception versus the
Standard & Poor's 500 Index and the Consumer Price Index, please refer to the
chart below.
<PAGE>
THE JAMESTOWN EQUITY FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown
Equity Fund, the Standard & Poor's 500 Index and the Consumer Price Index.
STANDARD & POOR'S 500 INDEX: THE JAMESTOWN EQUITY FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
12/01/92 10,000 12/01/92 10,000
12/31/92 1.23% 10,123 12/31/92 1.68% 10,168
03/31/93 4.36% 10,564 03/31/93 0.54% 10,223
06/30/93 0.48% 10,615 06/30/93 -1.00% 10,121
09/30/93 2.58% 10,889 09/30/93 1.85% 10,308
12/31/93 2.32% 11,142 12/31/93 0.67% 10,377
03/31/94 -3.79% 10,719 03/31/94 -0.82% 10,291
06/30/94 0.42% 10,764 06/30/94 1.64% 10,460
09/30/94 4.88% 11,290 09/30/94 1.70% 10,637
12/31/94 -0.02% 11,287 12/31/94 -1.35% 10,493
03/31/95 9.74% 12,387 03/31/95 10.17% 11,560
06/30/95 9.55% 13,569 06/30/95 8.46% 12,538
09/30/95 7.95% 14,648 09/30/95 6.80% 13,390
12/31/95 6.02% 15,530 12/31/95 5.22% 14,089
03/31/96 5.37% 16,363 03/31/96 5.03% 14,798
06/30/96 4.49% 17,097 06/30/96 4.05% 15,397
09/30/96 3.09% 17,626 09/30/96 2.74% 15,819
12/31/96 8.34% 19,095 12/31/96 7.83% 17,057
03/31/97 2.68% 19,607 03/31/97 0.00% 17,057
06/30/97 17.46% 23,030 06/30/97 15.33% 19,671
09/30/97 7.49% 24,755 09/30/97 5.99% 20,849
12/31/97 2.87% 25,466 12/31/97 2.70% 21,411
03/31/98 13.95% 29,018 03/31/98 14.51% 24,518
CONSUMER PRICE INDEX:
QTRLY
DATE RETURN BALANCE
12/01/92 10,000
12/31/92 0.20% 10,020
03/31/93 0.90% 10,110
06/30/93 0.60% 10,171
09/30/93 0.40% 10,212
12/31/93 0.70% 10,283
03/31/94 0.50% 10,334
06/30/94 0.60% 10,396
09/30/94 0.90% 10,490
12/31/94 0.60% 10,553
03/31/95 0.80% 10,638
06/30/95 0.90% 10,734
09/30/95 0.40% 10,777
12/31/95 0.50% 10,831
03/31/96 0.80% 10,917
06/30/96 1.10% 11,038
09/30/96 0.44% 11,086
12/31/96 0.82% 11,178
03/31/97 0.69% 11,255
06/30/97 0.19% 11,276
09/30/97 0.44% 11,325
12/31/97 0.62% 11,396
03/31/98 0.12% 11,409
The Jamestown Equity Fund Average Total Returns
1 Year 5 Years Since Inception*
43.74% 19.12% 18.31%
*Initial public offering of shares was December 1, 1992.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
THE JAMESTOWN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 32,982,706
=============
At value (Note 1) $ 48,803,931
Investments in repurchase agreements (Note 1) 3,527,000
Cash 115
Receivable for securities sold 977,601
Receivable for capital shares sold 24,000
Dividends receivable 27,940
Interest receivable 514
Other assets 2,761
-------------
TOTAL ASSETS 53,363,862
-------------
LIABILITIES
Dividends payable 5,194
Distributions payable 118,987
Payable for securities purchased 957,776
Payable for capital shares redeemed 30,600
Accrued advisory fees (Note 3) 28,147
Accrued administration fees (Note 3) 7,950
Other accrued expenses 1,103
-------------
TOTAL LIABILITIES 1,149,757
-------------
NET ASSETS $ 52,214,105
=============
Net assets consist of:
Paid-in capital $ 36,403,344
Distributions in excess of net realized gains (14,486)
Undistributed net investment income 4,022
Net unrealized appreciation on investments 15,821,225
-------------
Net assets $ 52,214,105
=============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 2,589,737
=============
Net asset value, offering price and redemption
price per share (Note 1) $ 20.16
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN EQUITY FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1998
<CAPTION>
INVESTMENT INCOME
<S> <C>
Dividends $ 451,263
Interest 146,628
------------
TOTAL INVESTMENT INCOME 597,891
------------
EXPENSES
Investment advisory fees (Note 3) 259,757
Administration fees (Note 3) 76,276
Professional fees 9,021
Registration fees 8,115
Custodian fees 6,418
Trustees' fees and expenses 5,405
Postage and supplies 3,864
Insurance expense 2,136
Other expenses 670
------------
TOTAL EXPENSES 371,662
Expenses reimbursed through a directed brokerage arrangement (Note 4) (12,000)
------------
NET EXPENSES 359,662
------------
NET INVESTMENT INCOME 238,229
------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 3,855,317
Net change in unrealized appreciation/depreciation on investments 10,606,115
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 14,461,432
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 14,699,661
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 238,229 $ 211,890
Net realized gains from security transactions 3,855,317 777,388
Net change in unrealized appreciation/depreciation
on investments 10,606,115 2,328,613
----------------- ----------------
Net increase in net assets from operations 14,699,661 3,317,891
----------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (242,370) (206,587)
From net realized gains from security transactions (4,379,490) (521,388)
----------------- ----------------
Decrease in net assets from distributions to shareholders (4,621,860) (727,975)
----------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 10,499,561 11,827,742
Net asset value of shares issued in reinvestment
of distributions to shareholders 4,351,536 671,223
Payments for shares redeemed (3,895,041) (1,765,155)
----------------- ----------------
Net increase in net assets from capital share transactions 10,956,056 10,733,810
----------------- ----------------
TOTAL INCREASE IN NET ASSETS 21,033,857 13,323,726
NET ASSETS:
Beginning of year 31,180,248 17,856,522
----------------- ----------------
End of year - (including undistributed net investment
income of $4,022 and $8,163, respectively) $ 52,214,105 $ 31,180,248
================= ================
Capital share activity:
Sold 571,636 788,755
Reinvested 236,191 43,245
Redeemed (209,264) (120,237)
----------------- ----------------
Net increase in shares outstanding 598,563 711,763
Shares outstanding, beginning of year 1,991,174 1,279,411
----------------- ----------------
Shares outstanding, end of year 2,589,737 1,991,174
================= ================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
<CAPTION>
Years ended March 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $15.66 $13.96 $11.29 $10.19 $10.18
------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.11 0.13 0.15 0.10 0.08
Net realized and unrealized gains (losses)
on investments 6.47 2.00 2.98 1.15 (0.01)
------- ------- ------- ------- -------
Total from investment operations 6.58 2.13 3.13 1.25 0.07
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.11) (0.13) (0.15) (0.12) (0.06)
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)
------- ------- ------- ------- -------
Net asset value at end of year $20.16 $15.66 $13.96 $11.29 $10.19
======= ======= ======= ======= =======
Total return 43.74% 15.27% 28.00% 12.33% 0.67%
======= ======= ======= ======= =======
Net assets at end of year (000's) $52,214 $31,180 $17,857 $8,111 $2,811
======= ======= ======= ======= =======
Ratio of gross expenses to average net assets 0.93% 0.98% 1.14% 1.99% 3.16%
Ratio of net expenses to average net assets 0.90%(a) 0.92%(a) 1.01%(a) 1.44%(b) 1.50%(b)
Ratio of net investment income to average net assets 0.60% 0.85% 1.27% 1.18% 0.82%
Portfolio turnover rate 59% 44% 54% 48% 92%
Average commission rate per share $0.0686 $0.0688 -- -- --
(a) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement (Note 4).
(b) Ratios were determined based on net expenses after the Adviser waived all
or a portion of its advisory fee and/or reimbursed the Fund for operating
expenses.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN EQUITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 93.5%
Advertising - 1.3%
11,000 Interpublic Group of Companies, Inc. $ 683,375
-------------------
Chemicals - 2.9%
18,400 Air Products & Chemicals, Inc. 1,524,900
-------------------
Commercial Banking - 6.9%
17,000 Fannie Mae 1,075,250
24,000 First Union Corporation 1,362,000
16,000 NationsBank Corporation 1,167,000
-------------------
3,604,250
-------------------
Communications - 8.7%
46,000 Equifax, Inc. 1,679,000
10,000 Lucent Technologies, Inc. 1,278,750
32,000 MCI Communications 1,584,000
-------------------
4,541,750
-------------------
Computers/Computer Technology Services - 12.1%
16,500 Cisco Systems, Inc. (a) 1,128,188
20,000 Computer Sciences Corporation (a) 1,100,000
31,000 Diebold, Inc. 1,364,000
14,800 Intel Corporation 1,155,325
26,000 Sunstrand Corporation 1,573,000
-------------------
6,320,513
-------------------
Consumer Products - 18.2%
22,500 Avon Products, Inc. 1,755,000
12,000 Cendant Corporation (a) 475,500
27,000 Crane Company 1,431,000
17,500 General Electric Company 1,508,281
8,500 Gillette Company 1,008,844
20,000 Kimberly-Clark Corporation 1,002,500
6,000 Procter & Gamble Company 506,250
24,000 Sherwin Williams Company 852,000
36,800 Sysco Corporation 943,000
-------------------
9,482,375
-------------------
Drugs/Medical Equipment - 8.1%
11,500 Abbott Laboratories 866,094
18,000 Lilly (Eli) & Company 1,073,250
7,500 Merck and Company, Inc. 962,812
16,000 Schering-Plough Corporation 1,307,000
-------------------
4,209,156
-------------------
<PAGE>
<CAPTION>
Shares Value
COMMON STOCKS - Continued
<S> <C> <C>
Electronics - 2.2%
18,000 Hewlett-Packard Company $ 1,140,750
-------------------
Entertainment - 1.1%
5,100 Walt Disney Company 544,425
-------------------
Fire Systems - 3.2%
31,000 Tyco International Ltd. 1,693,375
-------------------
Food Productions - 2.3%
37,000 Conagra, Inc. 1,188,625
-------------------
Funeral Services - 2.4%
30,000 Service Corporation International 1,273,125
-------------------
Health Care Centers - 1.5%
28,000 HealthSouth Corporation (a) 785,750
-------------------
Hotels - 2.7%
78,000 Choice Hotel International, Inc. (a) 1,433,250
-------------------
Insurance - 7.2%
7,700 American International Group 969,719
25,100 Conseco, Inc. 1,421,288
15,500 Jefferson-Pilot Corporation 1,378,531
-------------------
3,769,538
-------------------
Oil and Gas Drilling - 7.8%
23,000 Coastal Corporation 1,497,875
19,700 Schlumberger Ltd. 1,492,275
18,000 Texaco, Inc. 1,084,500
-------------------
4,074,650
-------------------
Oil Field Machinery and Equipment - 2.5%
27,000 Dresser Industries, Inc. 1,297,687
-------------------
<PAGE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - Continued
Retail Stores - 2.4%
36,500 AutoZone, Inc. (a) $ 1,236,437
-------------------
Total Common Stocks (Cost $32,982,706) $ 48,803,931
-------------------
<CAPTION>
Face
Amount
REPURCHASE AGREEMENTS (b) - 6.7%
$3,527,000 Star Bank, N.A., 5.25%, dated 03/31/1998, due 04/01/1998,
repurchase proceeds $3,527,514 (Cost $3,527,000) $ 3,527,000
-------------------
Total Investments and Repurchase Agreements
at Value - 100.2% $ 52,330,931
Liabilities in Excess of Other Assets - (0.2)% (116,826)
-------------------
Net Assets - 100.0% $ 52,214,105
===================
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $12,715,000 GNMA
II, Pool #8421, 7.375%, due 05/20/24; $14,335,000 GNMA II, Pool #8932, 7.00%,
due 03/20/22; and $1,120,000 GNMA II, Pool #8359, 7.00% due 01/20/24. The
aggregate market value of the collateral at March 31, 1998 was $28,948,985. The
Fund's pro-rata interest in the collateral at March 31, 1998 was $3,618,623.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Equity Fund (the Fund) is a no-load, diversified series of the
Williamsburg Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Trust was organized as a Massachusetts business trust on July 18, 1988. The Fund
began operations on December 1, 1992.
The 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 following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded.
Repurchase agreements -- The Fund generally enters into joint repurchase
agreements with other funds within the Trust. The joint repurchase agreement,
which is collateralized by U.S. Government obligations, is valued at cost which,
together with accrued interest, approximates market. At the time the Fund enters
into the joint repurchase agreement, the seller agrees that the value of the
underlying securities, including accrued interest, will at all times be equal to
or exceed the face amount of the repurchase agreement. In addition, the Fund
actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Dividend income is recorded on the ex-dividend date.
Dividends arising from net investment income are declared and paid quarterly to
shareholders of the Fund. Net realized short-term capital gains, if any, may be
distributed throughout the year and net realized long-term capital gains, if
any, are distributed at least once each year. Income distributions and capital
gain distributions are determined in accordance with income tax regulations,
which may differ from generally accepted accounting principles.
Security transactions -- Security transactions are accounted for on trade
date. Cost of securities sold is determined on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of $32,997,876 as of March 31, 1998:
Gross unrealized appreciation......................................$15,903,238
Gross unrealized depreciation..................................... (97,183)
-----------
Net unrealized appreciation........................................$15,806,055
===========
The difference between the Federal income tax cost of portfolio investments and
financial statement cost is due to certain timing differences in the recognition
of capital losses under generally accepted accounting principles and income tax
regulations.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $27,951,286 and $21,883,675, respectively.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Lowe, Brockenbrough & Tattersall, Inc.
(the Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .65% of its
average daily net assets up to $500 million and .50% of such net assets in
excess of $500 million. Certain trustees and officers of the Trust are also
officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .20% of its average daily net assets up to $25
million; .175% of the next $25 million of such net assets; and .15% of such net
assets in excess of $50 million, subject to a $2,000 minimum monthly fee. In
addition, the Fund pays out-of-pocket expenses including, but not limited to,
postage, supplies and costs of pricing the Fund's portfolio securities. Certain
officers of the Trust are also officers of CFS.
<PAGE>
4. DIRECTED BROKERAGE ARRANGEMENT
In order to reduce the total operating expenses of the Fund, the Fund's
custodian fees and a portion of other operating expenses have been paid through
an arrangement with a third-party broker-dealer who is compensated through
commission trades. Payment of expenses by the broker-dealer is based on a
percentage of commissions earned. Expenses reimbursed through the directed
brokerage arrangement totaled $12,000 for the year ended March 31, 1998.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Equity Fund (a series of The Williamsburg Investment Trust),
including the portfolio of investments, as of March 31, 1998, and the related
statement of operations for the year then ended, and the statement of changes in
net assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Equity Fund as of March 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN
INTERNATIONAL EQUITY FUND
August 1, 1998
A Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVE AND POLICIES ......................................... 2
DESCRIPTION OF BOND RATINGS ............................................... 9
INVESTMENT LIMITATIONS .................................................... 12
TRUSTEES AND OFFICERS ..................................................... 14
INVESTMENT ADVISOR ........................................................ 19
SUB-ADVISOR ............................................................... 20
ADMINISTRATOR ............................................................. 21
OTHER SERVICES ............................................................ 21
BROKERAGE ................................................................. 22
SPECIAL SHAREHOLDER SERVICES .............................................. 23
PURCHASE OF SHARES ........................................................ 25
REDEMPTION OF SHARES ...................................................... 25
NET ASSET VALUE DETERMINATION ............................................. 26
ALLOCATION OF TRUST EXPENSES .............................................. 26
ADDITIONAL TAX INFORMATION ................................................ 27
CAPITAL SHARES AND VOTING ................................................. 29
CALCULATION OF PERFORMANCE DATA ........................................... 30
FINANCIAL STATEMENTS AND REPORTS .......................................... 32
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Jamestown International Equity
Fund (the "Fund") dated August 1, 1998. The Prospectus may be obtained from the
Fund, at the address and phone number shown above, at no charge.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
FOREIGN SECURITIES. The Fund will invest primarily in foreign securities,
including those traded domestically as American Depository Receipts (ADRs).
Foreign securities investment presents special considerations not typically
associated with investments in domestic securities. Foreign taxes may reduce
income. Currency exchange rates and regulations may cause fluctuation in the
value of foreign securities. Foreign securities are subject to different
regulatory environments than in the United States and, compared to the United
States, there may be a lack of uniform accounting, auditing and financial
reporting standards, less volume and liquidity and more volatility, less public
information, and less regulation of foreign issuers. Countries have been known
to expropriate or nationalize assets, and foreign investments may be subject to
political, financial or social instability or adverse diplomatic developments.
There may be difficulties in obtaining service of process on foreign issuers and
difficulties in enforcing judgments with respect to claims under the U.S.
securities laws against such issuers. Favorable or unfavorable differences
between U.S. and foreign economies could affect foreign securities values. The
U.S. Government has, in the past, discouraged certain foreign investments by
U.S. investors through taxation or other restrictions and it is possible that
such restrictions could be imposed again.
WARRANTS AND RIGHTS. Warrants are essentially options to purchase equity
securities at specific prices and are valid for a specific period of time.
Prices of warrants do not necessarily move in concert with the prices of the
underlying securities. Rights are similar to warrants but generally have a short
duration and are distributed directly by the issuer to its shareholders. Rights
and warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The value of the Fund's portfolio
securities which are invested in non-U.S. dollar denominated instruments as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and the Fund
may incur costs in connection with conversions between various currencies. The
Fund will conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through forward contracts to purchase or sell foreign currencies. A
forward foreign currency exchange contract involves an obligation
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to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded directly
between currency traders (usually large commercial banks) and their customers.
The Fund will not, however, hold foreign currency except in connection with
purchase and sale of foreign portfolio securities.
The Fund will enter into forward foreign currency exchange contracts as
described hereafter. When the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to establish
the cost or proceeds relative to another currency. The forward contract may be
denominated in U.S. dollars or may be a "cross-currency" contract where the
forward contract is denominated in a currency other than U.S. dollars. However,
this tends to limit potential gains which might result from a positive change in
such currency relationships.
The forecasting of a short-term currency market movement is extremely difficult
and the successful execution of a short-term hedging strategy is highly
uncertain. The Fund may enter into such forward contracts if, as a result, not
more than 50% of the value of its total assets would be committed to such
contracts. Under normal circumstances, consideration of the prospect for
currency parities will be incorporated into the longer term investment decisions
made with regard to overall diversification strategies. However, the Trustees
believe that it is important to have the flexibility to enter into forward
contracts when the Sub-Advisor determines it to be in the best interests of the
Fund. The Custodian will segregate cash, U.S. Government obligations or other
liquid securities in an amount not less than the value of the Fund's total
assets committed to foreign currency exchange contracts entered into under this
type of transaction. If the value of the segregated securities declines,
additional cash or securities will be added on a daily basis, i.e., "marked to
market," so that the segregated amount will not be less than the amount of the
Fund's commitments with respect to such contracts.
Generally, the Fund will not enter into a forward foreign currency exchange
contract with a term of greater than 90 days. At the maturity of the contract,
the Fund may either sell the portfolio security and make delivery of the foreign
currency, or may retain the security and terminate the obligation to deliver the
foreign currency by purchasing an "offsetting" forward contract with the same
currency trader obligating the Fund to purchase, on the same maturity date, the
same amount of the foreign currency.
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<PAGE>
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the contract. Accordingly, it may be
necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security if
its market value exceeds the amount of foreign currency the Fund is obligated to
deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between entering into a forward contract for the sale of a
foreign currency and the date the Fund enters into an offsetting contract for
the purchase of the foreign currency, the Fund will realize a gain to the extent
the price of the currency the Fund has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency the Fund has agreed
to purchase exceeds the price of the currency the Fund has agreed to sell.
The Fund's dealings in forward foreign currency exchange contracts will be
limited to the transactions described above. The Fund is not required to enter
into such transactions with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by the Sub-Advisor. It
should also be realized that this method of protecting the value of the Fund's
portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities held by the
Fund. It simply establishes a rate of exchange which one can achieve at some
future point in time. Additionally, although such contracts tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time, they tend to limit any potential gain which might result should the value
of such currency increase.
WRITING COVERED CALL OPTIONS. The Fund may write covered call options on equity
securities or futures contracts to earn premium income, to assure a definite
price for a security it has considered selling, or to close out options
previously purchased. A call option gives the holder (buyer) the right to
purchase a security or futures contract at a specified price (the exercise
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<PAGE>
price) at any time until a certain date (the expiration date). A call option is
"covered" if the Fund owns the underlying security subject to the call option at
all times during the option period. A covered call writer is required to deposit
in escrow the underlying security in accordance with the rules of the exchanges
on which the option is traded and the appropriate clearing agency.
The writing of covered call options is a conservative investment technique which
the Sub-Advisor believes involves relatively little risk. However, there is no
assurance that a closing transaction can be effected at a favorable price.
During the option period, the covered call writer has, in return for the premium
received, given up the opportunity for capital appreciation above the exercise
price should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security decline.
The Fund may write covered call options if, immediately thereafter, not more
than 30% of its net assets would be committed to such transactions. As long as
the Securities and Exchange Commission continues to take the position that
unlisted options are illiquid securities, the Fund will not commit more than 15%
of its net assets to unlisted covered call transactions and other illiquid
securities.
WRITING COVERED PUT OPTIONS. The Fund may write covered put options on equity
securities and futures contracts to assure a definite price for a security if it
is considering acquiring the security at a lower price than the current market
price or to close out options previously purchased. A put option gives the
holder of the option the right to sell, and the writer has the obligation to
buy, the underlying security at the exercise price at any time during the option
period. The operation of put options in other respects is substantially
identical to that of call options. When the Fund writes a covered put option, it
maintains in a segregated account with its Custodian cash or liquid securities
in an amount not less than the exercise price at all times while the put option
is outstanding.
The risks involved in writing put options include the risk that a closing
transaction cannot be effected at a favorable price and the possibility that the
price of the underlying security may fall below the exercise price, in which
case the Fund may be required to purchase the underlying security at a higher
price than the market price of the security at the time the option is exercised.
The Fund may not write a put option if, immediately thereafter, more than 25% of
its net assets would be committed to such transactions.
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<PAGE>
OPTIONS TRANSACTIONS GENERALLY. Option transactions in which the Fund may engage
involve the specific risks described above as well as the following risks: the
writer of an option may be assigned an exercise at any time during the option
period; disruptions in the markets for underlying instruments could result in
losses for options investors; imperfect or no correlation between the option and
the securities being hedged; the insolvency of a broker could present risks for
the broker's customers; and market imposed restrictions may prohibit the
exercise of certain options. In addition, the option activities of the Fund may
affect its portfolio turnover rate and the amount of brokerage commissions paid
by the Fund. The success of the Fund in using the option strategies described
above depends, among other things, on the Sub-Advisor's ability to predict the
direction and volatility of price movements in the options, futures contracts
and securities markets and the Sub-Advisor's ability to select the proper time,
type and duration of the options.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities;
however, the aggregate of portfolio securities loaned will not exceed 25% of the
value of the Fund's net assets, measured at the time any such loan is made.
Under applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Fund receives amounts equal to the interest on loaned securities and also
receives one or more of (a) negotiated loan fees, (b) interest on securities
used as collateral, or (c) interest on short-term debt securities purchased with
such collateral; either type of interest may be shared with the borrower. The
Fund may also pay fees to placing brokers as well as custodian and
administrative fees in connection with loans. Fees may only be paid to a placing
broker provided that the Trustees determine that the fee paid to the placing
broker is reasonable and based solely upon services rendered, that the Trustees
separately consider the propriety of any fee shared by the placing broker with
the borrower, and that the fees are not used to compensate the Advisor, the
Sub-Advisor or any affiliated person of the Trust or an affiliated person of the
Advisor, the Sub-Advisor or other affiliated person. The terms of the Fund's
loans must meet applicable tests under the Internal Revenue Code and permit the
Fund to reacquire loaned securities on five days' notice or in time to vote on
any important matter.
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<PAGE>
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time the
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Fund holds a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Sub-Advisor will carefully consider the creditworthiness during
the term of the repurchase agreement. Repurchase agreements are considered as
loans collateralized by the Repurchase Securities, such agreements being defined
as "loans" under the Investment Company Act of 1940 (the "1940 Act"). The return
on such "collateral" may be more or less than that from the repurchase
agreement. The market value of the resold securities will be monitored so that
the value of the "collateral" is at all times as least equal to the value of the
loan, including the accrued interest earned thereon. All Repurchase Securities
will be held by the Fund's custodian either directly or through a securities
depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Fund. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and
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<PAGE>
are a source of financing used extensively in international trade. When a bank
"accepts" such a time draft, it assumes liability for its payment. When the Fund
acquires a Bankers' Acceptance, the bank which "accepted" the time draft is
liable for payment of interest and principal when due. The Bankers' Acceptance,
therefore, carries the full faith and credit of such bank. A CERTIFICATE OF
DEPOSIT ("CD") is an unsecured interest-bearing debt obligation of a bank. CDs
acquired by the Fund would generally be in amounts of $100,000 or more.
COMMERCIAL PAPER is an unsecured, short term debt obligation of a bank,
corporation or other borrower. Commercial Paper maturity generally ranges from
two to 270 days and is usually sold on a discounted basis rather than as an
interest-bearing instrument. The Fund will invest in Commercial Paper only if it
is rated in the highest rating category by any nationally recognized statistical
rating organization ("NRSRO") or, if not rated, the issuer must have an
outstanding unsecured debt issue rated in the three highest categories by any
NRSRO or, if not so rated, be of equivalent quality in the Sub-Advisor's
assessment. Commercial Paper may include Master Notes of the same quality.
MASTER NOTES are unsecured obligations which are redeemable upon demand of the
holder and which permit the investment of fluctuating amounts at varying rates
of interest. Master Notes are acquired by the Fund only through the Master Note
program of the Fund's custodian, acting as administrator thereof. The
Sub-Advisor will monitor, on a continuous basis, the earnings power, cash flow
and other liquidity ratios of the issuer of a Master Note held by the Fund.
U.S. GOVERNMENT SECURITIES. The Fund may invest in debt obligations which are
issued or guaranteed by the U.S. Government, its agencies and instrumentalities
("U.S. Government Securities") as described herein. U.S. Government Securities
include the following securities: (1) U.S. Treasury obligations of various
interest rates, maturities and issue dates, such as U.S. Treasury bills (mature
in one year or less), U.S. Treasury notes (mature in one to seven years), and
U.S. Treasury bonds (mature in more than seven years), the payments of principal
and interest of which are all backed by the full faith and credit of the U.S.
Government; (2) obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, some of which are backed by the full faith and credit of the
U.S. Government, e.g., obligations of the Government National Mortgage
Association ("GNMA"), the Farmers Home Administration and the Export Import
Bank; some of which do not carry the full faith and credit of the U.S.
Government but which are supported by the right of the issuer to borrow from the
U.S. Government, e.g., obligations of the Tennessee Valley Authority, the U.S.
Postal Service, the Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan Mortgage Corporation ("FHLMC"); and some of which are backed
only by the credit of the issuer itself, e.g., obligations
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<PAGE>
of the Student Loan Marketing Association, the Federal Home Loan Banks and the
Federal Farm Credit Bank; and (3) any of the foregoing purchased subject to
repurchase agreements as described herein. The Fund does not intend to invest in
"zero coupon" Treasury securities. The guarantee of the U.S. Government does not
extend to the yield or value of the Fund's shares.
Obligations of GNMA, FNMA and FHLMC may include direct pass-through
"Certificates," representing undivided ownership interests in pools of
mortgages. Such Certificates are guaranteed as to payment of principal and
interest (but not as to price and yield) by the U.S. Government or the issuing
agency. Mortgage Certificates are subject to more rapid prepayment than their
stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates and, as a result, the
proceeds from such prepayments may be reinvested in instruments which have lower
yields. To the extent such securities were purchased at a premium, such
prepayments could result in capital losses. The U.S. Government does not
guarantee premiums and market value of U.S. Government Securities.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Sub-Advisor felt such action was appropriate. In such a
case, the Fund could incur a short-term gain or loss.
DESCRIPTION OF BOND RATINGS
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Sub-Advisor believes that the quality of fixed-income securities in which the
Fund may invest should be
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continuously reviewed and that individual analysts give different weightings to
the various factors involved in credit analysis. A rating is not a
recommendation to purchase, sell or hold a security because it does not take
into account market value or suitability for a particular investor. When a
security has received a rating from more than one NRSRO, each rating is
evaluated independently. Ratings are based on current information furnished by
the issuer or obtained by the NRSROs from other sources that they consider
reliable. Ratings may be changed, suspended or withdrawn as a result of changes
in or unavailability of such information, or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S BOND RATINGS:
Aaa: Bonds rated Aaa are judged to be of the best quality. These bonds
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large in Aa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements that make the long term
risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present that suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
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DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S BOND RATINGS:
Aaa: This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
Aa: Bonds rated AA also qualify as high quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S BOND RATINGS:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
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BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
DESCRIPTION OF DUFF & PHELPS CREDIT RATING CO.'S BOND RATINGS:
AAA: This is the highest rating credit quality. The risk factors are
negligible, being only slightly more than for risk- free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average protection factors. However risk factors are
more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund. A "majority" for this purpose, means the lesser of (i) 67%
of the Fund's outstanding shares represented in person or by proxy at a meeting
at which more than 50% of its outstanding shares are represented, or (ii) more
than 50% of its outstanding shares.
Under these limitations, the Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one corporate issuer or purchase more than 10% of the outstanding
voting securities or of any class of securities of any one corporate
issuer;
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
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(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Advisor or Sub-Advisor who own beneficially more than
1/2 of 1% of the outstanding securities of such issuer together own more
than 5% of the outstanding securities of such issuer;
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Fund may
invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things, and the Fund may
invest in certain mortgage backed securities as described in the Prospectus
under "Investment Objective, Investment Policies and Risk Considerations";
(6) Underwrite securities issued by others, except to the extent the Fund may
be deemed to be an underwriter under the federal securities laws in
connection with the disposition of portfolio securities;
(7) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
(8) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);
(9) Make loans of money or securities, except that the Fund may (a) make loans
of its portfolio securities in amounts not in excess of 25% of its net
assets, and (b) invest in repurchase agreements;
(10) Issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets,
or (b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities if, immediately after such
borrowing, the value of the Fund's assets, including all borrowings then
outstanding, less its liabilities (excluding all borrowings), is equal to
at least 300% of the aggregate amount of borrowings then outstanding, and
may pledge its assets to secure all such borrowings;
- 13 -
<PAGE>
(11) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors);
(12) Invest more than 15% of its net assets in illiquid securities, including
repurchase agreements maturing in over seven days, and other securities for
which there is no established market or for which market quotations are not
readily available; or
(13) Purchase or sell puts, calls options, futures, straddles, commodities,
commodities contracts or commodities futures contracts, except as described
in the Prospectus and this Statement of Additional Information.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation. However, in the case of the
borrowing limitation (limitation number 10, above) the Fund will, to the extent
necessary, reduce its existing borrowings to comply with the limitation.
While the Fund has reserved the right to make short sales "against the box"
(limitation number 8, above), the Sub-Advisor has no present intention of
engaging in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- --------------- ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
- 14 -
<PAGE>
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
- 15 -
<PAGE>
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.,
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
- 16 -
<PAGE>
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
- 17 -
<PAGE>
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary of
Cincinnati, Ohio 45202 Countrywide Investments, Inc. and Countrywide Financial
Services, Inc.; Secretary of Countrywide Investment Trust;
Countrywide Tax-Free Trust and Countrywide Strategic
Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
- 18 -
<PAGE>
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) 3.2% of the then outstanding shares of the Fund. On the same
date, Oechsle International Advisors, L.P. Profit Sharing Trust, One
International Place, Boston, Massachusetts 02110, owned of record 5.0% of the
then outstanding shares of the Fund and Consolidated Shoe Co., Inc., together
with its Profit Sharing Plan, P.O. Box 10549, Lynchburg, Virginia 24506, owned
of record 6.2% of the then outstanding shares of the Fund.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Inc. (the "Advisor") performs management,
statistical, portfolio advisor selection and general investment supervisory
services for the Fund pursuant to an Investment Advisory Agreement (the Advisory
Agreement"). The Advisory Agreement is effective until February 28, 1999 and
will be renewed thereafter for one year periods only so long as such renewal and
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of the Fund's outstanding voting securities, provided
the continuance is also approved by a majority of the Trustees who are not
"interested persons" of the Trust or the Advisor by vote cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement is terminable without penalty on sixty days notice by the Board of
Trustees of the Trust or by the Advisor. The Advisory Agreement provides that it
will terminate automatically in the event of its assignment.
Compensation of the Advisor is at the annual rate of 1.00% of the Fund's average
daily net assets. For the fiscal years ended March 31, 1998 and 1997, the Fund
paid the Advisor advisory fees of $355,460 and $211,861 (which was net of
voluntary fee waivers of $29,007), respectively.
- 19 -
<PAGE>
The Advisor, organized as a Virginia corporation in 1970, is controlled by its
sole shareholder, Austin Brockenbrough III. In addition to acting as Advisor to
the Fund, the Advisor serves as investment advisor to three additional
investment companies, the subjects of separate prospectuses, and also provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals.
The Advisor also provides, at its own expense, certain Executive Officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Fund to clients of such dealers or others or based on the average balance of all
accounts in the Fund for which such dealers or others are designated as the
person responsible for the account.
SUB-ADVISOR
Oechsle International Advisors, L.P. (the "Sub-Advisor") supervises the Fund's
investments pursuant to a Sub-Advisory Agreement (the "Sub-Advisory Agreement")
between the Sub-Advisor, the Advisor and the Trust. The Sub-Advisory Agreement
is effective until February 28, 1999 and will be renewed thereafter for one year
periods only so long as such renewal and continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority of the Fund's
outstanding voting securities, provided the continuance is also approved by a
majority of the Trustees who are not "interested persons" of the Trust, the
Advisor or the Sub-Advisor by vote cast in person at a meeting called for the
purpose of voting on such approval. The Sub-Advisory Agreement is terminable
without penalty on sixty days notice by the Board of Trustees of the Trust, by
the Advisor or by the Sub-Advisor. The Sub-Advisory Agreement provides that it
will terminate automatically in the event of its assignment.
Compensation of the Sub-Advisor is paid by the Advisor (not the Fund) in the
amount of one-half of the advisory fee (net of any waivers) received by the
Advisor. Compensation payable to the Sub-Advisor for the fiscal years ended
March 31, 1998 and 1997 was $177,730 and $105,930, respectively.
The Sub-Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Fund. The Sub-Advisor determines what
securities and other investments will be purchased, retained or sold by the
Fund, and does so in accordance with the investment objective and policies of
the Fund as described herein and in the Prospectus. The Sub-Advisor places all
securities orders for the Fund, determining with which broker, dealer, or issuer
to place the orders.
- 20 -
<PAGE>
The Sub-Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Sub-Advisor must seek at
all times the most favorable price and execution for all securities brokerage
transactions.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Fund and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Fund pays the
Administrator a fee at the annual rate of 0.25% of the average value of its
daily net assets up to $25,000,000, 0.225% of such assets from $25,000,000 to
$50,000,000 and 0.20% of such assets in excess of $50,000,000; provided,
however, that the minimum fee is $4,000 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
For the fiscal years ended March 31, 1998 and 1997, the Administrator received
from the Fund fees of $86,293 and $59,209, respectively.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to prepare
the Fund's federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
The Custodian of the Fund's assets is Northern Trust Company, 50 South LaSalle
Street, Chicago, Illinois 60675. The Custodian holds all cash and securities of
the Fund (either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Fund.
- 21 -
<PAGE>
BROKERAGE
It is the Fund's practice to seek the best price and execution for all portfolio
securities transactions. The Sub-Advisor (subject to the general supervision of
the Board of Trustees and the Advisor) directs the execution of the Fund's
portfolio transactions. The Sub-Advisor may effect Fund portfolio transactions
with broker-dealers which may be interested persons of the Fund, the Trust, any
Trustee, officer or director of the Trust or its investment advisors or any
interested person of such persons.
The Fund's common stock portfolio transactions will normally be exchange traded
and will be effected through broker-dealers who will charge brokerage
commissions. With respect to securities traded only in the over-the-counter
market, orders will be executed on a principal basis with primary market makers
in such securities except where better prices or executions may be obtained on
an agency basis or by dealing with other than a primary market maker.
For the fiscal years ended March 31, 1998 and 1997, the total amount of
brokerage commissions paid by the Fund was $100,229 and $203,458, respectively.
While there is no formula, agreement or undertaking to do so, the Sub-Advisor
may allocate a portion of the Fund's brokerage commissions to persons or firms
providing the Sub-Advisor with research services, which may typically include,
but are not limited to, investment recommendations, financial, economic,
political, fundamental and technical market and interest rate data, and other
statistical or research services. Much of the information so obtained may also
be used by the Sub-Advisor for the benefit of the other clients it may have.
Conversely, the Fund may benefit from such transactions effected for the benefit
of other clients. In all cases, the Sub-Advisor is obligated to effect
transactions for the Fund based upon obtaining the most favorable price and
execution. Factors considered by the Advisor in determining whether the Fund
will receive the most favorable price and execution include, among other things:
the size of the order, the broker's ability to effect and settle the transaction
promptly and efficiently and the Sub-Advisor's perception of the broker's
reliability, integrity and financial condition.
- 22 -
<PAGE>
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a statement showing the current transaction and all prior
transactions in the shareholder account during the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within 7 days
of the valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees"). A corporation (or partnership) must
also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Fund. Shareholders should be aware that such systematic withdrawals
may deplete or use up entirely their initial investment and may result in
- 23 -
<PAGE>
realized long-term or short-term capital gains or losses. The Systematic
Withdrawal Plan may be terminated at any time by the Fund upon sixty days'
written notice or by a shareholder upon written notice to the Fund. Applications
and further details may be obtained by calling the Fund at 1-800-443-4249, or by
writing to:
The Jamestown International Equity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares of the Fund. The acceptance of such securities is at the
sole discretion of the Sub-Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Sub-Advisor may deem
appropriate. If accepted, the securities will be valued using the same criteria
and methods as described in "How Net Asset Value is Determined" in the
Prospectus.
REDEMPTIONS IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election may be filed under
Rule 18f-1 of the 1940 Act, wherein the Fund commits itself to pay redemptions
in cash, rather than in kind, to any shareholder of record of the Fund who
redeems during any ninety day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the existing account registration; (2) signature(s) of the
registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (see the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
- 24 -
<PAGE>
PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m., Eastern time,
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Fund until
confirmed in writing (or unless other arrangements have been made with the Fund,
for example in the case of orders utilizing wire transfer of funds) and payment
has been received.
The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUND. The Fund has adopted initial investment
minimums for the purpose of reducing the cost to the Fund (and consequently to
the shareholders) of communicating with and servicing its shareholders. However,
a reduced minimum initial investment requirement of $1,000 applies to Trustees,
officers and employees of the Fund, the Advisor, the Sub-Advisor and certain
parties related thereto, including clients of the Advisor and the Sub-Advisor or
any sponsor, officer, committee member thereof, or the immediate family of any
of them. In addition, accounts having the same mailing address may be aggregated
for purposes of the minimum investment if they consent in writing to share a
single mailing of shareholder reports, proxy statements (but each such
shareholder would receive his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Fund for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Fund.
- 25 -
<PAGE>
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund, and they have
adopted procedures to do so, as follows. The net asset value of the Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.,
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
The value of non-dollar denominated portfolio instruments held by the Fund will
be determined by converting all assets and liabilities initially expressed in
foreign currency values into U.S. dollar values at the mean between the bid and
offered quotations of such currencies against U.S. dollars as last quoted by any
recognized dealer. If such quotations are not available, the rate of exchange
will be determined in accordance with policies established in good faith by the
Board of Trustees. Gains or losses between trade and settlement dates resulting
from changes in exchange rates between the U.S. dollar and a foreign currency
are borne by the Fund. To protect against such losses, the Fund may enter into
forward foreign currency exchange contracts, which will also have the effect of
limiting any such gains.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor,
Sub-Advisor or the Administrator, including, but not limited to, the following:
custodian, shareholder servicing, stock transfer and dividend disbursing
expenses; clerical employees and junior level officers of the Trust as and if
approved by the Board of Trustees; taxes; expenses of the issuance and
redemption of shares (including registration and qualification fees and
expenses); costs and expenses of membership and attendance at meetings of
certain associations which may be deemed by the Trustees to be of overall
benefit to the Fund and its shareholders; legal and auditing expenses; and the
cost of stationery and forms prepared exclusively for the Fund. General Trust
expenses are allocated among the series, or funds, on a fair and equitable basis
by the Board of Trustees, which may be based on relative net assets of each fund
(on the date the expense is paid) or the nature of the services performed and
the relative applicability to each fund.
- 26 -
<PAGE>
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, the Fund
must distribute annually at least 90% of its net investment income. In addition
to this distribution requirement, the Fund must derive at least 90% of its gross
income each taxable year from dividends, interest, payments with respect to
securities' loans, gains from the disposition of stock or securities, and
certain other income.
While the above requirements are aimed at qualification of the Fund as regulated
investment companies under Subchapter M of the Code, the Fund also intends to
comply with certain requirements of the Code to avoid liability for federal
income and excise tax. If the Fund remains qualified under Subchapter M, it will
not be subject to federal income tax to the extent it distributes its taxable
net investment income and net realized capital gains. A nondeductible 4% federal
excise tax will be imposed on the Fund to the extent it does not distribute at
least 98% of its ordinary taxable income for a calendar year, plus 98% of its
capital gain net taxable income for the one year period ending each October 31,
plus certain undistributed amounts from prior years. While the Fund intends to
distribute its taxable income and capital gains in a manner so as to avoid
imposition of the federal excise and income taxes, there can be no assurance
that the Fund indeed will make sufficient distributions to avoid entirely
imposition of federal excise or income taxes.
As of March 31, 1998, the Fund had capital loss carryforwards for federal income
tax purposes of $496,302, which expire on March 31, 2005. In addition, the Fund
had net realized capital losses of $791,824 during the period from November 1,
1997 through March 31, 1998, which are treated for federal income tax purposes
as arising during the Fund's fiscal year ending March 31, 1999. These capital
loss carryforwards and "post-October" losses may be utilized in the current and
future years to offset net realized capital gains prior to distributing such
gains to shareholders.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUND'S DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the Fund
derived from net investment income or net short-term capital gains are taxable
to shareholders as ordinary income, whether received in cash or reinvested in
additional shares. Distributions, if any, of long-term capital gains are
- 27 -
<PAGE>
taxable to shareholders as long-term capital gains, whether received in cash or
reinvested in additional shares, regardless of how long Fund shares have been
held. For information on "backup" withholding, see "How to Purchase Shares" in
the Prospectus.
For corporate shareholders, the dividends received deduction, if applicable,
should apply to dividends from the Fund. The Fund will send shareholders
information each year on the tax status of dividends and disbursements. A
dividend or capital gains distribution paid shortly after shares have been
purchased, although in effect a return of investment, is subject to federal
income taxation. Dividends from net investment income, along with capital gains,
will be taxable to shareholders, whether received in cash or shares and no
matter how long you have held Fund shares, even if they reduce the net asset
value of shares below your cost and thus in effect result in a return of a part
of your investment.
Investments by the Fund in certain options, futures contracts and options on
futures contracts are "section 1256 contracts." Any gains or losses on section
1256 contracts are generally considered 60% long-term and 40% short-term capital
gains or losses ("60/40"). Section 1256 contracts held by the Fund at the end of
each taxable year are treated for federal income tax purposes as being sold on
such date for their fair market value. The resultant paper gains or losses are
also treated as 60/40 gains or losses. When the section 1256 contract is
subsequently disposed of, the actual gain or loss will be adjusted by the amount
of any preceding year-end gain or loss. The use of section 1256 contracts may
force the Fund to distribute to shareholders paper gains that have not yet been
realized in order to avoid federal income tax liability.
Foreign currency gains or losses on non-U.S. dollar denominated bonds and other
similar debt instruments and on any non-U.S. dollar denominated futures
contracts, options and forward contracts that are not section 1256 contracts
generally will be treated as ordinary income or loss.
Certain hedging transactions undertaken by the Fund may result in "straddles"
for federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by the Fund. In addition, losses realized by the Fund
on positions that are part of a straddle may be deferred, rather than being
taken into account in calculating taxable income for the taxable year in which
such losses are realized. Because only a few regulations implementing the
straddle rules have been promulgated, the tax consequences of hedging
transactions to the Fund are not entirely clear. The hedging transactions may
increase the amount of short-term capital gain realized by the Fund which is
taxed as ordinary income when distributed to
- 28 -
<PAGE>
shareholders. The Fund may make one or more of the elections available under the
Internal Revenue Code of 1986, as amended, which are applicable to straddles. If
the Fund makes any of the elections, the amount, character and timing of the
recognition of gains or losses from the affected straddle positions will be
determined under rules that vary according to the elections made. The rules
applicable under certain of the elections operate to accelerate the recognition
of gains or losses from the affected straddle positions. Because application of
the straddle rules may affect the character of gains or losses, defer losses
and/or accelerate the recognition of gains or losses from the affected straddle
positions, the amount which must be distributed to shareholders, and which will
be taxed to shareholders as ordinary income or long-term capital gain in any
year, may be increased or decreased substantially as compared to a fund that did
not engage in such hedging transactions.
The diversification requirements applicable to the Fund's assets may limit the
extent to which the Fund will be able to engage in transactions in options,
futures contracts or options on futures contracts.
CAPITAL SHARES AND VOTING
Shares of the Fund, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not less
than ten percent (10%) of the shares then outstanding may require the Trustees
to call such a meeting and the Trustees are obligated to provide certain
assistance to shareholders desiring to communicate with other shareholders in
such regard (e.g., providing access to shareholder lists, etc.). In case a
vacancy
- 29 -
<PAGE>
or an anticipated vacancy shall for any reason exist, the vacancy shall be
filled by the affirmative vote of a majority of the remaining Trustees, subject
to the provisions of Section 16(a) of the 1940 Act. The Trust does not expect to
have an annual meeting of shareholders.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Fund for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of the Fund ("T") is computed by using the redeemable value at the end of
a specified period of time ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of time ("n") according to the formula P(l+T)n=ERV.
The average annual total return quotations for the Fund for the one year period
ended March 31, 1998 and for the period since inception (April 16, 1996) to
March 31, 1998 are 29.67% and 13.31%, respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, the Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
- 30 -
<PAGE>
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest earned (for the purpose of "a" above) on
debt obligations is computed by reference to the yield to maturity of each
obligation held based on the market value of the obligation (including actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month) period for which yield is being calculated,
or, with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest).
The Fund's performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Fund may compare its performance to the Europe,
Australia and Far East Index (the "EAFE Index"), which is generally considered
to be representative of the performance of unmanaged common stocks that are
publicly traded in the securities markets located outside the United States.
Comparative performance may also be expressed by reference to a ranking prepared
by a mutual fund monitoring service, such as Lipper Analytical Services, Inc. or
Morningstar, Inc., or by one or more newspapers, newsletters or financial
periodicals. Performance comparisons may be useful to investors who wish to
compare the Fund's past performance to that of other mutual funds and investment
products. Of course, past performance is not a guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
- 31 -
<PAGE>
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Fund will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Fund as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
- 32 -
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
---------------------------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
Lowe, Brockenbrough & Tattersall, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1998
PERFORMANCE OF THE JAMESTOWN INTERNATIONAL EQUITY FUND
The Jamestown International Equity Fund returned 29.7% for the year ended March
31, 1998. This performance compares well with 18.6% for the Morgan Stanley EAFE
Index and 20.2% for the average international fund in the Lipper Index. This
period was characterized by continued strength throughout Europe and weakness in
Japan and the rest of Asia. The Fund was significantly underweighted in Japan
and had very little exposure to the collapse in most of the Asian markets that
began last summer.
Overweight positions in Italy, Spain and France, along with strong stock
selection throughout the region, were of particular benefit. Optimism was
particularly pronounced for these countries as their interest rates converged
toward German levels in preparation for the approaching common currency. The
structural changes that have occurred in Europe over the last two years should
continue to have a positive impact on earnings and returns, and Oechsle will
continue to favor this region until they see signs of structural change
throughout Asia.
In Japan, Oechsle believes that the focus on fiscal spending stimulus by market
participants is misguided. Any stimulus is unlikely to have a sustainable impact
on Japan's economy. Oechsle is focused on deregulation and the potential for
restructuring, both of which would have a more sustained and significant impact
on the long-term health of their economy. To date, policy initiatives for
structural change have been limited. Ultimately, the real question is whether or
not Japan chooses to participate in global trade and capital markets according
to the same rules as the rest of the world.
The Fund's limited emerging market investments continue to be concentrated in
Latin America. Oechsle believes the recovery in the emerging Asian stock markets
during the first quarter of 1998 appears to be a snap back from extremely
depressed levels of late 1997. They believe that the crises in emerging Asian
economies may be reasonably well contained, but not fully resolved. Valuations
are stretched on normalized earnings, and we are unlikely to see normalized
earnings in what remains of this century. Uncertainty remains high, balance
sheets are fragile, and uncooperative neighbors may destabilize the region
further.
ASSET ALLOCATION (As of March 31, 1998)
THE JAMESTOWN
INTERNATIONAL EQUITY MORGAN STANLEY
FUND EAFE INDEX
Continental Europe 55.6% 48.9%
United Kingdom 15.8% 21.8%
Pacific Basin, excluding Japan 6.0% 7.0%
Japan 12.8% 22.3%
Emerging Markets 7.2% 0.0%
Other 2.6% 0.0%
----- -----
Total 100.0% 100.0%
<PAGE>
JAMESTOWN INTERNATIONAL EQUITY FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown
International Equity Fund and the Morgan Stanley EAFE Index.
MORGAN STANLEY
EAFE INDEX JAMESTOWN INTL EQUITY FUND
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
04/30/96 10,000 04/30/96 10,000
05/31/96 -1.84% 9,816 05/31/96 -1.30% 9,870
06/30/96 0.56% 9,871 06/30/96 -0.51% 9,820
07/31/96 -2.92% 9,583 07/31/96 -4.49% 9,379
08/31/96 0.22% 9,604 08/31/96 0.00% 9,379
09/30/96 2.66% 9,859 09/30/96 1.71% 9,539
10/31/96 -1.02% 9,759 10/31/96 -0.21% 9,519
11/30/96 3.98% 10,147 11/30/96 3.89% 9,890
12/31/96 -1.29% 10,016 12/31/96 -1.22% 9,770
01/31/97 -3.50% 9,666 01/31/97 -0.41% 9,730
02/28/97 1.64% 9,824 02/28/97 0.52% 9,780
03/31/97 0.36% 9,860 03/31/97 0.72% 9,850
04/30/97 0.53% 9,912 04/30/97 1.43% 9,991
05/31/97 6.51% 10,557 05/31/97 6.43% 10,633
06/30/97 5.51% 11,139 06/30/97 7.27% 11,407
07/31/97 1.62% 11,319 07/31/97 5.03% 11,980
08/31/97 -7.47% 10,474 08/31/97 -8.56% 10,954
09/30/97 5.60% 11,060 09/30/97 8.63% 11,899
10/31/97 -7.68% 10,211 10/31/97 -10.14% 10,692
11/30/97 -1.02% 10,107 11/30/97 -0.09% 10,682
12/31/97 0.87% 10,195 12/31/97 2.82% 10,984
01/31/98 4.57% 10,660 01/31/98 2.21% 11,227
02/28/98 6.42% 11,345 02/28/98 7.74% 12,096
03/31/98 3.08% 11,694 03/31/98 5.60% 12,773
<PAGE>
The Jamestown International Equity Fund Average Annual Total Returns
1 Year Since Inception*
29.67% 13.31%
*Initial public offering of shares was April 16, 1996.
Past performance is not predictive of future performance.
<TABLE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 31,389,272
===============
At value (Note 1) $ 41,360,258
Cash 1,112,213
Cash denominated in foreign currencies (cost $1,152) 1,261
Net unrealized appreciation on forward foreign currency exchange contracts (Note 5) 122,782
Receivable for securities sold 664,035
Receivable for capital shares sold 240,000
Dividends receivable 106,249
Interest receivable 3,367
Other assets 765
---------------
TOTAL ASSETS 43,610,930
---------------
LIABILITIES
Dividends payable 1,623
Payable for securities purchased 997,451
Accrued advisory fees (Note 3) 34,944
Accrued administration fees (Note 3) 8,250
Other accrued expenses 26,018
---------------
TOTAL LIABILITIES 1,068,286
---------------
NET ASSETS $ 42,542,644
===============
Net assets consist of:
Paid-in capital $ 33,848,482
Accumulated net realized losses from security and foreign currency transactions (1,402,684)
Net unrealized appreciation on investments 9,970,986
Net unrealized appreciation on translation of assets and liabilities in foreign currencies 125,860
---------------
Net assets $ 42,542,644
===============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 3,372,542
===============
Net asset value, offering price and redemption price per share (Note 1) $ 12.61
===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
For the Year Ended March 31, 1998
<CAPTION>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $58,374) $ 472,755
Interest 61,696
-----------
TOTAL INVESTMENT INCOME 534,451
-----------
EXPENSES
Investment advisory fees (Note 3) 355,460
Administration fees (Note 3) 86,293
Custodian fees 60,384
Registration fees 16,446
Pricing costs 10,270
Professional fees 9,996
Trustees' fees and expenses 5,405
Printing of shareholder reports 3,101
Postage and supplies 2,990
Insurance expense 2,058
Other expenses 1,333
-----------
TOTAL EXPENSES 553,736
-----------
NET INVESTMENT LOSS (19,285)
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCIES (Note 4)
Net realized gains (losses) from:
Security transactions (60,926)
Foreign currency transactions 190,757
Net change in unrealized appreciation/depreciation on:
Investments 8,970,013
Foreign currency transactions 126,420
-----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
AND FOREIGN CURRENCIES 9,226,264
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,206,979
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended March 31, 1998 and 1997
Year Period
Ended Ended
March 31, March 31,
1998 1997(a)
<S> <C> <C>
FROM OPERATIONS:
Net investment loss $ (19,285) $ (36,671)
Net realized losses from security transactions (60,926) (1,230,188)
Net realized gains from foreign currency transactions 190,757 185,973
Net change in unrealized appreciation/depreciation on investments 8,970,013 1,000,973
Net change in unrealized appreciation/depreciation on translation
of assets and liabilities in foreign currencies 126,420 (560)
-------------- -------------
Net increase (decrease) in net assets from operations 9,206,979 (80,473)
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (325,257) (107,087)
-------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 4,706,633 29,619,931
Net asset value of shares issued in reinvestment
of distributions to shareholders 321,283 105,780
Payments for shares redeemed (657,411) (247,734)
-------------- -------------
Net increase in net assets from capital share transactions 4,370,505 29,477,977
-------------- -------------
TOTAL INCREASE IN NET ASSETS 13,252,227 29,290,417
NET ASSETS:
Beginning of period 29,290,417 0
-------------- -------------
End of period $ 42,542,644 $ 29,290,417
============== =============
Capital share activity:
Sold 418,420 3,000,775
Reinvested 28,068 10,836
Redeemed (60,156) (25,401)
-------------- -------------
Net increase in shares outstanding 386,332 2,986,210
Shares outstanding, beginning of period 2,986,210 0
-------------- -------------
Shares outstanding, end of period 3,372,542 2,986,210
============== =============
(a) Represents the period from the commencement of operations (April 16, 1996)
through March 31, 1997.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout
Each Period
<CAPTION>
Year Period
Ended Ended
March 31, March 31,
1998 1997 (a)
<S> <C> <C>
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 Adviser, the ratio of
expenses to average net assets would have been 1.71%(c) for the period ended
March 31, 1997.
(c) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 97.2%
Australia - 3.6%
85,700 Australia and New Zealand Banking Group Ltd. $ 574,008
70,600 Coca-Cola Amatil Ltd. 554,803
61,947 News Corporation Ltd. 409,573
-----------
1,538,384
-----------
Belgium - 0.6%
468 Kredietbank NV 251,488
-----------
Brazil - 1.2%
3,900 Telecomunicacoes Brasileiras SA - Telebras - ADR 506,269
-----------
Canada - 0.4%
13,000 MacMillan Bloedel Ltd. 180,539
-----------
France - 13.8%
4,980 Banque Nationale de Paris 387,022
2,874 Danone 693,951
2,233 Havas SA 184,891
18,357 Renault SA (a) 817,751
7,915 Schneider SA 609,368
8,970 Suez Lyonnaise des Eaux 1,295,764
8,601 Thomson CSF 347,056
6,819 Total SA - Class B 818,849
8,229 Valeo SA 723,859
-----------
5,878,511
-----------
Germany - 5.8%
7,683 Daimler-Benz AG 706,259
1,461 Mannesmann AG 1,069,678
872 Volkswagen AG 682,761
872 Volkswagen AG - Rights 15,843
-----------
2,474,541
-----------
Hong Kong - 1.7%
57,000 Hutchison Whampoa Ltd. 400,939
85,000 New World Development 300,043
-----------
700,982
-----------
India - 1.7%
6,800 Hindalco Industries Ltd. - GDR (a) 120,700
18,600 Reliance Industries Ltd. - GDR 155,310
4,220 Richter Gedeon Rt. - GDR 444,062
-----------
720,072
-----------
<PAGE>
<CAPTION>
Shares Value
COMMON STOCKS - Continued
<S> <C> <C>
Italy - 7.9%
9,100 Banca Popolare di Bergamo Credito Varesino SpA $ 208,172
187,722 Credito Italiano SpA 927,349
116,200 Mediaset SpA 735,305
186,202 Telecom Italia SpA 1,467,351
----------
3,338,177
----------
Japan - 12.7%
24,000 Canon, Inc. 541,728
25,000 Denso Corporation 468,688
500 Isetan Company 4,237
11,000 Ito-Yokado Company Ltd. 595,571
35,000 Mitsui Fudosan Company, Ltd. 333,331
15,000 Murata Manufacturing Company Ltd. 413,945
53 Nippon Telegraph and Telephone Corporation 441,166
44,000 Nomura Securities Company Ltd. 518,031
13 NTT Data Communications Systems Company 578,098
7,000 Rohm Company 640,415
6,500 Sony Corporation 550,802
53,000 Sumitomo Realty & Development 312,393
----------
5,398,405
----------
Mexico - 3.4%
12,300 Grupo Televisa SA 450,488
60,000 Kimberly-Clark de Mexico, SA de CV - Class A 309,939
11,900 Telefonos De Mexico SA - ADR 670,863
----------
1,431,290
----------
Netherlands - 13.0%
13,500 Gucci Group NV - ADR 641,250
12,120 ING Groep NV 687,779
21,479 Konink PTT Nederland NV 1,112,754
13,310 Royal Dutch Petroleum Company 753,393
8,361 Royal Philips Electronics NV 613,636
6,130 Vendex International NV 388,147
39,556 VNU-Verenigde Nederlandse Uitgeversbedrijven
Verenigd Bezit 1,352,892
----------
5,549,851
----------
New Zealand - 0.7%
65,275 Telecom Corporation of New Zealand Ltd. 311,076
----------
Philippines - 0.9%
540,000 Filinvest Land Inc. (a) 59,131
20,160 Metropolitan Bank & Trust Company (a) 186,179
4,333 Philippine Long Distance Telephone Company 120,619
----------
365,929
----------
<PAGE>
<CAPTION>
COMMON STOCKS - Continued
Shares Value
Spain - 6.2%
5,500 Argentaria SA $ 455,384
15,600 Banco Santander SA 776,968
32,007 Telefonica de Espana 1,410,662
-----------
2,643,014
-----------
Sweden - 2.4%
20,660 Hennes and Mauritz AB - Class B 1,038,909
-----------
Switzerland - 5.7%
414 Nestle SA 791,076
581 Novartis AG 1,028,243
56 Roche Holding AG 606,107
-----------
2,425,426
-----------
United Kingdom - 15.5%
27,500 BOC Group PLC 438,640
34,870 British Aerospace PLC 1,147,429
20,768 British Petroleum Company PLC 298,222
61,100 Diageo PLC 717,250
33,900 Glaxo Wellcome PLC 900,355
46,920 Imperial Chemical Industries PLC 831,294
218,070 LucasVarity PLC 873,693
49,484 Somerfield PLC 296,246
105,931 Vodafone Group PLC 1,104,266
-----------
6,607,395
-----------
Total Common Stocks (Cost $31,389,272) - 97.2% $41,360,258
Other Assets in Excess of Liabilities - 2.8% 1,182,386
-----------
Net Assets - 100.0% $42,542,644
===========
(a) Non-income producing security.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown International Equity Fund (the Fund) is a no-load, diversified
series of the Williamsburg Investment Trust (the Trust), an open-end management
investment company registered under the Investment Company Act of 1940. The
Trust was organized as a Massachusetts business trust on July 18, 1988. The Fund
began operations on April 16, 1996.
The Fund's investment objective is to achieve superior total returns through
investment in equity securities of issuers located outside the United States.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national or foreign stock
exchange are valued based upon the closing price on the principal exchange where
the security is traded. Foreign securities are translated from the local
currency into U.S. dollars using currency exchange rates supplied by a quotation
service.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Dividend income is recorded on the ex-dividend date.
Dividends arising from net investment income, if any, are declared and paid
quarterly to shareholders of the Fund. Net realized short-term capital gains, if
any, may be distributed throughout the year and net realized long-term capital
gains, if any, are distributed at least once each year. Income dividends and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Security transactions -- Security transactions are accounted for on trade
date. Cost of securities sold is determined on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of $31,392,260 as of March 31, 1998:
Gross unrealized appreciation.....................................$ 11,106,522
Gross unrealized depreciation..................................... (1,138,524)
------------
Net unrealized appreciation.......................................$ 9,967,998
============
As of March 31, 1998, the Fund had capital loss carryforwards for federal income
tax purposes of $496,302 which expire on March 31, 2005. In addition, the Fund
had net realized capital losses of $791,824 during the period from November 1,
1997 through March 31, 1998, which are treated for federal income tax purposes
as arising during the Fund's tax year ending March 31, 1999. These capital loss
carryforwards and "post-October" losses may be utilized in future years to
offset net realized capital gains, if any, prior to distributing such gains to
shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $19,366,414 and $15,951,225, respectively.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
Lowe, Brockenbrough & Tattersall, Inc. (the Adviser), under the terms of an
Investment Advisory Agreement, provides general investment supervisory services
to the Fund. Under the Investment Advisory Agreement, the Fund pays the Adviser
a fee, which is computed and accrued daily and paid monthly, at an annual rate
of 1.00% of its average daily net assets. Certain trustees and officers of the
Trust are also officers of the Adviser.
The Adviser retains Oechsle International Advisors, Inc. (Oechsle) to provide
the Fund with a continuous program of supervision of the Fund's assets,
including the composition of its portfolio, and to furnish advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to the terms of a Sub-Advisory
Agreement. Under the Sub-Advisory Agreement, the Adviser, not the Fund, pays
Oechsle a fee in the amount of one-half of the monthly advisory fee received by
the Adviser, net of any investment advisory fee waivers.
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement between the Trust and
Countrywide Fund Services, Inc. (CFS), CFS provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .25% of its average daily net assets up to $25
million; .225% of the next $25 million of such net assets; and .20% of such net
assets in excess of $50 million, subject to a $4,000 minimum monthly fee. In
addition, the Fund pays out-of-pocket expenses including, but not limited to,
postage, supplies and cost of pricing the Fund's portfolio securities. Certain
officers of the Trust are also officers of CFS.
4. FOREIGN CURRENCY TRANSLATION
Amounts denominated in or expected to settle in foreign currencies are
translated into U.S. dollars based on exchange rates on the following basis:
A. The market values of investment securities and other assets and
liabilities are translated at the closing rate of exchange each day.
B. Purchases and sales of investment securities and income and expenses
are translated at the rate of exchange prevailing on the respective dates of
such transactions.
C. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from those
resulting from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gains or losses on
investments.
Reported net realized foreign exchange gains or losses arise from 1) sales of
foreign currencies, 2) currency gains or losses realized between the trade and
settlement dates on securities transactions and 3) the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books, and the U.S. dollar equivalent of the amounts actually received or
paid. Reported net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities, other than investment
securities, resulting from changes in exchange rates.
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund enters into forward foreign currency exchange contracts as a way of
managing foreign exchange rate risk. The Fund may enter into these contracts for
the purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific transactions or portfolio
positions. The objective of the Fund's foreign currency hedging transactions is
to reduce risk that the U.S. dollar value of the Fund's securities denominated
in foreign currency will decline in value due to changes in foreign currency
exchange rates. All foreign currency exchange contracts are "marked-to-market"
daily at the applicable translation rates resulting in unrealized gains or
losses. Realized and unrealized gains or losses are included in the Fund's
Statement of Assets and Liabilities and Statement of Operations. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
<PAGE>
<TABLE>
At March 31, 1998, the Fund had forward foreign currency exchange contracts
outstanding as follows:
<CAPTION>
Net
Unrealized
Delivery To Receive Initial Market Appreciation
Date (To Deliver) Value Value (Depreciation)
<S> <C> <C> <C> <C>
CONTRACTS TO SELL
04/01/98 (21,183) AUD $ (14,256) $ (14,048) $ 208
=============
04/02/98 (55,126) AUD (37,100) (36,557) 543
=============
04/03/98 (38,695) AUD (26,022) (25,656) 366
=============
04/07/98 (12,552) AUD (8,306) (8,320) (14)
=============
04/02/98 (179,500) GBP (302,637) (300,591) 2,046
=============
04/03/98 (76,353) GBP (128,387) (127,861) 526
=============
04/06/98 (6,209) GBP (10,412) (10,397) 15
=============
04/01/98 (5,371,337) JPY (41,606) (40,280) 1,326
=============
05/27/98 (379,000,000) JPY (2,998,655) (2,872,107) 126,548
=============
07/01/98 (549,000) NZD (300,704) (300,110) 594
============= ------------ ----------- --------
TOTAL SELL CONTRACTS (3,868,085) (3,735,927) 132,158
------------ ----------- --------
CONTRACTS TO BUY
04/15/98 6,357,116 BEF 168,260 166,747 (1,513)
=============
04/30/98 1,574,043 FRF 258,131 254,761 (3,370)
=============
04/07/98 120,838 GBP 202,295 202,358 63
=============
04/01/98 84,868 NZD 47,781 46,920 (861)
=============
04/02/98 144,806 NZD 81,815 80,057 (1,758)
=============
04/03/98 179,257 NZD 100,922 99,048 (1,874)
=============
04/07/98 40,131 NZD 22,221 22,158 (63)
============= ------------ ----------- --------
TOTAL BUY CONTRACTS 881,425 872,049 (9,376)
------------ ----------- --------
NET CONTRACTS $(2,986,660) $(2,863,878) $122,782
============ =========== ========
AUD - Australian Dollar
BEF - Belgian Franc
FRF - French Franc
GBP - British Pound Sterling
JPY - Japanese Yen
NZD - New Zealand Dollar
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown International Equity Fund (a series of The Williamsburg Investment
Trust), including the portfolio of investments, as of March 31, 1998, and the
related statement of operations for the year then ended, and the statement of
changes in net assets and financial highlights for the year then ended and the
period April 16, 1996 (commencement of operations) to March 31, 1997. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown International Equity Fund as of March 31, 1998, the
results of its operations for the year then ended, the changes in its net assets
and the financial highlights for the periods referred to above, in conformity
with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN
TAX EXEMPT VIRGINIA FUND
August 1, 1998
A series of WILLIAMSBURG
INVESTMENT TRUST 312 Walnut Street,
21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES ........................................ 2
INVESTMENT LIMITATIONS .................................................... 4
TRUSTEES AND OFFICERS ..................................................... 5
INVESTMENT ADVISOR ........................................................ 10
ADMINISTRATOR ............................................................. 11
OTHER SERVICES ............................................................ 11
BROKERAGE ................................................................. 12
SPECIAL SHAREHOLDER SERVICES .............................................. 13
PURCHASE OF SHARES ........................................................ 15
REDEMPTION OF SHARES ...................................................... 15
NET ASSET VALUE DETERMINATION ............................................. 16
ALLOCATION OF TRUST EXPENSES .............................................. 16
ADDITIONAL TAX INFORMATION ................................................ 16
CAPITAL SHARES AND VOTING ................................................. 18
CALCULATION OF PERFORMANCE DATA ........................................... 18
FINANCIAL STATEMENTS AND REPORTS .......................................... 21
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Jamestown Tax Exempt Virginia
Fund (the "Fund") dated August 1, 1998. The Prospectus may be obtained from the
Fund, at the address and phone number shown above, at no charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used herein are defined in the Prospectus.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time the
Fund purchases a security (normally a U.S. Treasury obligation), it also resells
it to the vendor (normally a member bank of the Federal Reserve System or a
registered Government Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement) to the vendor on
an agreed upon date in the future. Such securities, including any securities so
substituted, are referred to as the "Repurchase Securities." The repurchase
price exceeds the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during which the
repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Fund holds a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Advisor will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Fund's custodian either directly or through a securities depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Fund. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks,
- 2 -
<PAGE>
Commercial Paper and Variable Amount Demand Master Notes ("Master Notes").
BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank, are the
customary means of effecting payment for merchandise sold in import-export
transactions and are a source of financing used extensively in international
trade. When a bank "accepts" such a time draft, it assumes liability for its
payment. When the Fund acquires a Bankers' Acceptance, the bank which "accepted"
the time draft is liable for payment of interest and principal when due. The
Bankers' Acceptance, therefore, carries the full faith and credit of such bank.
A CERTIFICATE OF DEPOSIT ("CD") is an unsecured interest-bearing debt obligation
of a bank. CDs acquired by the Fund would generally be in amounts of $100,000 or
more. COMMERCIAL PAPER is an unsecured, short-term debt obligation of a bank,
corporation or other borrower. Commercial Paper maturity generally ranges from
two to 270 days and is usually sold on a discounted basis rather than as an
interest-bearing instrument. The Fund will invest in Commercial Paper only if it
is rated in the highest rating category by any nationally recognized statistical
rating organization ("NRSRO") or, if not rated, the issuer must have an
outstanding unsecured debt issue rated in the three highest categories by any
NRSRO or, if not so rated, be of equivalent quality in the Advisor's assessment.
Commercial Paper may include Master Notes of the same quality. MASTER NOTES are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian, acting as administrator thereof. The Advisor will monitor,
on a continuous basis, the earnings power, cash flow and other liquidity ratios
of the issuer of a Master Note held by the Fund.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Advisor felt such action was appropriate. In such a case
the Fund could incur a short-term gain or loss.
- 3 -
<PAGE>
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations, in addition to those
described in the Prospectus, which cannot be changed without approval by holders
of a majority of the outstanding voting shares of the Fund. A "majority" for
this purpose, means the lesser of (i) 67% of the Fund's outstanding shares
represented in person or by proxy at a meeting at which more than 50% of its
outstanding shares are represented, or (ii) more than 50% of its outstanding
shares.
Under these limitations, the Fund MAY NOT:
(1) Invest for the purpose of exercising control or management of another
issuer;
(2) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Fund may
invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things;
(3) Underwrite securities issued by others, except to the extent the Fund may
be deemed to be an underwriter under the federal securities laws in
connection with the disposition of portfolio securities;
(4) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
(5) Make short sales of securities or maintain a short position, except short
sales "against the box";
(6) Participate on a joint or joint and several basis in any trading account in
securities;
(7) Make loans of money or securities, except that the Fund may invest in
repurchase agreements;
(8) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors);
(9) Write, purchase or sell commodities, commodities contracts, futures
contracts or related options; or
(10) Invest in restricted securities.
- 4 -
<PAGE>
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation.
While the Fund has reserved the right to make short sales "against the box"
(limitation number 5, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Williamsburg Investment
Trust (the "Trust"), their present position with the Trust or Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- --------------- ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 61) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Tattersall, Inc.,
The Jamestown International Equity Richmond, Virginia;
The Jamestown Tax Exempt Virginia Fund Director of Tredegar Industries,
6620 West Broad Street Inc. (plastics manufacturer) and
Suite 300 Wilkinson O'Grady & Co. Inc.
Richmond, Virginia 23230 (global asset manager); Trustee
of University of Richmond
John T. Bruce (age 44) Principal of None
Trustee and Chairman** Flippin, Bruce & Porter, Inc.,
Vice President Lynchburg, Virginia
FBP Contrarian Balanced Fund
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Charles M. Caravati, Jr. (age 61) Physician $9,000
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
- 5 -
<PAGE>
J. Finley Lee (age 58) Julian Price Professor Emeritus of $9,000
Trustee Business Administration
614 Croom Court University of North Carolina,
Chapel Hill, North Carolina 27514 Chapel Hill, North Carolina;
Director of Montgomery Indemnity
Insurance Co.; Trustee of Albemarle
Investment Trust (registered
investment company)
Richard Mitchell (age 49) Principal of None
Trustee** T. Leavell & Associates, Inc.,
President Mobile, Alabama
The Government Street Bond Fund
The Government Street Equity Fund
The Alabama Tax Free Bond Fund
150 Government Street
Mobile, Alabama 36602
Richard L. Morrill (age 59) President of $9,000
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc.
Harris V. Morrissette (age 38) President of $8,000
Trustee Marshall Biscuit Co. Inc.,
1500 S. Beltline Hwy. Mobile, Alabama;
Mobile, Alabama 36693 Chairman of Azalea Aviation, Inc.
(airplane fueling); Director of
South Alabama Bank and
South Alabama Bancorporation
Fred T. Tattersall (age 49) Managing Director of None
Trustee** Tattersall Advisory Group, Inc.,
President Richmond, Virginia
The Jamestown Bond Fund
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Erwin H. Will, Jr. (age 65) Chief Investment Officer of $6,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
- 6 -
<PAGE>
Samuel B. Witt III (age 62) Senior Vice President and $9,000
Trustee General Counsel of Stateside
2300 Clarendon Blvd. Associates, Inc., Arlington,
Suite 407 Virginia; Director of The Swiss
Arlington, Virginia 22201 Helvetia Fund, Inc. (closed-end
investment company)
John P. Ackerly IV (age 35) Portfolio Manager of
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia;
One James Center, 901 E. Cary St. prior to February 1994, a
Richmond, Virginia 23219 Portfolio Manager with
Central Fidelity Bank
Joseph L. Antrim III (age 53) Executive Vice President of
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Charles M. Caravati III (age 32) Assistant Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 56) Principal of
President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Timothy S. Healey (age 45) Principal of
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
- 7 -
<PAGE>
J. Lee Keiger III (age 43) First Vice President and Chief Financial
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
R. Gregory Porter, III (age 57) Principal of
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Mark J. Seger (age 36) Vice President of Countrywide Fund Services,
Treasurer Inc., (registered transfer agent and administrator
312 Walnut Street, 21st Floor to the Trust), CW Fund Distributors, Inc.
Cincinnati, Ohio 45202 (registered broker-dealer) and Countrywide
Financial Services, Inc. (financial services
company); Treasurer of Countrywide Investment
Trust, Countrywide Tax-Free Trust and Countrywide
Strategic Trust (registered investment companies),
Cincinnati, Ohio
Henry C. Spalding, Jr. (age 60) Executive Vice President of
President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John F. Splain (age 41) Vice President, General Counsel and Secretary
Secretary of Countrywide Fund Services, Inc. and CW Fund
312 Walnut Street, 21st Floor Distributors, Inc.; General Counsel and Secretary of
Cincinnati, Ohio 45202 Countrywide Investments, Inc. and Countrywide Financial
Services, Inc.; Secretary of Countrywide Investment Trust;
Countrywide Tax-Free Trust and Countrywide Strategic
Trust, Cincinnati, Ohio
Ernest H. Stephenson, Jr. (age 53) Vice President of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
- 8 -
<PAGE>
Connie R. Taylor (age 47) Administrator of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Craig D. Truitt (age 39) Senior Vice President of
Vice President Tattersall Advisory Group, Inc.,
The Jamestown Bond Fund Richmond, Virginia
The Jamestown Short Term Bond Fund
6802 Paragon Place
Suite 200
Richmond, Virginia 23230
Beth Ann Walk (age 39) Portfolio Manager of
Vice President Lowe, Brockenbrough & Tattersall, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 52) President and Chief Executive
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the 1940 Act.
Charles M. Caravati, Jr. is the father of Charles M. Caravati III.
Messrs. Lee, Morrill, Morrissette, Will and Witt constitute the Trust's
Nominating Committee. Messrs. Caravati, Lee, Morrill, Morrissette, Will and Witt
constitute the Trust's Audit Committee. The Audit Committee reviews annually the
nature and cost of the professional services rendered by the Trust's independent
accountants, the results of their year-end audit and their findings and
recommendations as to accounting and financial matters, including the adequacy
of internal controls. On the basis of this review the Audit Committee makes
recommendations to the Trustees as to the appointment of independent accountants
for the following year.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) 3.8% of the then outstanding shares of the Fund. On the same
date, Robert B. Seidensticker, 352 Rolling Lake Court, Manakin, Virginia 23103,
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<PAGE>
owned of record 8.4% of the then outstanding shares of the Fund; the Susan F.
Lavenstein Trust, c/o Lowe, Brockenbrough & Tattersall, Inc., 6620 West Broad
Street, Richmond, Virginia 23230, owned of record 5.4% of the then outstanding
shares of the Fund; and Doris L. Crickenberger, together with the Doris L.
Crickenberger Trust, 607 Henri Road, Richmond, Virginia 23226, owned of record
5.9% of the then outstanding shares of the Fund.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Tattersall, Inc. (the "Advisor") supervises the Fund's
investments pursuant to an Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement is effective until February
28, 1999 and will be renewed thereafter for one year periods only so long as
such renewal and continuance is specifically approved at least annually by the
Board of Trustees or by vote of a majority of the Fund's outstanding voting
securities, provided the continuance is also approved by a majority of the
Trustees who are not "interested persons" of the Trust or the Advisor by vote
cast in person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement is terminable without penalty on sixty days notice by the
Board of Trustees of the Trust or by the Advisor. The Advisory Agreement
provides that it will terminate automatically in the event of its assignment.
Compensation of the Advisor, 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
years ended March 31, 1998, 1997 and 1996, the Fund paid the Advisor advisory
fees of $56,311 (which was net of voluntary fee waivers of $4,939), $27,398 (net
of voluntary fee waivers of $14,090) and $9,576 (net of voluntary fee waivers of
$23,645), respectively.
The Advisor, organized as a Virginia corporation in 1970, is controlled by its
sole shareholder, Austin Brockenbrough, III. In addition to acting as Advisor to
the Fund, the Advisor serves as investment advisor to three additional
investment companies, the subjects of separate prospectuses, and also provides
investment advice to corporations, trusts, pension and profit sharing plans,
other business and institutional accounts and individuals.
The Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Fund. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Fund, and does
so in accordance with the investment objectives and policies of the Fund as
described herein and in the Prospectus. The Advisor places all securities orders
for the Fund, determining with which broker, dealer, or issuer to place the
orders.
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<PAGE>
The Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Advisor must seek at all
times the most favorable price and execution for all securities brokerage
transactions.
The Advisor also provides, at its own expense, certain Executive Officers to the
Trust, and pays the entire cost of distributing Fund shares.
The Advisor may compensate dealers or others based on sales of shares of the
Fund to clients of such dealers or others or based on the average balance of all
accounts in the Fund for which such dealers or others are designated as the
person responsible for the account.
ADMINISTRATOR
Countrywide Fund Services, Inc. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator also provides accounting and pricing
services to the Fund and supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. The Administrator supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Fund pays the
Administrator a fee at the annual rate of 0.15% of the average value of its
daily net assets up to $200,000,000 and 0.10% of such assets in excess of
$200,000,000; provided, however, that the minimum fee is $2,000 per month. In
addition, the Fund pays out-of-pocket expenses, including but not limited to,
postage, envelopes, checks, drafts, forms, reports, record storage and
communication lines.
For the fiscal years ended March 31, 1998, 1997 and 1996, the Administrator
received from the Fund fees of $25,157, $24,000 and $24,000, respectively.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Suite 800,
Philadelphia, Pennsylvania 19103, has been retained by the Board of Trustees to
perform an independent audit of the books and records of the Trust, to review
the Fund's federal and state tax returns and to consult with the Trust as to
matters of accounting and federal and state income taxation.
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<PAGE>
The Custodian of the Fund's assets is Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202. The Custodian holds all cash and securities of the Fund
(either in its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act), collects all income
and effects all securities transactions on behalf of the Fund.
BROKERAGE
It is the Fund's practice to seek the best price and execution for all portfolio
securities transactions. The Advisor (subject to the general supervision of the
Board of Trustees) directs the execution of the Fund's portfolio transactions.
The Trust has adopted a policy which prohibits the Advisor from effecting Fund
portfolio transactions with broker-dealers which may be interested persons of
the Fund, the Trust, any Trustee, officer or director of the Trust or its
investment advisors or any interested person of such persons.
The Fund's portfolio transactions will normally be principal transactions
executed in over-the-counter markets and will be executed on a "net" basis,
which may include a dealer markup.
No brokerage commissions were paid by the Fund for the last three fiscal years.
While there is no formula, agreement or undertaking to do so, the Advisor may
allocate a portion of the Fund's brokerage commissions to persons or firms
providing the Advisor with research services, which may typically include, but
are not limited to, investment recommendations, financial, economic, political,
fundamental and technical market and interest rate data, and other statistical
or research services. Much of the information so obtained may also be used by
the Advisor for the benefit of the other clients it may have. Conversely, the
Fund may benefit from such transactions effected for the benefit of other
clients. In all cases, the Advisor is obligated to effect transactions for the
Fund based upon obtaining the most favorable price and execution. Factors
considered by the Advisor in determining whether the Fund will receive the most
favorable price and execution include, among other things: the size of the
order, the broker's ability to effect and settle the transaction promptly and
efficiently and the Advisor's perception of the broker's reliability, integrity
and financial condition.
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<PAGE>
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts, estates
and others, investors are free to make additions and withdrawals to or from
their account as often as they wish. When an investor makes an initial
investment in the Fund, a shareholder account is opened in accordance with the
investor's registration instructions. Each time there is a transaction in a
shareholder account, such as an additional investment or the reinvestment of a
dividend or distribution, the shareholder will receive a statement showing the
current transaction and all prior transactions in the shareholder account during
the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the last business day of the month or quarter.
The shareholder may change the amount of the investment or discontinue the plan
at any time by writing to the Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Checks will be made payable to the designated recipient and mailed within three
business days of the valuation date. If the designated recipient is other than
the registered shareholder, the signature of each shareholder must be guaranteed
on the application (see "Signature Guarantees"). A corporation (or partnership)
must also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Fund. Shareholders should be aware that such systematic withdrawals
may deplete or use up entirely their initial investment and may result in
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<PAGE>
realized long-term or short-term capital gains or losses. The Systematic
Withdrawal Plan may be terminated at any time by the Fund upon sixty days'
written notice or by a shareholder upon written notice to the Fund. Applications
and further details may be obtained by calling the Fund at 1-800-443-4249, or by
writing to:
The Jamestown Tax Exempt Virginia Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares of the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus.
REDEMPTIONS IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election may be filed under
Rule 18f-1 of the 1940 Act, wherein the Fund commits itself to pay redemptions
in cash, rather than in kind, to any shareholder of record of the Fund who
redeems during any ninety day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the existing account registration; (2) signature(s) of the
registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (see the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
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<PAGE>
PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received. An order received prior to 4:00 p.m. Eastern time
will be executed at the price computed on the date of receipt; and an order
received after that time will be executed at the price computed on the next
Business Day. An order to purchase shares is not binding on the Fund until
confirmed in writing (or unless other arrangements have been made with the Fund,
for example in the case of orders utilizing wire transfer of funds) and payment
has been received.
The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
EMPLOYEES AND AFFILIATES OF THE FUND. The Fund has adopted initial investment
minimums for the purpose of reducing the cost to the Fund (and consequently to
the shareholders) of communicating with and servicing its shareholders. However,
a reduced minimum initial investment requirement of $1,000 applies to Trustees,
officers and employees of the Fund, the Advisor and certain parties related
thereto, including clients of the Advisor or any sponsor, officer, committee
member thereof, or the immediate family of any of them. In addition, accounts
having the same mailing address may be aggregated for purposes of the minimum
investment if they consent in writing to share a single mailing of shareholder
reports, proxy statements (but each such shareholder would receive his/her own
proxy) and other Fund literature.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "Exchange") is closed,
or trading on the Exchange is restricted as determined by the Securities and
Exchange Commission (the "Commission"), (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
fairly determine the value of its assets, and (iii) for such other periods as
the Commission may permit.
No charge is made by the Fund for redemptions, although the Trustees could
impose a redemption charge in the future. Any redemption may be more or less
than the shareholder's cost depending on the market value of the securities held
by the Fund.
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<PAGE>
NET ASSET VALUE DETERMINATION
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund, and they have
adopted procedures to do so, as follows. The net asset value of the Fund is
determined as of the close of trading of the Exchange (currently 4:00 p.m.
Eastern time) on each "Business Day." A Business Day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
ALLOCATION OF TRUST EXPENSES
Each Fund of the Trust pays all of its own expenses not assumed by the Advisor
or the Administrator, including, but not limited to, the following: custodian,
shareholder servicing, stock transfer and dividend disbursing expenses; clerical
employees and junior level officers of the Trust as and if approved by the Board
of Trustees; taxes; expenses of the issuance and redemption of shares (including
registration and qualification fees and expenses); costs and expenses of
membership and attendance at meetings of certain associations which may be
deemed by the Trustees to be of overall benefit to the Fund and its
shareholders; legal and auditing expenses; and the cost of stationery and forms
prepared exclusively for the Fund. General Trust expenses are allocated among
the series, or funds, on a fair and equitable basis by the Board of Trustees,
which may be based on relative net assets of each fund (on the date the expense
is paid) or the nature of the services performed and the relative applicability
to each fund.
ADDITIONAL TAX INFORMATION
TAXATION OF THE FUND. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). Among its requirements to qualify under Subchapter M, the Fund
must distribute annually at least 90% of its net taxable income plus 90% of its
net tax-exempt interest income. In addition to this distribution requirement,
the Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities' loans, gains from the
disposition of stock or securities, and certain other income.
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<PAGE>
While the above requirements are aimed at qualification of the Fund as a
regulated investment company under Subchapter M of the Code, the Fund also
intends to comply with certain requirements of the Code to avoid liability for
federal income and excise tax. If the Fund remains qualified under Subchapter M,
it will not be subject to federal income tax to the extent it distributes its
taxable net investment income and net realized capital gains. A nondeductible 4%
federal excise tax will be imposed on the Fund to the extent it does not
distribute at least 98% of its ordinary taxable income for a calendar year, plus
98% of its capital gain net taxable income for the one year period ending each
October 31, plus certain undistributed amounts from prior years. Such required
distributions are based only on the Fund's taxable income, however, so the
excise tax generally would not apply to tax-exempt income earned by the Fund.
While the Fund intends to distribute its taxable income and capital gains in a
manner so as to avoid imposition of the federal excise and income taxes, there
can be no assurance that the Fund indeed will make sufficient distributions to
avoid entirely imposition of federal excise or income taxes.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
TAX STATUS OF THE FUND'S DIVIDENDS AND DISTRIBUTIONS. Dividends paid by the Fund
derived from net investment income or net short-term capital gains are taxable
to shareholders as ordinary income, whether received in cash or reinvested in
additional shares. Since federal and Virginia tax laws exempt income from
qualifying municipal bond obligations, income dividends attributable to such
obligations are exempt from such taxes. A report will be distributed to each
shareholder as of December 31st of each year outlining the percentage of income
dividends which qualify for such tax exemptions. Distributions, if any, of
long-term capital gains are taxable to shareholders as long-term capital gains,
whether received in cash or reinvested in additional shares, regardless of how
long Fund shares have been held. Such capital gain distributions are also
subject to Virginia income tax, except to the extent attributable to gains from
certain obligations of the Commonwealth of Virginia and its political
subdivisions. For information on "backup" withholding, see "How to Purchase
Shares" in the Prospectus.
For federal income tax purposes, any loss upon the sale of shares of the Fund
held for six months or less will be treated as long-term capital loss to the
extent of any long-term capital gain distributions received by the shareholder.
In addition, any loss of Fund shares held for six months or less will be
disallowed for both federal and Virginia income tax purposes to the extent of
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<PAGE>
any dividends received by the shareholder exempt from federal income tax, even
though, in the case of Virginia, some portion of such dividends actually may
have been subject to Virginia income tax.
CAPITAL SHARES AND VOTING
Shares of the Fund, when issued, are fully paid and non-assessable and have no
preemptive or conversion rights. Shareholders are entitled to one vote for each
full share and a fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of the Trustees
and, in this event, the holders of the remaining shares voting will not be able
to elect any Trustees. The Trustees will hold office indefinitely, except that:
(1) any Trustee may resign or retire and (2) any Trustee may be removed with or
without cause at any time (a) by a written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal; or (b) by vote of
shareholders holding not less than two-thirds of the outstanding shares of the
Trust, cast in person or by proxy at a meeting called for that purpose; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders for the purpose of
voting on the removal of one or more Trustees. Shareholders holding not less
than ten percent (10%) of the shares then outstanding may require the Trustees
to call such a meeting and the Trustees are obligated to provide certain
assistance to shareholders desiring to communicate with other shareholders in
such regard (e.g., providing access to shareholder lists, etc.). In case a
vacancy or an anticipated vacancy shall for any reason exist, the vacancy shall
be filled by the affirmative vote of a majority of the remaining Trustees,
subject to the provisions of Section 16(a) of the 1940 Act. The Trust does not
expect to have an annual meeting of shareholders.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Fund for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income
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<PAGE>
dividends and capital gain distributions), and dividing the result by the net
asset value per share at the beginning of the period. In particular, the average
annual total return of the Fund ("T") is computed by using the redeemable value
at the end of a specified period of time ("ERV") of a hypothetical initial
investment of $1,000 ("P") over a period of time ("n") according to the formula
P(l+T)n=ERV. The average annual total return quotations for the Fund for the one
year period ended March 31, 1998 and for the period since inception (September
1, 1993) to March 31, 1998 are 8.00% and 4.89%, respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may consist of a cumulative
percentage of return, actual year-by-year rates or any combination thereof.
From time to time, the Fund may advertise its yield and tax-equivalent yield. A
yield quotation is based on a 30-day (or one month) period and is computed by
dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period, according to the
following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The Fund's yield for the 30 days ended March 31, 1998 was 4.21%.
The tax-equivalent yield of the Fund is computed by using the tax-exempt yield
figure and dividing by one minus the applicable tax rate. The Fund's
tax-equivalent yield for the 30 days ended March 31, 1998, based on the highest
marginal combined federal and Virginia income tax rate, was 7.40%.
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The Fund's performance may be compared in advertisements, sales literature and
other communications to the performance of other mutual funds having similar
objectives or to standardized indices or other measures of investment
performance. In particular, the Fund may compare its performance to the Lehman
Municipal Bond Index, which is generally considered to be representative of the
performance of municipal bonds. Comparative performance may also be expressed by
reference to a ranking prepared by a mutual fund monitoring service, such as
Lipper Analytical Services, Inc. or Morningstar, Inc., or by one or more
newspapers, newsletters or financial periodicals. Performance comparisons may be
useful to investors who wish to compare the Fund's past performance to that of
other mutual funds and investment products. Of course, past performance is not a
guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by
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independent rating services such as S&P and Moody's). The Fund may also depict
the historical performance of the securities in which the Fund may invest over
periods reflecting a variety of market or economic conditions either alone or in
comparison with alternative investments, performance indices of those
investments, or economic indicators. The Fund may also include in advertisements
and in materials furnished to present and prospective shareholders statements or
illustrations relating to the appropriateness of types of securities and/or
mutual funds that may be employed to meet specific financial goals, such as
saving for retirement, children's education, or other future needs.
FINANCIAL STATEMENTS AND REPORTS
The books of the Fund will be audited at least once each year by independent
public accountants. Shareholders will receive annual audited and semiannual
(unaudited) reports when published and will receive written confirmation of all
confirmable transactions in their account. A copy of the Annual Report will
accompany the Statement of Additional Information ("SAI") whenever the SAI is
requested by a shareholder or prospective investor. The Financial Statements of
the Fund as of March 31, 1998, together with the report of the independent
accountants thereon, are included on the following pages.
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<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
--------------------------------------
No Load Mutual Fund
Annual Report
March 31, 1998
Investment Adviser Administrator
Lowe, Brockenbrough & Tattersall, Inc. Countrywide Fund Services, Inc.
6620 West Broad Street 312 Walnut Street
Suite 300 P.O. Box 5354
Richmond, Virginia 23230 Cincinnati, Ohio 45201-5354
1.804.288.0404 1.800.443.4249
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
MANAGEMENT DISCUSSION AND ANALYSIS
March 31, 1998
PERFORMANCE OF THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
For the fiscal year ended March 31, 1998, The Jamestown Tax Exempt Virginia Fund
had a total return of 8.01% after operating expenses. The Lipper Intermediate
Municipal Bond Index advanced 8.03% during this same period. Some key
characteristics of the fund are as follows:
- ---------------------------------------------- --------------------
Average Effective Maturity/Duration 8.2 yrs/6.1 yrs
- ---------------------------------------------- --------------------
- ---------------------------------------------- --------------------
Average Weighted Coupon 5.7%
- ---------------------------------------------- --------------------
- ---------------------------------------------- --------------------
SEC Yield 4.2%
- ---------------------------------------------- --------------------
- ---------------------------------------------- --------------------
Average Credit Quality AA+
- ---------------------------------------------- --------------------
During the first three months of this year, the municipal bond market
experienced a massive avalanche of new issue supply, with total volume up 70%
from 1997 levels. This increase in issuance has prevented municipal yields from
falling as sharply as taxable yields over the past year. Also, the municipal
yield curve maintains a decent shape, where the difference in yield between
2-year insured bonds and 17-year insured bonds is roughly 120 basis points.
Beyond long intermediates, however, the reward associated with additional length
is quite modest, since 30-year insured bonds yield only about 13 basis points
more than 17-year paper. By comparison the taxable yield curve is extremely
flat, with 30-year Treasuries yielding only 40 basis points more than 2-year
paper. Therefore, municipals are very attractive on a relative yield basis to
taxable bonds, and we find the most value in 10-15 year, AAA, insured municipal
bonds.
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
Comparison of the Change in Value of a $10,000 Investment in The Jamestown Tax
Exempt Virginia Fund and the Lehman Municipal Bond Index.
LEHMAN MUNICIPAL BOND INDEX: THE JAMESTOWN TAX EXEMPT
VIRGINIA FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
09/01/93 10,000 09/01/93 10,000
09/30/93 1.14% 10,114 09/30/93 1.20% 10,120
12/31/93 1.41% 10,256 12/31/93 1.54% 10,275
03/31/94 -5.49% 9,693 03/31/94 -4.35% 9,828
06/30/94 1.11% 9,801 06/30/94 0.79% 9,906
09/30/94 0.68% 9,868 09/30/94 0.72% 9,978
12/31/94 -1.44% 9,726 12/31/94 -0.80% 9,898
03/31/95 7.07% 10,414 03/31/95 4.73% 10,366
06/30/95 2.41% 10,665 06/30/95 2.21% 10,596
09/30/95 2.87% 10,971 09/30/95 1.98% 10,806
12/31/95 4.13% 11,424 12/31/95 2.78% 11,106
03/31/96 -1.20% 11,287 03/31/96 -0.59% 11,041
06/30/96 0.76% 11,372 06/30/96 0.63% 11,110
09/30/96 2.29% 11,633 09/30/96 1.65% 11,293
12/31/96 2.55% 11,929 12/31/96 2.15% 11,536
03/31/97 -0.24% 11,901 03/31/97 -0.10% 11,525
06/30/97 3.44% 12,310 06/30/97 2.69% 11,835
09/30/97 3.02% 12,682 09/30/97 2.12% 12,086
12/31/97 2.71% 13,026 12/31/97 2.20% 12,352
03/31/98 1.15% 13,175 03/31/98 0.78% 12,448
LIPPER INTERMEDIATE MUNICIPAL FUND INDEX
QTRLY
DATE RETURN BALANCE
09/01/93 10,000
09/30/93 1.14% 10,114
12/31/93 1.18% 10,233
03/31/94 -3.89% 9,835
06/30/94 0.92% 9,926
09/30/94 0.59% 9,984
12/31/94 -3.54% 9,631
03/31/95 4.94% 10,107
06/30/95 1.66% 10,274
09/30/95 2.26% 10,507
12/31/95 2.58% 10,778
03/31/96 -0.66% 10,707
06/30/96 0.49% 10,759
09/30/96 1.63% 10,934
12/31/96 2.09% 11,163
03/31/97 -0.09% 11,153
06/30/97 2.57% 11,439
09/30/97 2.36% 11,709
12/31/97 2.07% 11,952
03/31/98 0.89% 12,058
The Jamestown Tax Exempt Virginia Fund Average Annual Total Returns
1 Year Since Inception*
8.00% 4.89%
*Initial public offering of shares was September 1, 1993.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<CAPTION>
<S> <C>
ASSETS
Investments in securities:
At acquisition cost $ 17,429,901
============
At value (Note 1) $ 18,012,103
Interest receivable 240,742
Other assets 290
------------
TOTAL ASSETS 18,253,135
------------
LIABILITIES
Dividends payable 28,883
Payable for capital shares redeemed 419
Accrued advisory fees (Note 3) 5,195
Accrued administration fees (Note 3) 2,280
Other accrued expenses 3,630
------------
TOTAL LIABILITIES 40,407
------------
NET ASSETS $ 18,212,728
============
Net assets consist of:
Paid-in capital $ 17,629,744
Accumulated net realized gains from
security transactions 782
Net unrealized appreciation on investments 582,202
------------
Net assets $ 18,212,728
============
Shares of beneficial interest outstanding
(unlimited number of shares
authorized, no par value) 1,793,260
============
Net asset value, offering price and redemption
price per share (Note 1) $ 10.16
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1998
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest $ 788,716
-----------
EXPENSES
Investment advisory fees (Note 3) 61,250
Administration fees (Note 3) 25,157
Professional fees 8,996
Pricing costs 5,831
Trustees' fees and expenses 5,405
Custodian fees 3,600
Printing of shareholder reports 2,912
Registration fees 2,733
Postage and supplies 2,338
Other expenses 1,561
-----------
TOTAL EXPENSES 119,783
Fees waived by the Adviser (Note 3) (4,939)
-----------
NET EXPENSES 114,844
-----------
NET INVESTMENT INCOME 673,872
-----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 57,902
Net change in unrealized appreciation/depreciation on investments 399,917
-----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 457,819
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,131,691
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1998 and 1997
<CAPTION>
Year Year
Ended Ended
March 31, March 31,
1998 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 673,872 $ 468,504
Net realized gains from security transactions 57,902 16,747
Net change in unrealized appreciation/depreciation
on investments 399,917 (32,780)
------------ ------------
Net increase in net assets from operations 1,131,691 452,471
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (673,872) (468,504)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 8,481,218 3,430,016
Net asset value of shares issued in reinvestment
of distributions to shareholders 360,594 251,004
Payments for shares redeemed (2,284,029) (1,247,016)
------------ ------------
Net increase in net assets from capital share transactions 6,557,783 2,434,004
------------ ------------
TOTAL INCREASE IN NET ASSETS 7,015,602 2,417,971
NET ASSETS:
Beginning of year 11,197,126 8,779,155
------------ ------------
End of year $ 18,212,728 $ 11,197,126
============ ============
Capital share activity:
Sold 843,460 349,394
Reinvested 35,724 25,420
Redeemed (225,366) (126,290)
------------ ------------
Net increase in shares outstanding 653,818 248,524
Shares outstanding, beginning of year 1,139,442 890,918
------------ ------------
Shares outstanding, end of year 1,793,260 1,139,442
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout
Each Period
<CAPTION>
Period
Years ended March 31, Ended
March 31,
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%
(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
Adviser, 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 (Note 3).
(c) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS
March 31, 1998
<CAPTION>
Par
Amount Value
VIRGINIA FIXED RATE REVENUE AND GENERAL
OBLIGATION (GO) BONDS - 98.1%
<S> <C> <C>
Arlington Co., Virginia, GO,
$700,000 5.60%, due 08/01/2006 $ 759,409
------------
Augusta Co., Virginia, Industrial Dev. Authority, Hospital, Revenue,
500,000 7.00%, due 09/01/2021, prerefunded 09/01/2001 552,780
------------
Brunswick Co., Virginia, Industrial Dev. Authority, Revenue,
300,000 5.45%, due 07/01/2006 320,718
------------
Chesterfield Co., Virginia, GO,
350,000 6.25%, due 07/15/2005 378,581
------------
Fairfax Co., Virginia, GO,
350,000 5.60%, due 05/01/2003 361,004
------------
Fairfax Co., Virginia, Park Authority, Revenue,
300,000 6.25%, due 07/15/2005 326,514
------------
Fairfax Co., Virginia, Sewer, Revenue,
350,000 5.625%, due 07/15/2008 381,297
------------
Hanover Co., Virginia, Industrial Dev. Authority, Revenue,
225,000 6.25%, due 10/01/2011 241,472
------------
Henrico Co., Virginia, GO,
500,000 4.70%, due 01/15/2002 511,460
------------
James City Co., Virginia, GO,
500,000 5.25%, due 12/15/2015 506,410
------------
Loudoun Co., Virginia, GO,
300,000 5.50%, due 06/01/2009 321,204
------------
Lynchburg, Virginia, GO,
500,000 5.30%, due 05/01/2014 512,065
------------
Newport News, Virginia, GO,
400,000 5.40%, due 07/01/2002 409,048
------------
Norfolk, Virginia, GO,
300,000 5.75%, due 06/01/2011 320,718
------------
Norfolk, Virginia, Industrial Dev. Authority, Hospital, Revenue,
350,000 6.80%, due 06/01/2005 398,958
------------
<PAGE>
<CAPTION>
Par
Amount Value
Virginia - Continued
<S> <C> <C>
Petersburg, Virginia, GO,
$500,000 5.125%, due 01/15/2013 $ 505,580
------------
Peumansend Creek, Virginia, Regional Jail Authority, Revenue,
300,000 5.75%, due 06/01/2017 319,407
------------
Pittsylvania Co., Virginia, GO,
300,000 5.65%, due 07/01/2006 323,646
------------
Portsmouth, Virginia, GO,
800,000 5.00%, due 08/01/2017 785,360
------------
Prince William Co., Virginia, GO,
400,000 4.90%, due 08/01/2005 413,664
------------
Prince William Co., Virginia, Park Authority, Revenue,
250,000 6.10%, due 10/15/2004 273,175
------------
Prince William Co., Virginia, Service Auth. Water & Sewer, Revenue,
150,000 6.40%, due 07/01/2004, prerefunded 07/01/2001 163,063
500,000 5.00%, due 07/01/2003 517,685
------------
680,748
------------
Richmond, Virginia, GO,
400,000 6.25%, due 01/15/2018 426,276
------------
Richmond, Virginia, Metropolitan Authority, Expressway, Revenue,
500,000 6.05%, due 07/15/2005 542,230
------------
Richmond, Virginia, Public Utility, Revenue,
150,000 7.10%, due 01/15/2000, prerefunded 05/15/1998 153,365
------------
Riverside, Virginia, Regional Jail Authority, Revenue,
300,000 5.30%, due 07/01/2002 313,533
------------
Roanoke, Virginia, GO,
300,000 6.40%, due 08/01/2012 328,281
------------
Roanoke Co., Virginia, Water System, Revenue,
400,000 6.00%, due 07/01/2031, prerefunded 07/01/2001 423,000
------------
Spotsylvania Co., Virginia, GO,
400,000 5.75%, due 07/15/2011 425,076
------------
<PAGE>
<CAPTION>
Par
Amount Value
Virginia - Continued
Suffolk, Virginia, GO,
$350,000 5.80%, due 06/01/2011 $ 379,162
------------
Upper Occoquan, Virginia, Sewer Authority, Revenue,
700,000 5.00% due 07/01/2015 692,769
------------
Virginia Beach, Virginia, GO,
325,000 6.20%, due 09/01/2013 364,045
------------
Virginia College Building Authority, Educational Facilities, Revenue,
500,000 5.00%, due 09/01/2014 496,110
------------
Virginia Commonwealth University, Revenue,
250,000 5.75%, due 05/01/2006 271,853
------------
Virginia State, GO,
500,000 5.375%, due 06/01/2015 514,095
------------
Virginia State Housing Dev. Authority, Commonwealth Mortgages, Revenue,
150,000 5.60%, due 01/01/2002 155,112
------------
Virginia State Housing Dev. Authority, Multi Family, Revenue,
150,000 6.60%, due 11/01/2012 163,483
150,000 6.30%, due 11/01/2015 159,362
------------
322,845
------------
Virginia State Public Building Authority, Revenue,
500,000 6.00%, due 08/01/2003 532,205
------------
Virginia State Public School Authority, Revenue,
250,000 5.90%, due 08/01/2006 268,360
------------
Virginia State Resource Authority, Solid Waste Disposal System, Revenue,
500,000 5.50%, due 04/01/2015 512,115
------------
Virginia State Transportation Board, Revenue,
350,000 6.25%, due 05/15/2012, prerefunded 05/15/2004 384,118
------------
Winchester, Virginia, Ind. Dev. Authority, Educational Facilities, Revenue,
500,000 5.00% due 10/01/2018 487,485
------------
<PAGE>
<CAPTION>
Par
Amount Value
<S> <C> <C>
Virginia - Continued
York Co., Virginia, Certificates of Participation, Revenue,
$250,000 6.625%, due 03/01/2012 $ 265,230
------------
Total Virginia Fixed Rate Revenue and General
Obligation (GO) Bonds (Cost $17,278,281) $ 17,860,483
------------
Shares
MONEY MARKETS - 0.8%
151,620 Star Tax Free Fund (Cost $151,620) $ 151,620
------------
Total Investments at Value (Cost $17,429,901) - 98.9% $ 18,012,103
Other Assets in Excess of Liabilities - 1.1% 200,625
------------
Net Assets - 100.0% $ 18,212,728
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Tax Exempt Virginia Fund (the Fund) is a no-load series of the
Williamsburg Investment Trust (the Trust), an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Trust was organized as a Massachusetts business trust on July 18, 1988. The Fund
began operations on September 1, 1993.
The 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
and enhance the value of an investment in the Fund. The Fund invests primarily
in debt obligations issued by the State of Virginia and its political
subdivisions, agencies, authorities and instrumentalities and by other issuers
the interest from which is exempt from the personal income taxes of Virginia.
The marketability and market value of these obligations may be affected by
certain Virginia constitutional amendments, legislative measures, executive
orders, administrative regulations, voter initiatives and other political and
economic developments. If any such developments arise, they could adversely
affect the ability of various Virginia issuers to meet their financial
obligations and could impact the Fund's portfolio.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. The Fund's securities will ordinarily be traded on
the over-the-counter market. When market quotations are not readily available,
securities may be valued on the basis of prices provided by an independent
pricing service. If a pricing service cannot provide a valuation, securities
will be valued in good faith at fair market value using methods consistent with
those determined by the Board of Trustees.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Discounts and premiums on securities purchased are amortized
in accordance with income tax regulations. Dividends arising from net investment
income are declared daily and paid on the last business day of each month to
shareholders of the Fund. Net realized short-term capital gains, if any, may be
distributed throughout the year and net realized long-term capital gains, if
any, are distributed at least once each year. Income distributions and capital
gain distributions are determined in accordance with income tax regulations,
which may differ from generally accepted accounting principles.
Security transactions -- Security transactions are accounted for on trade
date. Cost of securities sold is determined on a specific identification basis.
<PAGE>
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, if any, the Fund (but
not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments of $17,429,901 as of March 31, 1998:
Gross unrealized appreciation......................................$ 591,267
Gross unrealized depreciation....................................... (9,065)
---------
Net unrealized appreciation .......................................$ 582,202
=========
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1998, purchases and proceeds from sales and
maturities of investment securities, other than short-term investments, amounted
to $11,791,783 and $4,833,802, respectively.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Lowe, Brockenbrough & Tattersall, Inc.
(the Adviser) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, the Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly at an annual rate of .40% of its
average daily net assets up to $250 million; .35% of the next $250 million of
such net assets; and .30% of such net assets in excess of $500 million. The
Adviser currently intends to limit the total operating expenses of the Fund to
.75% of average daily net assets. Accordingly, the Adviser voluntarily waived
$4,939 of its investment advisory fee for the year ended March 31, 1998. Certain
trustees and officers of the Trust are also officers of the Adviser.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust,
Countrywide Fund Services, Inc. (CFS) provides administrative, pricing,
accounting, dividend disbursing, shareholder servicing and transfer agent
services for the Fund. For these services, CFS receives a monthly fee from the
Fund at an annual rate of .15% of its average daily net assets up to $200
million and .10% of such net assets in excess of $200 million, subject to a
$2,000 minimum monthly fee. In addition, the Fund pays out-of-pocket expenses
including, but not limited to, postage, supplies and costs of pricing the Fund's
portfolio securities. Certain officers of the Trust are also officers of CFS.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Williamsburg Investment Trust
Cincinnati, Ohio
We have audited the accompanying statement of assets and liabilities of
The Jamestown Tax Exempt Virginia Fund (a series of The Williamsburg Investment
Trust), including the portfolio of investments, as of March 31, 1998, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Jamestown Tax Exempt Virginia Fund as of March 31, 1998, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for the periods referred to above, in conformity with generally accepted
accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 24, 1998
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements:
Included in Part A: Financial Highlights
Included in Part B: Statements of Assets and Liabilities, Statements
of Operations, Statements of Changes in Net Assets, Financial
Highlights and Portfolios of Investments as of March 31, 1998
(b) Exhibits:
1. Declaration of Trust*
2. Bylaws*
3. Not Applicable
4. See Exhibits 1 and 2
5. (i) Investment Advisory Agreement for The Jamestown Equity
Fund*
(ii) Investment Advisory Agreement for The Jamestown Balanced
Fund*
(iii) Sub-Advisory Agreement for The Jamestown Balanced Fund*
(iv) Investment Advisory Agreement for The Jamestown
International Equity Fund*
(v) Sub-Advisory Agreement for The Jamestown International
Equity Fund*
(vi) Investment Advisory Agreement for The Jamestown Tax Exempt
Virginia Fund*
(vii) Investment Advisory Agreements for The Jamestown Bond Fund
and The Jamestown Short Term Bond Fund*
(viii) Investment Advisory Agreements for the FBP Contrarian
Balanced Fund and the FBP Contrarian Equity Fund*
<PAGE>
(ix) Investment Advisory Agreements for The Government Street
Equity Fund, The Government Street Bond Fund and The Alabama
Tax Free Bond Fund*
(x) Investment Advisory Agreement for The Davenport Equity
Fund**
6. Underwriting Agreement between Williamsburg Investment Trust
and CW Fund Distributors**
7. Not Applicable
8. (i) Custodian Agreement with The Northern Trust Company*
(ii) Custodian Agreement with Star Bank, N.A.*
9. Administration, Accounting and Transfer Agency Agreement*
10. Opinion and Consent of Counsel*
11. Consent of Independent Public Accountants**
12. Not Applicable
13. Not Applicable
14. Not Applicable
15. Plan of Distribution Pursuant to Rule 12b-1*
16. Not Applicable
17. Financial Data Schedules**
18. Rule 18f-3 Plan Adopted With Respect to the Multiple Class
Distribution System*
- ---------------------
* Previously filed as Exhibit to Registration Statement on Form N-1A
** Filed herewith
Item 25. Persons Controlled by or under Common Control with Registrant
- -------- -------------------------------------------------------------
No person is directly or indirectly controlled by or under common
control with the Registrant.
<PAGE>
Item 26. Number of Holders of Securities
-------------------------------
Set forth is the number of record holders, as of June 30, 1998, of the
shares of the Trust:
Number of Record
Title of Class Holders
-------------- -------
Shares of beneficial interest of FBP
Contrarian Equity Fund 543
Shares of beneficial interest of
FBP Contrarian Balanced Fund 498
Shares of beneficial interest of The
Government Street Equity Fund 331
Shares of beneficial interest of The
Government Street Bond Fund 154
Shares of beneficial interest of The
Alabama Tax Free Bond Fund 116
Shares of beneficial interest of The
Jamestown Balanced Fund 266
Shares of beneficial interest of The
Jamestown Equity Fund 274
Shares of beneficial interest of The
Jamestown Bond Fund, Institutional
Shares 43
Shares of beneficial interest of The
Jamestown Bond Fund, Service Group
Shares 2
Shares of beneficial interest of The
Jamestown Short Term Bond Fund,
Institutional Shares 17
Shares of beneficial interest of The
Jamestown Short Term Bond Fund,
Service Group Shares 0
Shares of beneficial interest of The
Jamestown Tax Exempt Virginia Fund 67
Shares of beneficial interest of The
Jamestown International Equity Fund 208
Shares of beneficial interest of The
Davenport Equity Fund 2,176
<PAGE>
Item 27. Indemnification. Article VIII of the Registrant's Agreement and
Declaration of Trust provides for indemnification of officers and
trustees as follows:
SECTION 8.4 Indemnification of Trustees and Officers. Subject to
the limitations set forth in this Section 8.4, the Trust shall
indemnify (from the assets of the Fund or Funds to which the
conduct in question relates) each of its Trustees and officers,
including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust
has any interest as a shareholder, creditor or otherwise
(referred to hereinafter, together with such person's heirs,
executors, administrators or other legal representatives, as a
"covered person") against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any covered
person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such covered person may be or may have been involved as a party
or otherwise or with which such covered person may be or may have
been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or
trustee, except with respect to any matter as to which it has
been determined that such covered person (i) did not act in good
faith in the reasonable belief that his action was in or not
opposed to the best interests of the Trust or (ii) had acted with
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office
(either and both of the conduct described in clauses (i) and (ii)
above being referred to hereinafter as "Disabling Conduct"). A
determination that the covered person is entitled to
indemnification may be made by (i) a final decision on the merits
by a court or other body before whom the proceeding was brought
that such covered person was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative
action against such covered person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based
upon a review of the facts, that such covered person was not
liable by reason of Disabling Conduct by (a) vote of a majority
of a quorum of Trustees who are neither "interested persons" of
the Trust as the quoted phrase is
<PAGE>
defined in Section 2(a) (19) of the Investment Company Act of
1940 nor parties to the action, suit or other proceeding on the
same or similar grounds is then or has been pending or threatened
(such quorum of such Trustees being referred to hereinafter as
the "Disinterested Trustees"), or (b) an independent legal
counsel in a written opinion. Expenses, including accountants'
and counsel fees so incurred by any such covered person (but
excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to
time by the Fund or Funds to which the conduct in question
related in advance of the final disposition of any such action,
suit or proceeding; provided, that the covered person Shall have
undertaken to repay the amounts so paid if it is ultimately
determined that indemnification of such expenses is not
authorized under this Article VIII and if (i) the covered person
shall have provided security for such undertaking, (ii) the Trust
shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of the Independent Trustees, or an
independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as
opposed to a full inquiry), that there is reason to believe that
the covered person ultimately will be entitled to indemnification
hereunder.
SECTION 8.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any covered person referred to in Section
8.4 hereof, pursuant to a consent decree or otherwise, no such
indemnification either for said payment or for any other expenses
shall be provided unless such indemnification shall be approved
(i) by a majority of the Disinterested Trustees or (ii) by an
independent legal counsel in a written opinion. Approval by the
Independent Trustees pursuant to clause (ii) shall not prevent
the recovery from any covered person of any amount paid to such
covered person in accordance with either of such clauses as
indemnification if such covered person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such covered
person's action was in or not opposed to the best interests of
the Trust or to have been liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
covered person's office.
<PAGE>
SECTION 8.6 Indemnification Not Exclusive. The right of
indemnification provided by this Article VIII shall not be
exclusive of or affect any of the rights to which any covered
person may be entitled. Nothing contained in this Article VIII
shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons
may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on
behalf of any such person.
The Trust's Advisory Agreements provide for indemnification of each of
the Advisors as follows:
8.(b) Indemnification of Advisor. Subject to the limitations set
forth in this Subsection 8(b), the Trust shall indemnify, defend
and hold harmless (from the assets of the Fund or Funds to which
the conduct in question relates) the Advisor against all loss,
damage and liability, including but not limited to amounts paid
in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by the Advisor in connection with the
defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or
legislative body, related to or resulting from this Agreement or
the performance of services hereunder, except with respect to any
matter as to which it has been determined that the loss, damage
or liability is a direct result of (i) a breach of fiduciary duty
with respect to the receipt of compensation for services; or (ii)
wilful misfeasance, bad faith or gross negligence on the part of
the Advisor in the performance of its duties or from reckless
disregard by it of its duties under this Agreement (either and
both of the conduct described in clauses (i) and (ii) above being
referred to hereinafter as "Disabling Conduct"). A determination
that the Advisor is entitled to indemnification may be made by
(i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Advisor was not
liable by reason of Disabling Conduct, (ii) dismissal of a court
action or an administrative proceeding against the Advisor for
insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that
the Advisor was not liable by reason of Disabling Conduct by: (a)
vote of a majority of a quorum of Trustees who are
<PAGE>
neither "interested persons" of the Trust as the quoted phrase is
defined in Section 2(a)(19) of the Investment Company Act of 1940
nor parties to the action, suit or other proceeding on the same
or similar grounds that is then or has been pending or threatened
(such quorum of such Trustees being referred to hereinafter as
the "Independent Trustees"), or (b) an independent legal counsel
in a written opinion. Expenses, including accountants' and
counsel fees so incurred by the Advisor (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines or
penalties), may be paid from time to time by the Fund or Funds to
which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided,
that the Advisor shall have undertaken to repay the amounts so
paid if it is ultimately determined that indemnification of such
expenses is not authorized under this Subsection 8(b) and if (i)
the Advisor shall have provided security for such undertaking,
(ii) the Trust shall be insured against losses arising by reason
of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion,
shall have determined, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the Advisor ultimately will be entitled to
indemnification hereunder.
As to any matter disposed of by a compromise payment by the
Advisor referred to in this Subsection 8(b), pursuant to a
consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless
such indemnification shall be approved (i) by a majority of the
Independent Trustees or (ii) by an independent legal counsel in a
written opinion. Approval by the Independent Trustees pursuant to
clause (i) shall not prevent the recovery from the Advisor of any
amount paid to the Advisor in accordance with either of such
clauses as indemnification of the Advisor is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that the Advisor's
action was in or not opposed to the best interests of the Trust
or to have been liable to the Trust or its Shareholders by reason
of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in its conduct under the
Agreement.
<PAGE>
The right of indemnification provided by this Subsection 8(b)
shall not be exclusive of or affect any of the rights to which
the Advisor may be entitled. Nothing contained in this Subsection
8(b) shall affect any rights to indemnification to which
Trustees, officers or other personnel of the Trust, and other
persons may be entitled by contract or otherwise under law, nor
the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as
may be necessary and appropriate to authorize the Trust hereunder
to pay the indemnification required by this Subsection 8(b)
including, without limitation, to the extent needed, to determine
whether the Advisor is entitled to indemnification hereunder and
the reasonable amount of any indemnity due it hereunder, or
employ independent legal counsel for that purpose.
8.(c) The provisions contained in Section 8 shall survive the
expiration or other termination of this Agreement, shall be
deemed to include and protect the Advisor and its directors,
officers, employees and agents and shall inure to the benefit of
its/their respective successors, assigns and personal
representatives.
The Trust maintains a standard mutual fund and investment advisory
professional and directors and officers liability policy. Coverage under the
policy includes losses by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty. The Trust may not pay for
insurance which protects its Trustees and officers against liabilities arising
from action involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their offices.
Item 28. Business and Other Connections of Investment Advisor
----------------------------------------------------
Lowe, Brockenbrough & Tattersall, Inc. ("LB&T") is a registered
investment advisor providing general investment advisory services to
four series of Williamsburg Investment Trust: The Jamestown Balanced
Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt Virginia
Fund and The Jamestown International Equity Fund. LB&T also provides
investment advisory services to corporations, trusts, pension and
profit sharing plans, other business and institutional accounts and
individuals. The following list sets forth the business and other
connections of the directors and officers of LB&T, 6620 West Broad
Street, Suite 300, Richmond, Virginia 23230.
<PAGE>
(1) Austin Brockenbrough III - Managing Director of LB&T.
(a) A Trustee of Williamsburg Investment Trust, a registered
investment company, and President of The Jamestown Tax
Exempt Virginia Fund.
(2) Henry C. Spalding, Jr. - Executive Vice President of LB&T.
(a) President of The Jamestown Balanced Fund and The
Jamestown Equity Fund.
(3) William F. Shumadine, Jr. - Senior Vice President of LB&T.
(4) Ernest H. Stephensen, Jr. - Vice President of LB&T.
(a) Vice President of The Jamestown Balanced Fund and The
Jamestown Equity Fund.
(5) Charles M. Caravati III - Assistant Portfolio Manager of
LB&T.
(a) Vice Present of The Jamestown Internationl Equity Fund.
Tattersall Advisory Group, Inc. ("Tattersall") is a registered
investment advisor providing general investment advisory services to
two series of Williamsburg Investment Trust, The Jamestown Bond Fund
and The Jamestown Short Term Bond Fund, and subadvisory services to
The Jamestown Balanced Fund, another series of Williamsburg Investment
Trust. Tattersall also provides investment advisory services to
corporations, trusts, pension and profit sharing plans, other business
and institutional accounts and individuals. The following list sets
forth the business and other connections of the directors and officers
of Tattersall, 6802 Paragon Place, Suite 200, Richmond, Virginia
23230.
(1) Fred T. Tattersall - Managing Director of Tattersall.
(a) A Trustee of Williamsburg Investment Trust and
President of The Jamestown Bond Fund and The Jamestown
Short Term Bond Fund.
(2) Kevin D. Girts - Executive Vice President of Tattersall.
(3) Craig D. Truitt - Senior Vice President of Tattersall.
<PAGE>
(a) Vice President of The Jamestown Bond Fund and The
Jamestown Short Term Bond Fund.
Oechsle International Advisors, L.P. ("Oechsle International") is a
registered investment advisor which provides investment advisory
services and acts as sub-advisor to The Jamestown International Equity
Fund. The following are the partners of Oechsle International, One
International Place, Boston, Massachusetts 02110.
(1) Oechsle Group, L.P. (the Managing General Partner of which
is Walter Oechsle), a general partner of Oechsle
International.
(2) Dresdner Asset Management (U.S.A.) Corporation (a subsidiary
of Dresdner Bank A.G.), a limited partner of Oechsle
International.
(3) OIA Limited Partnership Interest Trust (the trustee of which
is Oechsle Group, L.P.), a limited partner of Oechsle
International
Flippin, Bruce & Porter, Inc. ("FBP") is a registered investment
advisor providing investment advisory services to two series of
Williamsburg Investment Trust: the FBP Contrarian Balanced Fund and
the FBP Contrarian Equity Fund. The Advisor also provides investment
advice to corporations, trusts, pension and profit sharing plans,
other business and institutional account and individuals. The
following list sets forth the business and other connections of the
directors and officers of Flippin, Bruce & Porter, Inc., 800 Main
Street, Suite 202, P.O. Box 6138, Lynchburg, Virginia 24505.
(1) John T. Bruce - A Principal of FBP.
(a) Chairman of the Board of Trustees of Williamsburg
Investment Trust and Vice President of FBP Contrarian
Balanced Fund and FBP Contrarian Equity Fund.
(2) John M. Flippin - A Principal of FBP
(a) President of FBP Contrarian Balanced Fund and FBP
Contrarian Equity Fund.
(3) Robert Gregory Porter III - A Principal of FBP.
<PAGE>
(a) Vice President of FBP Contrarian Balanced Fund and FBP
Contrarian Equity Fund.
(4) Joseph T. Antonelli, Jr. - Portfolio Manager of FBP.
(5) David J. Marshall - Portfolio Manager of FBP.
T. Leavell & Associates, Inc. ("TLA") is a registered investment
advisor providing investment advisory services to three series of
Williamsburg Investment Trust: The Government Street Equity Fund, The
Government Street Bond Fund and The Alabama Tax Free Bond Fund. TLA
also provides investment advice to corporations, trusts, pension and
profit sharing plans, other business and institutional accounts and
individuals. The following list sets forth the business and other
connections of the directors and officers of T. Leavell & Associates,
Inc., 150 Government Street, P.O. Box 1307, Mobile, Alabama 36633.
(1) Thomas W. Leavell - President and a Principal of TLA.
(2) Dorothy G. Gambill - Secretary/Treasurer and a Principal of
TLA.
(3) Richard Mitchell - Executive Vice President and a Principal
of TLA.
(a) A Trustee of Williamsburg Investment Trust and
President of The Government Street Bond Fund, The
Government Street Equity Fund and The Alabama Tax Free
Bond Fund.
(4) Kenneth P. Pulliam - Portfolio Manager of TLA.
(5) Mary Shannon Hope - Portfolio Manager of TLA.
(6) Timothy S. Healy - Vice President and a Principal of TLA.
(a) Vice President of The Alabama Tax Free Bond Fund.
(7) Ann Damon Haas - Vice President of TLA.
Davenport & Company LLC ("Davenport") is a registered investment
advisor providing investment advisory services to one series of
<PAGE>
Williamsburg Investment Trust, The Davenport Equity Fund. Davenport
also provides investment advice to corporations, trusts, pension and
profit sharing plans, other businesses and institutional accounts and
individuals. The following list sets forth the business and other
connections of the directors and officers of Davenport & Company LLC,
One James Center, Richmond, Virginia, 23285.
(1) Coleman Wortham III - President and chief Executive Officer
of Davenport.
(a) Vice President of The Davenport Equity Fund.
(2) J. Lee Keiger, III - First Vice President and Chief
Financial Officer of Davenport.
(a) Vice President of The Davenport Equity Fund.
(3) Joseph L. Antrim, III - Executive Vice President of
Davenport
(a) President of The Davenport Equity Fund
(4) John P. Ackerly, IV - Portfolio Manager of Davenport.
(a) Vice President of The Davenport Equity Fund.
(5) Michael S. Beall - Executive Vice President and Director of
Research for Davenport.
(6) James C. Hamilton, Jr. - First Vice President and Director
of Davenport.
(7) Beverley B. Munford, III - Vice President of Davenport.
(8) Hunter R. Pettus, Jr. - Senior Vice President and Director
of Davenport.
Item 29. Principal Underwriter
---------------------
(a) CW Fund Distributors, Inc. (the "Distributor"), the principal
underwriter for the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund, also acts as principal underwriter for
the following open-end investment companies: the Milestone Funds,
Brundage, Story and Rose Investment Trust, Profit Funds
Investment Trust, Bowes Investment Trust, Firsthand Funds, the
Lake Shore Family of Funds, UC Investment Trust and The James
Advantage Funds.
<PAGE>
(b) Position Position
with with
Name Distributor Registrant
---- ----------- ----------
*Angilo R. Mozilo Chairman of None
the Board
and Director
*Andrew S. Bielanski Director None
*Thomas H. Boone Director None
*Marshall M. Gates Director None
Robert H. Leshner Vice Chairman, None
Chief Executive
Officer and
Director
Robert G. Dorsey President Vice
President
Maryellen Peretzky Vice President None
Administration,
Human Resources
and Operations
John F. Splain Vice President, Secretary
Secretary and
General Counsel
M. Kathleen Luegers Vice President- None
MIS
Mark J. Seger Vice President Treasurer
Christina H. Kelso Vice President- None
Operations
Gary H. Goldschmidt Assistant Vice Assistant
President and Treasurer
Assistant Fund
Controller
Terrie A. Wiedenheft Treasurer None
Tina D. Hosking Assistant None
Vice President-
Legal
Elizabeth A. Santen Assistant None
Vice President-
Legal
Stephen F. Niehaus Assistant None
Vice President-
MIS
<PAGE>
*Sandor E. Samuels Assistant None
Secretary
*Susan E. Bow Assistant None
Secretary
*Anne Banducci Assistant None
Secretary
The address of all of the above-named persons is 312 Walnut
Street, Cincinnati, Ohio 45202, except that the address of those
individuals indicated by an asterisk (*) is 4500 Park Granada
Boulevard Calabasas, California 91302
(c) Not Applicable
Item 30. Locations of Accounts and Records
---------------------------------
The Registrant maintains the records required by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3 inclusive
thereunder at its principal executive office at 312 Walnut Street,
Cincinnati, Ohio 45202. Certain records, including records relating to
the physical possession of its securities, may be maintained pursuant
to Rule 31a-3 at the main offices of the Registrant's investment
advisors and custodians.
Item 31. Management Services
-------------------
See discussion in Part A under "Management of the Fund -
Administrator" and in Part B under "Administrator."
Item 32. Undertakings
------------
(a) Not Applicable
(b) Not Applicable
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
report to shareholders, upon request and without charge.
(d) The Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940, as amended.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cincinnati and the State of Ohio on the 31st day
of July, 1998.
WILLIAMSBURG INVESTMENT TRUST
By: /s/ John F. Splain
-------------------------
John F. Splain,
Attorney-in-Fact
The term "Williamsburg Investment Trust" means and refers to the Trustees
from time to time serving under the Agreement and Declaration of Trust of the
Registrant dated July 18, 1988, as amended, a copy of which is on file with the
Secretary of State of The Commonwealth of Massachusetts. The obligations of the
Registrant hereunder are not binding personally upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Registrant, but
bind only the trust property of the Registrant, as provided in the Agreement and
Declaration of Trust of the Registrant. The execution of this Registration
Statement has been authorized by the Trustees of the Registrant and this
Registration Statement has been signed by an authorized officer of the
Registrant, acting as such, and neither such authorization by such Trustees nor
such execution by such officer shall be deemed to have been made by any of them,
but shall bind only the trust property of the Registrant as provided in its
Declaration of Trust.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
Signature Title Date
/s/ John T. Bruce
- -------------------------------- Trustee and Chairman July 31, 1998
John T. Bruce (principal executive
officer)
/s/ Mark J. Seger
- -------------------------------- Treasurer (principal July 31, 1998
Mark J. Seger financial and
accounting officer)
Austin Brockenbrough III* Trustee
Charles M. Caravati, Jr.* Trustee
J. Finley Lee, Jr.* Trustee
Richard Mitchell* Trustee
Richard L. Morrill* Trustee
Harris V. Morrissette* Trustee
Fred T. Tattersall* Trustee
Erwin H. Will, Jr* Trustee
Samuel B. Witt III* Trustee
*By: /s/ John F. Splain
-----------------------
John F. Splain
Attorney-in-Fact
July 31, 1998
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
1 Declaration of Trust*
2 Bylaws*
3 Not Applicable
4 See Exhibits 1 and 2
5 (i) Investment Advisory Agreement for The Jamestown Equity Fund*
(ii) Investment Advisory Agreement for The Jamestown Balanced Fund*
(iii) Sub-Advisory Agreement for The Jamestown Balanced Fund*
(iv) Investment Advisory Agreement for The Jamestown International Equity
Fund*
(v) Sub-Advisory Agreement for The Jamestown International Equity Fund*
(vi) Investment Advisory Agreement for The Jamestown Tax Exempt Virginia
Fund*
(vii) Investment Advisory Agreements for The Jamestown Bond Fund and The
Jamestown Short Term Bond Fund*
(viii) Investment Advisory Agreements for the FBP Contrarian Balanced Fund
and the FBP Contrarian Equity Fund*
(ix) Investment Advisory Agreements for The Government Street Equity Fund,
The Government Street Bond Fund and The Alabama Tax Free Bond Fund*
(x) Investment Advisory Agreement for The Davenport Equity Fund**
6 Underwriting Agreement for the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund**
7 Not Applicable
<PAGE>
8 (i) Custodian Agreement with The Northern Trust Company*
(ii) Custodian Agreement with Star Bank, N.A.*
9 Administration, Accounting and Transfer Agency Agreement*
10 Opinion and Consent of Counsel*
11 Consent of Independent Public Accountants**
12 Not Applicable
13 Not Applicable
14 Not Applicable
15 Plan of Distribution Pursuant to Rule 12b-1*
16 Not Applicable
17 Financial Data Schedules**
18 Rule 18f-3 Plan Adopted With Respect to the Multiple Class
Distribution System*
- -----------------------
* Previously filed as Exhibit to Registration Statement on Form N-1A
** Filed herewith
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of December 31, 1997, by and between
WILLIAMSBURG INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), on
behalf of THE DAVENPORT EQUITY FUND, and DAVENPORT & COMPANY LLC, a Virginia
limited liability company (the "Adviser"), registered as an investment adviser
under the Investment Advisers Act of 1940, as amended.
WHEREAS, the Trust is registered as a no-load, open-end management investment
company of the series type under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser to furnish investment advisory
and administrative services to The Davenport Equity Fund series of the Trust,
and the Adviser is willing to so furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Adviser to act as investment
adviser to The Davenport Equity Fund series of the Trust (the "Fund") for
the period and on the terms set forth in this Agreement. The Adviser
accepts such appointment and agrees to furnish the services herein set
forth, for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the Commonwealth of
Massachusetts (such Declaration, as presently in effect and as it
shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's Bylaws (such Bylaws, as presently in effect and as they
shall from time to time be amended, are herein called the "Bylaws");
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser and approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended, relating to shares of
beneficial interest of the Trust (herein called the "Shares") as filed
with the Securities and Exchange Commission ("SEC") and all amendments
thereto;
<PAGE>
(e) The Fund's Prospectus (such Prospectus, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Adviser from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with
the SEC.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of Trustees,
the Adviser will provide a continuous investment program for the Fund,
including investment research and management with respect to all
securities, investments, cash and cash equivalents of the Fund. The Adviser
will determine from time to time what securities and other investments will
be purchased, retained or sold by the Fund. The Adviser will provide the
services under this Agreement in accordance with the Fund's investment
objectives, policies and restrictions as stated in its Prospectus. The
Adviser further agrees that it:
(a) Will conform its activities to all applicable Rules and Regulations of
the SEC and will, in addition, conduct its activities under this
Agreement in accordance with regulations of any other Federal and
State agencies which may now or in the future have jurisdiction over
its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Adviser will attempt to
obtain the best net price and the most favorable execution of its
orders. Consistent with this obligation, when the Adviser believes two
or more brokers or dealers are comparable in price and execution, the
Adviser may prefer: (i) brokers and dealers who provide the Fund with
research advice and other services, or who recommend or sell Fund
shares, and (ii) brokers who are affiliated with the Trust or the
Adviser, PROVIDED, HOWEVER, that in no instance will portfolio
securities be purchased from or sold to the Adviser or any affiliated
person of the Adviser in principal transactions;
(c) Will provide certain executive personnel for the Trust as may be
mutually agreed upon from time to time with the Board of Trustees, the
salaries and expenses of such personnel to be borne by the Adviser
unless otherwise mutually agreed upon; and
(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on
behalf of the Trust.
- 2 -
<PAGE>
Notwithstanding the foregoing, the Adviser may obtain the services of an
investment counselor or sub-adviser of its choice subject to the approval
of the Board of Trustees. The cost of employing such counselor or
sub-adviser will be paid by the Adviser and not by the Fund.
4. SERVICES NOT EXCLUSIVE. The advisory services furnished by the Adviser
hereunder are not to be deemed exclusive, and the Adviser shall be free to
furnish similar services to others so long as its services under this
Agreement are not impaired.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Adviser hereby agrees that all records which it maintains
for the benefit of the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by it pursuant to Rule 31a-1 under the 1940 Act that are not
maintained by others on behalf of the Trust.
6. EXPENSES. During the term of this Agreement, the Adviser will pay all
expenses incurred by it in connection with its investment advisory services
pertaining to the Fund. In the event that there is no distribution plan
under Rule 12b-1 of the 1940 Act in effect for the Fund, the Adviser will
pay the entire cost of the promotion and sale of Fund shares.
Notwithstanding the foregoing, the Fund shall pay the expenses and costs of
the following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio transactions
of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio securities;
(d) Fees and expenses of the Fund's administration agent, the Fund's
transfer and shareholder servicing agent and the Fund's accounting
agent or, if the Trust performs any such services without an agent,
the costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Trust's existence as a legal entity;
(g) Compensation of Trustees who are not interested persons of the Adviser
as that term is defined by law;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees and expenses;
- 3 -
<PAGE>
(j) Costs of setting in type, printing and mailing Prospectuses, reports
and notices to existing shareholders;
(k) The investment advisory fee payable to the Adviser, as provided in
paragraph 7 herein; and
(l) Distribution expenses, but only in accordance with any Distribution
Plan as and if approved by the shareholders of the Fund.
7. COMPENSATION. For the services provided and the expenses assumed by the
Adviser pursuant to this Agreement, the Fund will pay the Adviser and the
Adviser will accept as full compensation an investment advisory fee at the
annual rate of 0.75% of the daily average net assets of the Fund, computed
at the end of each month and payable within five (5) business days
thereafter.
8.(a)LIMITATION OF LIABILITY. The Adviser shall not be liable for any error of
judgment, mistake of law or for any other loss whatsoever suffered by the
Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from wilful misfeasance, bad
faith or gross negligence on the part of the Adviser in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
8.(b)INDEMNIFICATION OF ADVISER. Subject to the limitations set forth in this
Subsection 8(b), the Trust shall indemnify, defend and hold harmless (from
the assets of the Fund or Funds to which the conduct in question relates)
the Adviser against all loss, damage and liability, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by the Adviser in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, related
to or resulting from this Agreement or the performance of services
hereunder, except with respect to any matter as to which it has been
determined that the loss, damage or liability is a direct result of (i) a
breach of fiduciary duty with respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its duties or from reckless
disregard by it of its duties under this Agreement (either and both of the
conduct described in clauses (i) and (ii) above being referred to
hereinafter as "DISABLING CONDUCT"). A determination that the Adviser is
entitled to indemnification may be made by (i) a final decision on the
- 4 -
<PAGE>
merits by a court or other body before whom the proceeding was brought that
the Adviser was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Adviser for
insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Adviser was not
liable by reason of Disabling Conduct by (a) vote of a majority of a quorum
of Trustees who are neither "interested persons" of the Trust as the quoted
phrase is defined in Section 2(a)(19) of the 1940 Act nor parties to the
action, suit or other proceeding on the same or similar grounds that is
then or has been pending or threatened (such quorum of Trustees being
referred to hereinafter as the "INDEPENDENT TRUSTEES"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Adviser (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), may be paid from time to time by the Fund or Funds to which the
conduct in question related in advance of the final disposition of any such
action, suit or proceeding; PROVIDED, that the Adviser shall have
undertaken to repay the amounts so paid if it is ultimately determined that
indemnification of such expenses is not authorized under this Subsection
8(b) and if (i) the Adviser shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses arising by
reason of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the Adviser
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Adviser
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any other
expenses shall be provided unless such indemnification shall be approved
(i) by a majority of the Independent Trustees or (ii) by an independent
legal counsel in a written opinion. Approval by the Independent Trustees
pursuant to clause (i) shall not prevent the recovery from the Adviser of
any amount paid to the Adviser in accordance with either of such clauses as
indemnification of the Adviser is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable
belief that the Adviser's action was in or not opposed to the best
interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in its conduct under the
Agreement.
- 5 -
<PAGE>
The right of indemnification provided by this Subsection 8(b) shall
not be exclusive of or affect any of the rights to indemnification to which
the Adviser may be entitled. Nothing contained in this Subsection 8(b)
shall affect any rights to indemnification to which Trustees, officers or
other personnel of the Trust, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may
be necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Adviser is
entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for that
purpose.
8.(c)The provisions contained in Section 8 shall survive the expiration or other
termination of this Agreement, shall be deemed to include and protect the
Adviser and its directors, officers, employees and agents and shall inure
to the benefit of its/their respective successors, assigns and personal
representatives.
9. DURATION AND TERMINATION. This Agreement shall be effective on the date
hereof and, unless sooner terminated as provided herein, shall continue in
effect until March 31, 1999. Thereafter, this Agreement shall be renewable
for successive periods of one year each, provided such continuance is
specifically approved annually:
(a) By a vote of the majority of those members of the Board of Trustees
who are not parties to this Agreement or interested persons of any
such party (as that term is defined in the 1940 Act), cast in person
at a meeting called for the purpose of voting on such approval; and
(b) By vote of either the Board or a majority (as that term is defined in
the 1940 Act) of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund
or by the Adviser at any time on sixty (60) days' written notice, without
the payment of any penalty, provided that termination by the Fund must be
authorized either by vote of the Board of Trustees or by vote of a majority
of the outstanding voting securities of the Fund. This Agreement will
automatically terminate in the event of its assignment (as that term is
defined in the 1940 Act).
- 6 -
<PAGE>
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by a written instrument
signed by the party against which enforcement of this change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by a vote of the holders of a majority of
the Fund's outstanding voting securities (as defined in the 1940 Act).
11. SHAREHOLDER LIABILITY. The Adviser is hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Agreement and
Declaration of Trust of the Trust, which is on file with the Secretary of
the Commonwealth of Massachusetts, and agrees that obligations assumed by
the Trust pursuant to this Agreement shall be limited in all cases to the
Fund and its assets. The Adviser agrees that it shall not seek satisfaction
of any such obligations from the shareholders or any individual shareholder
of the Fund, nor from the Trustees or any individual Trustee of the Trust.
12. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect. If any provision
of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
13. APPLICABLE LAW. This Agreement shall be construed in accordance with, and
governed by, the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: WILLIAMSBURG INVESTMENT TRUST
By: /s/ Joy Tyree By: /s/ John T. Bruce
--------------------------------- --------------------------------
Title: Trader Title: Chairman
----------------------------- ----------------------------
ATTEST: DAVENPORT & COMPANY LLC
By: /s/ Cindy Leeland Dolan By: /s/ Joseph L. Antrim
--------------------------------- --------------------------------
Title: Branch Administration Title: Executive Vice President
----------------------------- ----------------------------
- 7 -
UNDERWRITING AGREEMENT
----------------------
This Agreement made as of June 1, 1998 by and between Williamsburg
Investment Trust (the "Trust"), a Massachusetts business trust, Flippin, Bruce &
Porter, Inc. (the "Manager"), a Virginia corporation, and CW Fund Distributors,
Inc., a Delaware corporation (the "Underwriter").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Trust Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of the FBP Contrarian Balanced Fund and the FBP
Contrarian Equity Fund series of shares of the Trust (the "Series") to the
public in accordance with the applicable federal and state securities laws; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is employed by the Trust to
provide the Series with investment advisory and management services;
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
<PAGE>
1. Appointment.
------------
The Trust hereby appoints, for the period of this Agreement,
Underwriter as its exclusive agent for the distribution of the Shares, and
Underwriter hereby accepts such appointment under the terms of this Agreement.
While this Agreement is in force, the Trust shall not sell any Shares except on
the terms set forth in this Agreement. Notwithstanding any other provision
hereof, the Trust may terminate, suspend or withdraw the offering of Shares
whenever, in its sole discretion, it deems such action to be desirable.
Underwriter will undertake and discharge its obligations hereunder as an
independent contractor and shall have no authority or power to obligate or bind
the Trust by its actions, conduct or contracts except as described in this
Agreement.
2. Sale and Repurchase of Shares.
------------------------------
(a) Underwriter will have the right, as agent for the Trust, to enter
into dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering price
(as defined in subparagraph 2(d) hereof) stated in the Trust's effective
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, including the then current prospectus and statement of additional
information (the "Registration Statement"). Upon receipt of an order to purchase
Shares from a dealer with whom Underwriter has a dealer agreement, Underwriter
will promptly cause such order to be filled by the Trust.
- 2 -
<PAGE>
(b) Underwriter will also have the right, as agent for the Trust, to
sell such Shares to the public against orders therefor at the public offering
price.
(c) Underwriter will also have the right to take, as agent for the
Trust, all actions which, in Underwriter's judgment, are necessary to carry into
effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series shall be
the respective net asset value of the Shares of that Series then in effect, plus
any applicable sales charge determined in the manner set forth in the
Registration Statement or as permitted by the Act and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. In no event
shall any applicable sales charge exceed the maximum sales charge permitted by
the Rules of the NASD. Any payments to dealers shall be governed by a separate
agreement between Underwriter and such dealer and the Registration Statement.
(e) The net asset value of the Shares of each Series shall be
determined in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each Series shall
be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
- 3 -
<PAGE>
(f) On every sale, the Trust shall receive the applicable net asset
value of the Shares promptly, but in no event later than the third business day
following the date on which Underwriter shall have received an order for the
purchase of the Shares.
(g) Upon receipt of purchase instructions, Underwriter will transmit
such instructions to the Trust or its transfer agent for registration of the
Shares purchased.
(h) Exchanges of shares between Series will be effected in the manner
and subject to the restrictions and charges described in the Registration
Statement. The handling of exchanges will be further subject to such other
procedures as may be mutually agreed upon from time to time.
(i) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
- 4 -
<PAGE>
(j) Underwriter, as agent of and for the account of the Trust, may
repurchase the Shares at such prices and upon such terms and conditions as shall
be specified in the Registration Statement.
3. Sale of Shares by the Trust.
----------------------------
The Trust reserves the right to issue any Shares at any time directly
to the holders of Shares ("Shareholders"), to sell Shares to its Shareholders or
to other persons approved by Underwriter at not less than net asset value and to
issue Shares in exchange for substantially all the assets of any corporation or
trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
------------------------
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Trust, undertakes to sell Shares on a best efforts
basis only against orders therefor.
5. Rules of NASD, etc.
-------------------
(a) Underwriter will conform to the Rules of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any Shares.
(b) Underwriter will require each dealer with whom Underwriter has a
dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of the Shares,
and neither Underwriter nor any such dealers shall withhold the placing of
purchase orders so as to make a profit thereby.
- 5 -
<PAGE>
(c) Underwriter agrees to furnish to the Trust sufficient copies of
any agreements, plans or other materials it intends to use in connection with
any sales of Shares in adequate time for the Trust to file and clear them with
the proper authorities before they are put in use, and not to use them until so
filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or broker,
or otherwise, under all applicable State or federal laws required in order that
Shares may be sold in such States as may be mutually agreed upon by the parties.
(e) Underwriter shall not make, or permit any representative, broker
or dealer to make, in connection with any sale or solicitation of a sale of the
Shares, any representations concerning the Shares except those contained in the
then current prospectus and statement of additional information covering the
Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
(f) Underwriter shall file Trust advertisements, sales literature and
other marketing and sales related materials with the appropriate regulatory
agencies and shall obtain such approvals for their use as may be required by the
Securities and Exchange Commission, the NASD and/or state securities
- 6 -
<PAGE>
administrators. Underwriter shall not disseminate to the public any such
materials without prior approval by the Trust.
6. Records to be Supplied by Trust.
--------------------------------
The Trust shall furnish to Underwriter copies of all information,
financial statements and other papers which Underwriter may reasonably request
for use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified copy, upon request by
Underwriter, of all financial statements prepared for the Trust by independent
public accountants.
7. Expenses.
---------
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Manager in accordance with
agreements between them as permitted by applicable law, including the Act and
rules and regulations promulgated thereunder. These costs include, but are not
limited to, licensing fees, insurance premiums, filing fees, travel and such
other expenses as may be incurred by Underwriter on behalf of the Trust and the
Manager.
- 7 -
<PAGE>
8. Indemnification of Trust.
-------------------------
Underwriter agrees to indemnify and hold harmless the Trust and each
person who has been, is, or may hereafter be a trustee, officer, employee,
shareholder or control person of the Trust, against any loss, damage or expense
(including the reasonable costs of investigation) reasonably incurred by any of
them in connection with any claim or in connection with any action, suit or
proceeding to which any of them may be a party, which arises out of or is
alleged to arise out of or is based upon any untrue statement or alleged untrue
statement of a material fact, or the omission or alleged omission to state a
material fact necessary to make the statements not misleading, on the part of
Underwriter or any agent or employee of Underwriter or any other person for
whose acts Underwriter is responsible, unless such statement or omission was
made in reliance upon written information furnished by the Trust. Underwriter
likewise agrees to indemnify and hold harmless the Trust and each such person in
connection with any claim or in connection with any action, suit or proceeding
which arises out of or is alleged to arise out of Underwriter's failure to
exercise reasonable care and diligence with respect to its services, if any,
rendered in connection with investment, reinvestment, automatic withdrawal and
other plans for Shares. The term "expenses" for purposes of this and the next
paragraph includes amounts paid in satisfaction of judgments or in settlements
which are made with Underwriter's consent. The Underwriter will advance
attorneys' fees or other
- 8 -
<PAGE>
expenses incurred by any such person in defending a proceeding upon the
undertaking by or on behalf of such person to repay the advance if it is
ultimately determined that such person is not entitled to indemnification. The
foregoing rights of indemnification shall be in addition to any other rights to
which the Trust or each such person may be entitled as a matter of law.
9. Indemnification of Underwriter.
-------------------------------
The Trust agrees to indemnify and hold harmless Underwriter and each
person who has been, is, or may hereafter be a director, officer, employee,
shareholder or control person of Underwriter against any loss, damage or expense
(including the reasonable costs of investigation) reasonably incurred by any of
them in connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of any of such persons in the performance of Underwriter's duties or from
the reckless disregard by any of such persons of Underwriter's obligations and
duties under this Agreement. The Trust will advance attorneys' fees or other
expenses incurred by any such person in defending a proceeding, upon the
undertaking by or on behalf of such person to repay the advance if it is
ultimately determined that such person is not entitled to indemnification. Any
person employed by Underwriter who may also be or become an officer or employee
of the Trust shall be deemed, when acting within the scope of his employment by
the Trust, to be acting in such employment solely for the Trust and not as an
employee or agent of Underwriter.
- 9 -
<PAGE>
10. Termination and Amendment of this Agreement.
--------------------------------------------
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Underwriter, (ii) either by action of the
Board of Trustees of the Trust or at a meeting of the Shareholders of the Trust
by the affirmative vote of a majority of the outstanding Shares, and (iii) by a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of Underwriter by vote cast in person at a meeting called for the
purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. Effective Period of this Agreement.
-----------------------------------
This Agreement shall take effect upon its execution and shall remain
in full force and effect for a period of two (2) years from the date of its
execution (unless terminated automatically as set forth in Section 10), and from
year to year thereafter, subject to annual approval (i) by Underwriter, (ii) by
the Board of Trustees of the Trust or a vote of a majority of the outstanding
Shares, and (iii) by a majority of the Trustees of the Trust who are not
interested persons of the Trust or of Underwriter by vote cast in person at a
meeting called for the purpose of voting on such approval.
- 10 -
<PAGE>
12. New Series.
-----------
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Trust established during the initial
or renewal term of this Agreement for which the Manager provides investment
advisory and management services.
13. Successor Investment Company.
-----------------------------
Unless this Agreement has been terminated in accordance with Paragraph
10, the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Trust as a
result of reorganization, recapitalization or change of domicile.
14. Severability.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
15. Questions of Interpretation.
----------------------------
(a) This Agreement shall be governed by the laws of the State of
Delaware.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by
- 11 -
<PAGE>
rules, regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
16. Limitation of Liability.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the Trust, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust.
17. Notices.
--------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust and the Manager
for this purpose shall be 800 Main Street, Suite 202, Lynchburg, Virginia 24505,
and that the address of Underwriter for this purpose shall be 312 Walnut Street,
Cincinnati, Ohio 45202.
- 12 -
<PAGE>
IN WITNESS WHEREOF, the Trust, the Manager and Underwriter have each
caused this Agreement to be signed in duplicate on their behalf, all as of the
day and year first above written.
WILLIAMSBURG INVESTMENT TRUST
By: /s/ John T. Bruce
--------------------------------
Its:President
FLIPPIN, BRUCE & PORTER, INC.
By: /s/ John M. Flippin
--------------------------------
Its:President
CW FUND DISTRIBUTORS, INC.
By: /s/ Robert H. Leshner
--------------------------------
Its:Vice Chairman
- 13 -
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Post-Effective Amendment to the
Registration Statement on Form N-1A of Williamsburg Investment Trust, comprised
of The Jamestown Bond Fund, The Jamestown Short Term Bond Fund, The Jamestown
Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt Virginia
Fund, The Jamestown International Equity Fund, FBP Contrarian Balanced Fund, FBP
Contrarian Equity Fund, The Government Street Equity Fund, The Government Street
Bond Fund, The Alabama Tax Free Bond Fund and Davenport Equity Fund and to the
use of our reports dated April 24, 1998 on the financial statements and
financial highlights. Such financial statements and financial highlights appear
in each series' respective 1998 Annual Report to Shareholders which accompanies
the Statement of Additional Information.
/s/Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 27, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000842512
<NAME> WILLIAMSBURG INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> FBP CONTRARIAN BALANCED FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 36,885,918
<INVESTMENTS-AT-VALUE> 55,827,086
<RECEIVABLES> 307,752
<ASSETS-OTHER> 4,803
<OTHER-ITEMS-ASSETS> 314
<TOTAL-ASSETS> 56,139,955
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 199,626
<TOTAL-LIABILITIES> 199,626
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36,976,286
<SHARES-COMMON-STOCK> 2,931,941
<SHARES-COMMON-PRIOR> 2,573,969
<ACCUMULATED-NII-CURRENT> 4,103
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,959,920
<NET-ASSETS> 55,940,329
<DIVIDEND-INCOME> 544,381
<INTEREST-INCOME> 1,097,392
<OTHER-INCOME> 0
<EXPENSES-NET> 506,795
<NET-INVESTMENT-INCOME> 1,134,978
<REALIZED-GAINS-CURRENT> 2,178,348
<APPREC-INCREASE-CURRENT> 9,325,106
<NET-CHANGE-FROM-OPS> 12,638,432
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,138,576
<DISTRIBUTIONS-OF-GAINS> 2,862,386
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 323,989
<NUMBER-OF-SHARES-REDEEMED> 177,851
<SHARES-REINVESTED> 211,834
<NET-CHANGE-IN-ASSETS> 15,085,977
<ACCUMULATED-NII-PRIOR> 7,701
<ACCUMULATED-GAINS-PRIOR> 684,058
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 365,477
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 506,795
<AVERAGE-NET-ASSETS> 48,771,677
<PER-SHARE-NAV-BEGIN> 15.87
<PER-SHARE-NII> .41
<PER-SHARE-GAIN-APPREC> 4.26
<PER-SHARE-DIVIDEND> .41
<PER-SHARE-DISTRIBUTIONS> 1.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.08
<EXPENSE-RATIO> 1.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000842512
<NAME> WILLIAMSBURG INVESTMENT TRUST
<SERIES>
<NUMBER> 2
<NAME> THE JAMESTOWN BALANCED FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 74,866,530
<INVESTMENTS-AT-VALUE> 101,236,552
<RECEIVABLES> 1,686,354
<ASSETS-OTHER> 6,639
<OTHER-ITEMS-ASSETS> 589
<TOTAL-ASSETS> 102,930,134
<PAYABLE-FOR-SECURITIES> 1,197,219
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 324,628
<TOTAL-LIABILITIES> 1,521,847
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 75,047,485
<SHARES-COMMON-STOCK> 5,835,774
<SHARES-COMMON-PRIOR> 4,658,602
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<NAME> THE GOVERNMENT STREET EQUITY FUND
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<NAME> THE GOVERNMENT STREET BOND FUND
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<NAME> THE JAMESTOWN SHORT TERM BOND FUND
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<NAME> FBP CONTRARIAN EQUITY FUND
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<NAME> WILLIAMSBURG INVESTMENT TRUST
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<NAME> THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
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