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. 33
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 36
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Williamsburg Investment Trust
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(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
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(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, 1999) 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
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Cross-Reference Sheet Pursuant to Rule 495(a)
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Part A Prospectus
Form Item Cross-Reference
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1. Front and Back Cover Pages Cover Pages
2. Risk/Return Summary: Investments, Risk/Return
Risks, and Performance Summary
3. Risk/Return Summary: Fee Table Expense Information;
Synopsis of Costs and
Expenses
4. Investment Objectives, Principal Investment Investment
Objectives, Strategies, and Related
Risk Considerations Principal Investment
Strategies and
Related Risks
5. Management's Discussion of Fund Inapplicable
Performance (Included in Annual
Report)
6. Management, Organization, and Management of
Capital Structure the Fund
7. Shareholder Information How to Purchase Shares;
How to Redeem Shares;
How Net Asset
Value is Determined;
Dividend and Capital Gain
Distributions; Dividends,
Distributions and Taxes;
Tax Status Application
8. Distribution Arrangements None
9. Financial Highlights Information Financial Highlights
<PAGE>
PART B
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Caption in
Statement of
Additional
Item No. Registration Statement Caption Information
- -------- ------------------------------ -------------
10. Cover Page and Table of Contents Cover Page;
Table of Contents
11. Fund History Capital Shares
and Voting
12. Description of the Fund and Its Investment
Investments and Risks Objective and
Policies;
Description of
Bond Ratings;
Investment
Limitations;
Allocation of
Trust Expenses
13. Management of the Fund Trustees and
Officers
14. Control Persons and Principal Holders Trustees and
of Securities Officers
15. Investment Advisory and Other Services The Investment
Adviser;
Administrator;
Other Services
16. Brokerage Allocation and Other Brokerage
Practices
17. Capital Stock and Other Securities Capital Shares
and Voting
18. Purchase, Redemption and Pricing of Net Asset Value
Shares Determination;
Special
Shareholder
Services;
Purchase of
Shares;
Redemption of
Shares
<PAGE>
19. Taxation of the Fund Additional Tax
Information
20. Underwriters Distributor
21. Calculation of Performance Data Calculation of
Performance
Data
22. Financial Statements Financial
Statements and
Reports
<PAGE>
PART C
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The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
THE
FLIPPIN, BRUCE & PORTER
FUNDS
[LOGO]
FBP Contrarian Equity Fund
FBP Contrarian Balanced Fund
PROSPECTUS
AUGUST 1, 1999
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
NO-LOAD FUNDS
<PAGE>
PROSPECTUS NO-LOAD FUNDS
August 1, 1999
THE
FLIPPIN, BRUCE & PORTER
FUNDS
[LOGO]
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 has information you should know before you invest. You should
read it carefully and keep it for future reference.
TABLE OF CONTENTS
Risk/Return Summary
Synopsis of Costs and Expenses
Investment Objectives, Principal Investment
Strategies and Related Risks
How to Purchase Shares
How to Redeem Shares
How Net Asset Value is Determined
Management of the Funds
Dividends, Distributions and Taxes
Financial Highlights
Application
<PAGE>
RISK/RETURN SUMMARY
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The FBP CONTRARIAN 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 FBP CONTRARIAN BALANCED FUND'S investment objective is 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.
WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
In seeking to achieve the investment objectives of both the Equity Fund and the
Balanced Fund, a "contrarian" investment strategy is used. Contrarian investing
seeks to acquire the securities of companies which, in the Advisor's judgment,
are undervalued, usually because they are out of favor with most of the
investment community. A company's securities may be out of favor due to earnings
declines, business or economic cycle slumps, competitive problems, litigation,
product obsolescence and other reasons.
FBP CONTRARIAN EQUITY FUND
The Equity Fund will invest in a variety of companies, industries and economic
sectors to seek the best opportunities for capital appreciation and growth with
limited risk. The Fund will be primarily invested in the securities of
established companies having operating histories of 10 years or longer and
having a market capitalization of $500 million or more.
The Equity Fund intends 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.
FBP CONTRARIAN BALANCED FUND
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, which include corporate debt
obligations and U.S. Government Securities, are acquired for income and
secondarily for capital appreciation.
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<PAGE>
The percentage of assets invested in equities, fixed income securities and money
market instruments will vary from time to time depending upon the Advisor's
judgment of general market and economic conditions, trends in yields and
interest rates and changes in fiscal or monetary policies. Depending upon the
Advisor'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%
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
The return on and value of an investment in each of the Funds will fluctuate in
response to stock market movements. Stocks and other equity securities are
subject to market risks and fluctuations in value due to earnings, economic
conditions and other factors beyond the control of the Advisor. As a result,
there is a risk that you could lose money by investing in the Funds.
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 write covered call options. If the Advisor 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.
The contrarian approach of the Advisor searches for securities that are "out of
favor" in the market. If securities selected by the Advisor never regain a
favorable position in the market, the Funds may not realize their investments
objectives.
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<PAGE>
PERFORMANCE SUMMARY
The bar charts and performance tables shown below provide an indication of the
risks of investing in the Funds by showing the changes in the performance of the
Funds from year to year since the Funds' inception and by showing how the
average annual returns of the Funds compare to those of a broad-based securities
market index and an index of funds with similar investment objectives. How the
Funds have performed in the past is not necessarily an indication of how the
Funds will perform in the future.
Equity Fund
4.62% 30.41% 22.76% 25.42% 17.92%
[bar chart]
1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
24.61% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -15.36% during the quarter ended September 30, 1998.
The Fund's year-to-date return through June 30, 1999 is 16.32%.
Balanced Fund
- -7.87% 27.30% 14.37% 9.96% 1.86% 25.68% 16.56% 20.63% 15.14%
[bar chart]
1990 1991 1992 1993 1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
16.44% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -13.02% during the quarter ended September 30, 1990.
The Fund's year-to-date return through June 30, 1999 is 11.91%.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
Since
One Year Five Years Inception(1)
-------- ---------- ------------
Equity Fund 17.92% 19.89% 19.30%
Standard & Poor's 500 Index(2) 28.58% 24.06% 23.18%
Balanced Fund 15.14% 15.69% 12.37%
Standard & Poor's 500 Index(2) 28.58% 24.06% 20.82%
Lipper Balanced Fund Index(3) 15.09% 13.87% 12.80%
(1) The inception date of the Equity Fund was July 30, 1993 and the inception
date of the Balanced Fund was July 3, 1989.
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<PAGE>
(2) The Standard & Poor's 500 Index is a widely recognized, unmanaged index of
common stock prices.
(3) The Lipper Balanced Fund Index is an average of the annual returns of
balanced mutual funds tracked by Lipper Analytical Services, Inc.
SYNOPSIS OF COSTS AND EXPENSES
This table describes the fees and expenses that you will pay if you buy and hold
shares of the Funds.
SHAREHOLDER FEES
(fees paid directly from your investment): None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Equity Balanced
Fund Fund
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Management Fees 0.75% 0.75%
Administrator's Fees 0.20% 0.20%
Other Expenses 0.13% 0.09%
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Total Annual Fund Operating Expenses 1.08% 1.04%
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This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in a Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that a Fund's operating expenses remain
the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
Equity Fund Balanced Fund
----------- -------------
l Year $ 110 $ 106
3 Years 343 331
5 Years 595 574
10 Years 1,317 1,271
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
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.
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<PAGE>
INVESTMENT OBJECTIVES
The investment objective of the FBP CONTRARIAN 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.
The investment objective of the FBP CONTRARIAN 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.
PRINCIPAL INVESTMENT STRATEGIES
INVESTMENT SELECTION - EQUITY FUND AND BALANCED FUND. The concept of
"contrarian" investing used in both the Equity Fund and the Balanced Fund seeks
to acquire the securities of companies which, in the Advisor's judgment, are
undervalued in the securities markets. Candidates for such contrarian investment
will usually include the equity securities of domestic, established companies.
The Advisor believes 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 Advisor 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 Advisor 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 Advisor 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
Advisor 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.
-5-
<PAGE>
As a temporary defensive measure, when the Advisor 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. When a
temporary defensive position is taken by a Fund, it may not be able to achieve
its investment objective.
EQUITY SELECTION. The Advisor will invest the Funds' assets among various
companies, industries and economic sectors in an attempt to take advantage of
what the Advisor 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 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 Advisor's opinion. In determining whether an
equity security is undervalued, the Advisor considers, among other things:
o research material generated by the brokerage community;
o investment and business publications and general investor attitudes;
o valuation with respect to price-to-book value, price-to-sales,
price-to-cash flow, price-to-earnings ratios and dividend yield,
compared to historical valuations and future prospects for the company
as judged by the Advisor; and
o periodic company reports and announcements.
In order to implement the Funds' contrarian strategy, the Advisor allocates the
total portfolio of the Equity Fund, and the equity portion of the Balanced
Fund's portfolio as follows:
Freshly identified contrarian securities will normally comprise approximately
25% of the equities held by the Funds. Such securities will be of companies
which the Advisor 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 Advisor'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 3 to 4 years.
-6-
<PAGE>
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 Advisor to have attractive potential
for long term capital appreciation and growth.
Securities of recovered companies will normally comprise approximately 25% of
the equities held by the Funds. These once contrarian issues are now at or near
the top of the Advisor'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 1 to 10 years from the date
of purchase except when, in the Advisor's opinion, long term interest rates are
expected by the Advisor 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 Advisor'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 Advisor 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.
-7-
<PAGE>
The Advisor 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. 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.
MONEY MARKET INSTRUMENTS. Money market instruments mature in 13 months or less
from the date of purchase and include U.S. Government Securities and corporate
debt securities (including those subject to repurchase agreements), bankers'
acceptances and certificates of deposit of domestic branches of U.S. banks and
commercial paper, including variable amount demand master notes. At the time of
purchase, money market instruments will have a short-term rating in the highest
category by Moody's or S&P or, if not rated, issued by a corporation having an
outstanding unsecured debt issue rated A or better by Moody's or S&P or, if not
so rated, of equivalent quality in the Advisor's opinion.
OPTIONS. When the Advisor believes that individual portfolio securities within
the Equity Fund and Balanced Fund are approaching the top of the Advisor'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 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
Advisor 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.
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<PAGE>
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.
RELATED RISKS
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. Stocks and other equity securities are subject to market
risks (rapid increase or decrease in value or liquidity of the security) and
fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, there is a risk that you could
lose money by investing in the Funds. In addition, there is the risk that "out
of favor" companies, selected by the Advisor, will never regain a favorable
position in the market. 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 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 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.
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<PAGE>
Corporate debt obligations rated less than A 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 than is the case with
higher grade securities.
HOW TO PURCHASE SHARES
There are NO SALES COMMISSIONS charged to investors. You may obtain assistance
in opening an account from Countrywide Fund Services, Inc. (the "Administrator")
by calling 1-800-443-4249, or by writing to the Funds at the address shown below
for regular mail orders. You may also obtain assistance through any
broker-dealer authorized to sell shares of the Funds. The broker-dealer may
charge you a fee for its services.
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 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 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.
You 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.
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<PAGE>
If an order to purchase shares is 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. You may invest 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. For initial purchases, you should be
prepared to provide us, by mail or facsimile, with a signed, completed Account
Application. This will ensure prompt and accurate handling of your investment.
Please have your bank use the following wiring instructions to purchase by wire:
Firstar Bank, NA
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 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 you to make
regular monthly or quarterly investment in shares through automatic charges to
your checking account. With your authorization and bank approval, the
Administrator will automatically charge your 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 or both. You may change the amount of the investment or discontinue the
plan at any time by writing to the Administrator.
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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.
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<PAGE>
HOW TO REDEEM SHARES
You may redeem shares of the Funds 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 you
bring your account value up to $1,000 or more during the notice period, your
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
Administrator 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 3 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. You may reduce or avoid such delay (which may
take up to 15 days) if you purchase by certified check, government check or wire
transfer. In such cases, the net asset value next determined after receipt by
the Administrator of your 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.
-13-
<PAGE>
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). You may not redeem
shares of the Funds 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.
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, (3) requests to establish or change redemption
services other than through your initial account application, and (4) if the
name(s) or the address on your account has been changed within 30 days of your
redemption request. 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. If your shares of either Fund are valued at $25,000
or more at the current offering price, you 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. You
may establish this service whether dividends and distributions are reinvested or
paid in cash. Systematic withdrawals may be deposited directly to the your bank
account by completing the applicable section on the Account Application form
accompanying this Prospectus, or by writing the Funds.
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.
-14-
<PAGE>
Securities which are traded over-the-counter are priced at the last sale price,
if available; otherwise, at the last quoted bid price. Securities traded on a
national stock exchange will be valued based upon the closing price on the
valuation date on the principal exchange where the security is traded. Fixed
income securities will ordinarily be traded in the over-the-counter market and
common stocks will ordinarily be traded on a national securities exchange, but
may also be traded in the over-the-counter market. 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
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, Flippin,
Bruce & Porter, Inc., 800 Main Street, Suite 202, Lynchburg, Virginia 24505 (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 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
-15-
<PAGE>
has been a principal of the Advisor since the founding of the firm in 1985.
Compensation of the Advisor, 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%.
YEAR 2000 READINESS. Computer users around the world are faced with the dilemma
of the Year 2000 issue, which stems from the use of two digits in most older
computer systems to designate the year. When the year advances from 1999 to
2000, many computers will not recognize "00" as the Year 2000. This issue could
potentially affect every aspect of computer-related activity, on an individual
and corporate level. The Funds could be adversely impacted if the computer
systems used by the Advisor and other service providers have not been converted
to meet the requirements of the new century. The Advisor has evaluated its
internal systems and expects them to handle the change of millennium. The
Advisor is monitoring on an ongoing basis the progress of the Funds' service
providers to convert their systems to comply with the requirements of the Year
2000. The Advisor currently has no reason to believe that these service
providers will not be fully and timely compliant. However, you should be aware
that there can be no assurance that all systems will be successfully converted
prior to January 1, 2000, in which case it would become necessary for the Funds
to enter into agreements with new service providers or to make other
arrangements.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 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.
-16-
<PAGE>
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.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Funds (assuming reinvestment of all dividends and distributions). This
information has been audited by Tait, Weller & Baker, whose report, along with
the Funds' financial statements, are included in the Statement of Additional
Information, which is available upon request.
<TABLE>
<CAPTION>
FBP CONTRARIAN EQUITY FUND
FINANCIAL HIGHLIGHTS
========================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- ------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 21.45 $ 16.08 $ 14.21 $ 11.21 $ 10.15
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ........................... 0.13 0.19 0.22 0.24 0.21
Net realized and unrealized gains
on investments ............................... 1.50 5.98 2.24 3.05 1.14
-------- -------- -------- -------- --------
Total from investment operations ................... 1.63 6.17 2.46 3.29 1.35
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ............ (0.13) (0.19) (0.22) (0.24) (0.23)
Distributions from net realized gains ........... (0.38) (0.61) (0.37) (0.05) (0.06)
-------- -------- -------- -------- --------
Total distributions ................................ (0.51) (0.80) (0.59) (0.29) (0.29)
-------- -------- -------- -------- --------
Net asset value at end of year ..................... $ 22.57 $ 21.45 $ 16.08 $ 14.21 $ 11.21
======== ======== ======== ======== ========
Total return ....................................... 7.74% 38.90% 17.65% 29.54% 13.52%
======== ======== ======== ======== ========
Net assets at end of year (000's) .................. $ 44,978 $ 35,322 $ 16,340 $ 9,090 $ 5,323
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) ..... 1.08% 1.12% 1.21% 1.25% 1.25%
Ratio of net investment income to average net assets 0.63% 1.04% 1.50% 1.89% 2.15%
Portfolio turnover rate ............................ 18% 10% 9% 12% 9%
</TABLE>
(a) Absent fee waivers and/or expense reimbursements by the Advisor, the ratios
of expenses to average net assets would have been 1.25%, 1.67% and 2.27%
for the years ended March 31, 1997, 1996 and 1995, respectively.
-17-
<PAGE>
<TABLE>
<CAPTION>
FBP CONTRARIAN BALANCED FUND
FINANCIAL HIGHLIGHTS
========================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- ------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 19.08 $ 15.87 $ 14.86 $ 12.80 $ 12.19
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ........................... 0.39 0.41 0.42 0.43 0.38
Net realized and unrealized gains
on investments ............................... 1.21 4.26 1.49 2.44 0.87
-------- -------- -------- -------- --------
Total from investment operations ................... 1.60 4.67 1.91 2.87 1.25
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ............ (0.39) (0.41) (0.42) (0.43) (0.39)
Distributions from net realized gains ........... (0.93) (1.05) (0.48) (0.38) (0.25)
-------- -------- -------- -------- --------
Total distributions ................................ (1.32) (1.46) (0.90) (0.81) (0.64)
-------- -------- -------- -------- --------
Net asset value at end of year ..................... $ 19.36 $ 19.08 $ 15.87 $ 14.86 $ 12.80
======== ======== ======== ======== ========
Total return ....................................... 8.74% 30.22% 13.15% 22.86% 10.54%
======== ======== ======== ======== ========
Net assets at end of year (000's) .................. $ 64,963 $ 55,940 $ 40,854 $ 35,641 $ 25,976
======== ======== ======== ======== ========
Ratio of net expenses to average net assets ........ 1.04% 1.04% 1.08% 1.17% 1.17%(a)
Ratio of net investment income to average net assets 2.05% 2.33% 2.65% 3.04% 3.10%
Portfolio turnover rate ............................ 25% 21% 24% 17% 14%
</TABLE>
(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.
-18-
<PAGE>
INVESTMENT ADVISOR
Flippin, Bruce & Porter, Inc.
800 Main Street, Suite 202
P. O. Box 6138
Lynchburg, Virginia 24505
800-327-9375
ADMINISTRATOR
Countrywide Fund Services, Inc.
P. O. Box 5354
Cincinnati, Ohio 45201-5354
800-443-4249
CUSTODIAN
Firstar 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
Erwin H. Will, Jr.
Samuel B. Witt, III
-19-
<PAGE>
Additional information about the Funds is included in the Statement of
Additional Information ("SAI") and which is incorporated by reference in its
entirety. Additional information about the Funds' investments is available in
the Funds' annual and semiannual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and strategies that
significantly affected the Funds' performance during their last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Funds, or to make inquiries about the Funds, please call
1-800-443-4249.
Information about the Funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's public reference room in Washington,
D.C. Information about the operation of the public reference room can be
obtained by calling the Commission at 1-800-SEC-0330. Reports and other
information about the Funds are available on the Commission's Internet site at
HTTP://WWW.SEC.GOV. Copies of information on the Commission's Internet site may
be obtained, upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, D.C. 20549-6009.
File No. 811-5685
-20-
<PAGE>
THE GOVERNMENT
STREET EQUITY FUND
A No-Load Fund
Prospectus
August 1, 1999
Investment Advisor
T. Leavell & Associates, Inc.
Founded 1979
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
<PAGE>
PROSPECTUS
August 1, 1999
THE GOVERNMENT STREET EQUITY FUND
A NO-LOAD FUND
The investment objective of THE GOVERNMENT STREET EQUITY FUND is to seek capital
appreciation through the compounding of dividends and capital gains, both
realized and unrealized. The Fund will seek to attain its objective by investing
in common stocks.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
Mobile, Alabama
TABLE OF CONTENTS
Risk/Return Summary........................................................... 3
Synopsis of Costs and Expenses................................................ 5
How to Purchase Shares........................................................ 6
How to Redeem Shares.......................................................... 8
How Net Asset Value is Determined............................................. 9
Management of the Fund........................................................10
Dividends, Distributions and Taxes............................................11
Financial Highlights..........................................................12
Application...................................................................
<PAGE>
RISK/RETURN SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is to seek 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.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund's portfolio consists primarily of the common stocks of medium to large
capitalization companies which are broadly diversified among economic sectors
and industries. The Fund generally will remain fully invested in common stocks.
The Fund is governed by an investment philosophy that seeks to reduce risk (the
variability of returns) in the portfolio while increasing compounded returns.
The Advisor 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" or
"value") is then sorted into capitalization sectors (small, medium or large)
using the capitalization sector weightings of the S&P 500 as benchmarks. These 6
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 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.
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.
-1-
<PAGE>
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. As a result of engaging in these temporary
measures, the Fund may not achieve its investment objective. 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.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
The return on and value of an investment in the Fund will fluctuate in response
to stock market movements. Stocks and other equity securities are subject to
market risks and fluctuations in value due to general economic conditions,
political stability and other factors. The Fund's portfolio might also decrease
in value in response to the activities and financial prospects of an individual
company in the Fund's portfolio. As a result, there is a risk that you could
lose money by investing in the Fund.
While medium-sized 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
corporations. In addition, in many instances, the securities of medium-sized
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 medium sized companies
may be subject to wider price fluctuations.
PERFORMANCE SUMMARY
The bar chart and performance table shown below provide an indication of the
risks of investing in the Fund by showing the changes in the performance of the
Fund from year to year since its inception and by showing how the average annual
returns of the Fund compare to those of a broad-based securities market index.
How the Fund has performed in the past is not necessarily an indication of how
the Fund will perform in the future.
[bar chart}
6.04% 3.15% -2.78% 27.42% 21.48% 27.84% 23.73%
1992 1993 1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
20.92% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -9.05% during the quarter ended September 30, 1998.
The year-to-date return through June 30, 1999 is 10.62%.
-2-
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
Since Inception
One Year Five Years (June 3, 1991)
-------- ---------- --------------
The Government Street
Equity Fund 23.73% 18.94% 15.19%
Standard & Poor's
500 Index* 28.58% 24.06% 19.8%
*The Standard & Poor's 500 Index is a widely recognized, unmanaged index of
common stock prices.
SYNOPSIS OF COSTS AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES (fees paid directly from your investment) None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees 0.60%
Administrator's Fees 0.20%
Other Expenses 0.05%
-----
Total Annual Fund Operating Expenses 0.85%
=====
EXAMPLE
This Example is intend to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 years $ 87
3 years 271
5 years 471
10 years 1,049
HOW TO PURCHASE SHARES
There are NO SALES COMMISSIONS charged to investors. You may obtain assistance
in opening an account from Countrywide Fund Services, Inc. (the "Administrator")
by calling 1-800-443-4249, or by writing to the Fund at the address shown below
for regular mail orders. You may also obtain assistance through any
broker-dealer authorized to sell shares of the Fund. The broker-dealer may
charge you a fee for its services.
-3-
<PAGE>
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 is $5,000 ($1,000 for an
individual retirement account or self-employed retirement (KEOGH) plan). 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.
You 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.
If an order to purchase shares is 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, to:
The Government Street Equity Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. You may invest 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. For initial purchases, you should be
prepared to provide us, by mail or facsimile, with a completed, signed Account
Application. This will ensure prompt and accurate handling of your investment.
Please have your bank use the following wiring instructions to purchase by wire:
Firstar 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)
-4-
<PAGE>
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 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 you to make
regular monthly or quarterly investment in shares through automatic charges to
your checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge your 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 or both. You may change the amount of the investment or discontinue the
plan at any time by writing to the Administrator.
HOW TO REDEEM SHARES
You may redeem shares of the Fund 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
Administrator 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;
-5-
<PAGE>
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 3 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. You may reduce or avoid such delay (which may
take up to 15 days) if you purchase by certified check, government check or wire
transfer. In such cases, the net asset value next determined after receipt of
your 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.
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). You may not redeem
shares of the Fund 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 any time you wish by filing a letter including your new
redemption instructions with the Fund.
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, (3) requests to establish or change redemption
services other than through your initial account application, and (4) if the
name(s) or the address on your account has been changed within 30 days of your
redemption request. 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. If your Fund shares are valued at $10,000 or more at
the current offering price, you 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. You may
establish this service whether dividends and distributions are reinvested or
paid in cash. Systematic withdrawals may be deposited directly to your bank
account by completing the applicable section on the Account Application form
accompanying this Prospectus, or by writing the Fund.
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
-6-
<PAGE>
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, they are valued 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
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, T.
Leavell & Associates, Inc., 150 Government Street, P.O. Box 1307, Mobile,
Alabama 36633 (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 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 is 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.
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%.
YEAR 2000 READINESS. Computer users around the world are faced with the dilemma
of the Year 2000 issue, which stems from the use of two digits in most older
computer systems to designate the year. When the year advances from 1999 to
2000, many computers will not recognize "00" as the Year 2000. This issue could
potentially affect every aspect of computer-related activity, on an individual
and corporate level. The Fund could be adversely impacted if the computer
systems used by the Advisor and other service providers have not been converted
to meet the requirements of the new century. The Advisor has evaluated its
internal systems and expects them to handle the change of millennium. The
Advisor is monitoring on an ongoing basis the progress of the Fund's service
providers to convert their systems to comply with the requirements of the Year
2000. The Advisor currently has no reason to believe that these service
providers will not be fully and timely compliant. However, you should be aware
that there can be no assurance that all systems will be successfully converted
prior to January 1, 2000, in which case it would become necessary for the Fund
to enter into agreements with new service providers or to make other
arrangements.
-7-
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue code of 1986 and will distribute all of its
net income and realized capial 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. The Fund expects that its
distributions will consist primarily of capital gains.
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.
-8-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Tait, Weller & Baker, whose report, along with
the Fund's financial statements, are included in the Statement of Additional
Information, which is available upon request.
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
- ------------------------------------------------------------------------------------------------------------------
Years Ended March 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 43.79 $ 32.59 $ 29.41 $ 23.87 $ 22.69
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 0.27 0.32 0.37 0.40 0.38
Net realized and unrealized
gains on investments ................... 6.01 12.28 4.50 5.75 1.19
-------- -------- -------- -------- --------
Total from investment operations ............. 6.28 12.60 4.87 6.15 1.57
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (0.27) (0.32) (0.36) (0.40) (0.39)
Distributions from net realized gains ..... (1.70) (1.08) (1.33) (0.21) --
-------- -------- -------- -------- --------
Total distributions .......................... (1.97) (1.40) (1.69) (0.61) (0.39)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 48.10 $ 43.79 $ 32.59 $ 29.41 $ 23.87
======== ======== ======== ======== ========
Total return ................................. 14.81% 39.31% 16.94% 25.96% 7.02%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 90,707 $ 75,643 $ 49,629 $ 41,421 $ 31,473
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) 0.85% 0.86% 0.89% 0.94% 0.91%
Ratio of net investment income
to average net assets ..................... 0.61% 0.82% 1.17% 1.50% 1.71%
Portfolio turnover rate ...................... 22% 18% 20% 31% 55%
</TABLE>
(a) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's administrative and 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 1.00% for the year ended March 31, 1995.
-9-
<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.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Firstar 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
Erwin H. Will, Jr.
Samuel B. Witt III
PORTFOLIO MANAGER
Thomas W. Leavell
-10-
<PAGE>
Additional information about the Fund is included in the Statement of Additional
Information ("SAI"), which is incorporated by reference in its entirety.
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and strategies that
significantly affected the Fund's performance during its last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Fund, or to make inquiries about the Fund, please call
1-800-443-4249.
Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's public reference room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the Commission at 1-800-SEC-0330. Reports and other information about
the Fund are available on the Commission's Internet site at HTTP://WWW.SEC.GOV.
Copies of information on the Commission's Internet site may be obtained, upon
payment of a duplicating fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, D.C. 20549-6009
File No. 811-5685
-11-
<PAGE>
THE GOVERNMENT
STREET BOND FUND
A No-Load Fund
Prospectus
August 1, 1999
Investment Advisor
T. Leavell & Associates, Inc.
Founded 1979
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
<PAGE>
PROSPECTUS
August 1, 1999
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.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
Mobile, Alabama
TABLE OF CONTENTS
Risk/Return Summary........................................................... 3
Synopsis of Costs and Expenses................................................ 5
How to Purchase Shares........................................................ 6
How to Redeem Shares.......................................................... 8
How Net Asset Value is Determined............................................. 9
Management of the Fund........................................................10
Dividends, Distributions and Taxes............................................11
Additional Investment Information.............................................12
Financial Highlights..........................................................13
Application...................................................................
<PAGE>
RISK/RETURN SUMMARY
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
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.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
In seeking to achieve the Fund's investment objectives, the Fund will emphasize
preservation of capital by limiting investments in the portfolio to fixed income
securities in the 4 highest quality ratings. These securities are referred to as
"investment grade."
Under normal circumstances, approximately 40% of the Fund's total assets will be
invested in U.S. Government Securities. These include U.S. Treasury Securities
and securities issued or guaranteed as to interest and principal by agencies or
instrumentalities of the U.S. Government. The Fund may also invest in corporate
debt securities.
The maturities of securities in the portfolio will range from less than 1 year
to 15 years from the date of purchase. The Fund will be adjusted from time to
time to maintain an average maturity of between 3 and 7 years, depending upon
the Advisor's market interest rate forecasts.
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.
The Adviser will select corporate bonds and/or notes based on the overall credit
quality of the issuer, the bonds' relative interest rate spread over U.S.
Treasury Securities of comparable maturity, and call features. In the event that
a corporate fixed income security held by the Fund is downgraded and 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. The corporate fixed income securities selected for the portfolio may
include floating rate securities that adjust their effective interest rate at
predetermined periodic intervals.
-1-
<PAGE>
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
The fixed income securities in which the Fund will invest are subject to
fluctuation in value. 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. 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, and the
Fund's net asset value would decrease.
Securities rated in the lower end of the "investment grade" category are
considered speculative in certain respects. Changes in economic or other
conditions are more likely to lead to a weakened capacity to make interest and
principal payments than with higher grade securities. 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.
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 Fund or to the Fund's shares.
The Fund is not intended to be a complete investment program and you could lose
money by investing in the Fund.
PERFORMANCE SUMMARY
The bar chart and performance table shown below provide an indication of the
risks of investing in the Fund by showing the changes in the performance of the
Fund from year to year since the Fund's inception and by showing how the average
annual returns of the Fund compare to those of a broad-based securities market
index. How the Fund has performed in the past is not necessarily an indication
of how the Fund will perform in the future.
[bar chart]
6.34% 8.80% -2.69% 15.46% 3.67% 7.83% 7.43%
1992 1993 1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
5.24% during the quarter ended June 30, 1995 and the lowest return for a quarter
was -2.38% during the quarter ended March 31, 1994.
The year-to-date return through June 30, 1999 is -1.63%.
-2-
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
Since Inception
One Year Five Years (June 3, 1991)
-------- ---------- --------------
The Government Street 7.43% 6.17% 7.32%
Bond Fund
Lehman Government/
Corporate Intermediate
Bond Index* 8.44% 6.60% 7.79%
90-Day Treasury Bill
Index ** 5.23% 5.22% 4.84%
*The Lehman Government/Corporate Intermediate Bond Index is an unmanaged index
generally representative of intermediate-term bonds.
**The 90-Day Treasury Bill Index is an unmanaged index generally representative
of the average yield of 90-day Treasury bills.
SYNOPSIS OF COSTS AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES (fees paid directly from your investment) None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees 0.50%
Administrator's Fees 0.20%
Other Expenses 0.03%
-----
Total Annual Fund Operating Expenses 0.73%
=====
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs
<PAGE>
may be higher or lower, based on these assumptions your costs would be:
1 years $ 75
3 years 233
5 years 406
10 years 906
HOW TO PURCHASE SHARES
There are NO SALES COMMISSIONS charged to investors. You may obtain assistance
in opening accounts from Countrywide Fund Services, Inc. (the "Administrator")
by calling 1-800-443-4249, or by writing to the Fund at the address shown below
for regular mail orders. You may also obtain assistance through any
broker-dealer authorized to sell shares of the Fund. The broker-dealer may
charge you a fee for its services.
-3-
<PAGE>
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 is normally $5,000 ($1,000
for an individual retirement account ("IRA") or self-employed retirement plan
("Keogh")). 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. If your order is 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, you 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.
You 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.
If an order to purchase shares is 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 Bond Fund, to:
The Government Street Bond Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. You may invest 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. For initial purchases, you should be
prepared to provide us, by mail or facsimile, with a completed, signed Account
Application. This will ensure prompt and accurate handling of your investment.
Please have your bank use the following wiring instructions to purchase by wire:
Firstar 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)
-4-
<PAGE>
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 you to make
regular monthly or quarterly investment in shares through automatic charges to
your 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 or both. You may change the amount of the investment or discontinue the
plan at any time by writing to the Administrator.
HOW TO REDEEM SHARES
You may redeem shares of the Fund 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.
-5-
<PAGE>
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 3 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. You may reduce or avoid such delay (which may
take up to 15 days) if you purchase 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.
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 any time you wish by filing a letter including your new
redemption instructions with the Fund.
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, (3) requests to establish or change redemption services
other than through your initial account application and (4) if the name(s) or
the address on your account has been changed within 30 days of your redemption
request. 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.
-6-
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN. If your Fund shares are 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. You may establish
this service whether dividends and distributions are reinvested or paid in cash.
Systematic withdrawals may be deposited directly to your bank account by
completing the applicable section on the Account Application form accompanying
this Prospectus, or by writing the Fund.
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 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
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, T.
Leavell & Associates, Inc., 150 Government Street, P.O. Box 1307, Mobile,
Alabama 36633 (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.
-7-
<PAGE>
The Advisor 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%.
YEAR 2000 READINESS. Computer users around the world are faced with the dilemma
of the Year 2000 issue, which stems from the use of two digits in most older
computer systems to designate the year. When the year advances from 1999 to
2000, many computers will not recognize "00" as the Year 2000. This issue could
potentially affect every aspect of computer-related activity, on an individual
and corporate level. The Fund could be adversely impacted if the computer
systems used by the Advisor and other service providers have not been converted
to meet the requirements of the new century. The Advisor has evaluated its
internal systems and expects them to handle the change of millennium. The
Advisor is monitoring on an ongoing basis the progress of the Fund's service
providers to convert their systems to comply with the requirements of the Year
2000. The Advisor currently has no reason to believe that these service
providers will not be fully and timely compliant. However, you should be aware
that there can be no assurance that all systems will be successfully converted
prior to January 1, 2000, in which case it would become necessary for the Fund
to enter into agreements with new service providers or to make other
arrangements.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue code of 1986 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. The Fund expect that its distributions will consist primarily of
income.
-8-
<PAGE>
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.
ADDITONAL INVESTMENT INFORMATION
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.
Money market instruments mature in 13 months or less from the date of purchase
and include U.S. Government Securities and corporate debt securities (including
those subject to repurchase agreements), bankers' acceptances and certificates
of deposit of domestic branches of U.S. banks, and commercial paper (including
variable amount demand master note). 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 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.
-9-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Tait, Weller & Baker, whose report, along with
the Fund's financial statements, are included in the Statement of Additional
Information, which is available upon request.
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
- ------------------------------------------------------------------------------------------------------------------
Years Ended March 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 21.06 $ 20.47 $ 20.87 $ 20.33 $ 20.87
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 1.27 1.32 1.34 1.35 1.35
Net realized and unrealized
gains (losses) on investments .......... (0.16) 0.60 (0.40) 0.54 (0.53)
-------- -------- -------- -------- --------
Total from investment operations ............. 1.11 1.92 0.94 1.89 0.82
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (1.27) (1.33) (1.34) (1.35) (1.36)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 20.90 $ 21.06 $ 20.47 $ 20.87 $ 20.33
======== ======== ======== ======== ========
Total return ................................. 5.38% 9.61% 4.60% 9.43% 4.12%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 43,041 $ 36,908 $ 29,442 $ 28,718 $ 27,780
======== ======== ======== ======== ========
Ratio of net expenses to average net assets .. 0.73% 0.74% 0.75% 0.76% 0.85%
Ratio of net investment income
to average net assets ..................... 6.01% 6.35% 6.44% 6.38% 6.68%
Portfolio turnover rate ...................... 17% 10% 20% 10% 11%
</TABLE>
-10-
<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.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
CUSTODIAN
Firstar 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
Erwin H. Will, Jr.
Samuel B. Witt III
PORTFOLIO MANAGER
Mary Shannon Hope
-11-
<PAGE>
Additional information about the Fund is included in the Statement of Additional
Information ("SAI"), which is incorporated by reference in its entirety.
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and strategies that
significantly affected the Fund's performance during its last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Fund, or to make inquiries about the Fund, please call
1-800-443-4249.
Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's public reference room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the Commission at 1-800-SEC-0330. Reports and other information about
the Fund are available on the Commission's Internet site at HTTP://WWW.SEC.GOV.
Copies of information on the Commission's Internet site may be obtained, upon
payment of a duplicating fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, D.C. 20549-6009.
File No. 811-5685
-12-
<PAGE>
THE ALABAMA
TAX FREE
BOND FUND
A NO-LOAD FUND
Prospectus
August 1, 1999
Investment Advisor
T. Leavell & Associates, Inc.
Founded 1979
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
<PAGE>
PROSPECTUS
AUGUST 1, 1999
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.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc.
Mobile, Alabama
TABLE OF CONTENTS
Risk/Return Summary.......................................................... 3
Synopsis of Costs and Expenses............................................... 5
How to Purchase Shares....................................................... 6
How to Redeem Shares......................................................... 8
How Net Asset Value is Determined............................................ 10
Management of the Fund....................................................... 11
Additional Investment Information............................................ 12
Dividend and Capital Gain Distributions...................................... 14
Tax Status................................................................... 14
Financial Highlights......................................................... 16
Application..................................................................
<PAGE>
RISK/RETURN SUMMARY
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
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.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund invests 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.
The securities will be rated in the 3 highest grades used by the recognized
rating agencies (or unrated municipal securities that the Advisor determines are
of comparable quality). Under normal circumstances, the Fund's average maturity
is expected to be 3 to 10 years.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
The net asset value of the shares of the Fund will change as the general levels
of interest rates fluctuate. When interest rates rise, the value of the Fund's
portfolio can be expected to decline. There is also the risk that the issuer of
a bond may not be able to make interest and principal payments when due.
Because the Fund invests primarily in bonds from the State of Alabama, it is
particularly sensitive to political and economic factors that negatively affect
Alabama. In addition, there is the risk that substantial changes in federal
income tax law could cause municipal bond prices to decline. This is because the
demand for municipal bonds is strongly influenced by the value of tax-exempt
income to investors.
As a non-diversified fund, the Fund may be invested in fewer issuers than a
diversified fund. If the Fund concentrates in a particular segment of the bond
market, economic or political factors affecting one bond in that segment and may
affect other bonds within the same segment. These factors may cause greater
fluctuations in the Fund's value and may make the Fund more susceptible to any
single risk.
3
<PAGE>
The Fund is not intended to be a complete investment program and you could lose
money by investing in the Fund.
PERFORMANCE SUMMARY
The bar chart and performance table shown below provide an indication of the
risks of investing in the Fund by showing the changes in the performance of the
Fund from year to since the Fund's inception and by showing how the average
annual returns of the Fund compare to those of a broad-based securities market
index. How the Fund has performed in the past is not necessarily an indication
of how the Fund will perform in the future.
[bar chart}
- -3.18% 12.42% 3.77% 6.32% 5.13%
1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
4.67% during the quarter ended March 31, 1995, and the lowest return for a
quarter was -3.17% during the quarter ended March 31, 1994.
The year-to-date return through June 30, 1999 is -1.28%.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
Since Inception
One Year Five Years (January 15, 1993)
-------- ---------- ------------------
The Alabama Tax Free
Bond Fund 5.13% 4.77% 5.31%
Lehman 7-Year G.O.
Municipal Bond Index* 6.36% 5.83% 6.57%
Lehman 3-Year
Municipal Bond Index** 5.20% 4.90% 5.10%
*The Lehman 7-Year G.O. Municipal Bond Index is an unmanaged index generally
representative of 7-Year general obligation tax-exempt bonds.
4
<PAGE>
**The Lehman 3-Year Municipal Bond Index is an unmanaged index generally
representative of 3-Year tax-exempt bonds.
SYNOPSIS OF COSTS AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES (fees paid directly from
your investment)..................................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fee.................................................. 0.35
Administrator's Fees............................................ 0.20%
Other Expenses.................................................. 0.21%
-----
Total Annual Fund Operating Expenses............................ 0.76%(1)
=====
(1) The Advisor has voluntarily agreed to waive all or a portion of its fee and
to reimburse certain expenses of the Fund necessary to limit total operating
expenses to 0.65% of the Fund's average net assets. The Advisor reserves the
right to terminate this waiver or any reimbursement at any time in the Advisor's
sole discretion.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 years $ 78
3 years 243
5 years 422
10 years 942
5
<PAGE>
HOW TO PURCHASE SHARES
There are NO SALES COMMISSIONS charged to investors. You may obtain assistance
in opening accounts from Countrywide Fund Services, Inc. (the "Administrator")
by calling 1-800-443-4249, or by writing to the Fund at the address shown below
for regular mail orders. You may also obtain assistance through any
broker-dealer authorized to sell shares of the Fund. The broker-dealer may
charge you a fee for its services.
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 an 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.
You 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.
If an order to purchase shares were 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.
6
<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
Alabama Tax Free Bond Fund, to:
The Alabama Tax Free Bond Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. You may invest 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. For initial purchases, you should be
prepared to provide us, by mail or facsimile, with a completed, signed Account
Application. This will ensure prompt and accurate handling of your investment.
Please have your bank use the following wiring instructions to purchase by wire:
Firstar 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 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 you to make
regular monthly or quarterly investment in shares through automatic charges to
your checking account. With your
7
<PAGE>
authorization and bank approval, the Administrator will automatically charge
your 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 or both. You may change the amount of
the investment or discontinue the plan at any time by writing to the
Administrator.
HOW TO REDEEM SHARES
You may redeem shares of the Fund 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,
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
8
<PAGE>
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 3 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. You may reduce or avoid such delay (which may
take up to 15 days) if you purchase 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.
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.
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, (3) requests to establish or change redemption services
other than through your initial account application and (4) if the name(s) or
the address on your account has been changed within 30 days of your redemption
request. 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. If your Fund shares are valued at $10,000 or more at
the current offering price, you may establish a Systematic Withdrawal Plan to
receive a monthly or quarterly
9
<PAGE>
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. You may establish this service whether
dividends and distributions are reinvested or paid in cash. Systematic
withdrawals may be deposited directly to the your bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by writing the Fund.
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.
10
<PAGE>
MANAGEMENT OF THE FUND
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, T.
Leavell & Associates, Inc., 150 Government Street, P.O. Box 1307, Mobile,
Alabama 36633 (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 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 BS,
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%. 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.
11
<PAGE>
YEAR 2000 READINESS. Computer users around the world are faced with the dilemma
of the Year 2000 issue, which stems from the use of two digits in most older
computer systems to designate the year. When the year advances from 1999 to
2000, many computers will not recognize "00" as the Year 2000. This issue could
potentially affect every aspect of computer-related activity, on an individual
and corporate level. The Fund could be adversely impacted if the computer
systems used by the Advisor and other service providers have not been converted
to meet the requirements of the new century. The Advisor has evaluated its
internal systems and expects them to handle the change of millennium. The
Advisor is monitoring on an ongoing basis the progress of the Fund's service
providers to convert their systems to comply with the requirements of the Year
2000. The Advisor currently has no reason to believe that these service
providers will not be fully and timely compliant. However, you should be aware
that there can be no assurance that all systems will be successfully converted
prior to January 1, 2000, in which case it would become necessary for the Fund
to enter into agreements with new service providers or to make other
arrangements.
ADDITIONAL INVESTMENT INFORMATION
The Fund invests primarily in:
(a) 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; and
(b) 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.
Although the Fund normally invests all of its assets in obligations exempt from
federal and Alabama state income taxes, market conditions may from time to time
limit availability. During periods when the Fund is unable to purchase such
obligations, the Fund will invest the assets of the Fund in municipal
obligations the interest on which is exempt from
12
<PAGE>
federal income taxes, but which is subject to the personal income taxes of
Alabama.
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 taxable
short-term obligations. These may include:
(a) 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
(b) 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.
Interest income from these short-term obligations may be taxable to shareholders
as ordinary income for federal and state income tax purposes. As a result of
engaging in these temporary measures, the Fund may not achieve its investment
objective.
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).
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.
For additional information about Municipal Obligations, see the Statement of
Additional Information.
13
<PAGE>
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS
Each month the Fund distributes a dividend 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. You may elect to receive
dividends and capital gain distributions in either cash or additional shares.
The Fund expects that its distributions will consist primarily of investment
income.
TAX STATUS
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.
14
<PAGE>
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.
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 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.
This discussion 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.
15
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Tait, Weller & Baker, whose report, along with
the Fund's financial statements, are included in the Statement of Additional
Information, which is available upon request.
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
- ------------------------------------------------------------------------------------------------------------------
Years Ended March 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 10.49 $ 10.18 $ 10.23 $ 9.96 $ 9.96
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 0.44 0.44 0.43 0.42 0.45
Net realized and unrealized
gains (losses) on investments .......... 0.05 0.31 (0.05) 0.27 --
-------- -------- -------- -------- --------
Total from investment operations ............. 0.49 0.75 0.38 0.69 0.45
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (0.44) (0.44) (0.43) (0.42) (0.45)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 10.54 $ 10.49 $ 10.18 $ 10.23 $ 9.96
======== ======== ======== ======== ========
Total return ................................. 4.73% 7.44% 3.82% 7.02% 4.66%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 21,560 $ 19,938 $ 16,801 $ 15,480 $ 12,816
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) 0.65% 0.65% 0.66% 0.75% 0.75%
Ratio of net investment income
to average net assets ..................... 4.16% 4.19% 4.24% 4.11% 4.56%
Portfolio turnover rate ...................... 7% 2% 6% 4% 36%
</TABLE>
(a) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been
0.76%, 0.75%, 0.78%, 0.86% and 1.05% for the years ended March 31, 1999,
1998, 1997, 1996 and 1995, respectively.
16
<PAGE>
[Back Cover]
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
Firstar 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
Erwin H. Will, Jr.
Samuel B. Witt III
PORTFOLIO MANAGER
Timothy S. Healey
17
<PAGE>
Additional information about the Fund is included in the Statement of Additional
Information ("SAI"), which is incorporated by reference in its entirety.
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and strategies that
significantly affected the Fund's performance during its last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Fund, or to make inquiries about the Fund, please call
1-800-443-4249.
Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's public reference room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the Commission at 1-800-SEC-0330. Reports and other information about
the Fund are available on the Commission's Internet site at HTTP://WWW.SEC.GOV.
Copies of information on the Commission's Internet site may be obtained, upon
payment of a duplicating fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, D.C. 20549-6009.
File No. 811-5685
18
<PAGE>
THE DAVENPORT EQUITY FUND
PROSPECTUS
August 1, 1999
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
<PAGE>
PROSPECTUS
AUGUST 1, 1999
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.
TABLE OF CONTENTS
Risk/Return Summary.......................................................
Synopsis of Costs and Expenses............................................
Investment Objective, Principal Investment Strategies
and Risk Considerations..................................................
How to Purchase Shares....................................................
How to Redeem Shares......................................................
How Net Asset Value is Determined.........................................
Management of the Fund....................................................
Dividends, Distributions and Taxes........................................
Financial Highlights......................................................
Application...............................................................
<PAGE>
RISK/RETURN SUMMARY
WHAT IS THE FUND'S 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.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
Normally, the Fund will have at least 65% of its assets in common stocks which
according to the Advisor's analysis show strong growth potential. In determining
whether a company has the potential for strong growth, the Advisor will focus
on:
o price-earnings ratios
o rate of earnings growth
o depth of management
o a company's past financial stability
o a company's present and projected position within its industry
o dividend record
The Advisor does not limit the Fund to any particular capitalization
requirement. At any time, the Fund may have a portion of its assets in small,
unseasoned companies.
The Advisor may invest a portion of the Fund's portfolio in fixed-income
securities and money market instruments. Money market instruments are used when
new funds are received and awaiting investment, to accumulate cash for
anticipated purchases of portfolio securities and to provide for shareholder
redemptions and operational expenses of the Fund.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
The return on and value of an investment in the Fund will fluctuate in response
to stock market movements. Stocks and other equity securities are subject to
market risks and fluctuations in value due to earnings, economic conditions and
other factors beyond the control of the Advisor. As a result, there is a risk
that you could lose money by investing in the Fund.
When the Fund invests in small, unseasoned companies there is the potential for
rapid growth; however, these companies often involve higher risks because they
lack the management experience, financial resources, product diversification and
other competitive strengths of larger companies. In addition, many smaller
companies are only traded over-the-counter or on a regional securities exchange
thus exposing the Fund to greater price fluctuations than larger cap companies
traded over the larger exchanges.
-1-
<PAGE>
When the Fund invests in fixed-income securities, the Fund may not achieve the
degree of capital appreciation that a portfolio investing solely in common
stocks might achieve. Fixed-income securities fluctuate with changes in interest
rates. Typically a rise in interest rates causes a decline in the market value
of fixed-income securities and, conversely, a decrease in interest rates may
cause an increase in the market value of the fixed-income securities.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
Performance Summary
The Fund is not permitted to report performance information in this section
until it has completed one calendar year of operation.
SYNOPSIS OF COSTS AND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
(fees paid directly from your investment): None
ANNUAL FUND OPERATING EXPENSES
(expenses deducted from Fund assets):
Management Fees........................................... 0.75%
Fees...................................................... 0.20%
Other Expenses............................................ 0.19%
-----
Total Fund Operating Expenses............................. 1.14%
=====
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years 5 years 10 years
------ ------- ------- --------
$116 $362 $628 $1,386
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISK CONSIDERATIONS
INVESTMENT OBJECTIVE. 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.
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.
-2-
<PAGE>
EQUITY SELECTION. Normally the Fund will invest at least 65% of its total assets
in common stocks. 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 from
time to time invest a portion of its assets in small, unseasoned companies.
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 5
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.
The Fund may invest in preferred stocks and convertible bonds which are rated at
the time of purchase in the 4 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. 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.
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 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. When the Fund invests in money
market instruments for temporary defensive purposes, it may not achieve its
investment objective.
-3-
<PAGE>
RISK 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. There is a risk that you could lose money by investing in the Fund.
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.
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.
While small, unseasoned 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
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 and may have limited liquidity (which
means that the Fund may have difficulty selling them at an acceptable price when
it wants to). 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.
HOW TO PURCHASE SHARES
There are NO SALES COMMISSIONS CHARGED to investors. You may obtain assistance
in opening an account from Countrywide Fund Services, Inc. (the "Administrator")
by calling 1-800-281-3217, or by writing to the Fund at the address shown below
for regular mail orders. You may also obtain assistance through any
broker-dealer authorized to sell shares of the Fund. The broker-dealer may
charge you a fee for its services. Your investment will purchase shares at the
Fund's net asset value next determined after your order is received by the Fund.
The minimum initial investment in the Fund 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.
-4-
<PAGE>
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.
You 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.
If an order to purchase shares is 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:
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. You may invest directly by bank wire. To establish a new
account or add to an existing account by wire, please call the Administrator at
1-800-281-3217 before wiring funds to advise the Administrator 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:
Firstar 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
Administrator 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.
-5-
<PAGE>
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire 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 Administrator
at 1-800-281-3217 to alert the Administrator 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 you to make
regular monthly or quarterly investment in shares through automatic charges to
your checking account. With your 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 of the last business day of the
month or both. You 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.
HOW TO REDEEM SHARES
You may redeem shares of the Fund 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. All
redemption orders received 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 you
bring your account value up to $10,000 or more during the notice period, your
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
Administrator, 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;
-6-
<PAGE>
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 3 business days after
receipt of your redemption request. However, the Fund or the Administrator may
delay forwarding a redemption check for recently purchased shares while it
determines whether the purchase payment will be honored. You may reduce or avoid
such delay (which may take up to 15 days) by purchasing by certified check,
government check or wire transfer. In such cases, the net asset value next
determined after receipt by the Administrator of your 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 (1)
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"), (2) 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 (3) 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). You may not redeem
shares of the Fund 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 Administrator.
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 30 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, (2) requests to
establish or change redemption services other than through your initial account
application, and (3) if the name(s) or the address on your account has been
changed within 30 days of your redemption request. 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.
-7-
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN. If your Fund shares are valued at $10,000 or more at
the current offering price, you may establish a Systematic Withdrawal Plan to
receive a monthly or quarterly check in a stated amount of 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. You
may establish this service whether dividends and distributions are reinvested or
paid in cash. Systematic withdrawals may be deposited directly to your bank
account by completing the applicable section on the Account Application form
accompanying this Prospectus, or by writing the Fund.
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, they are valued 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 FUND
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.
-8-
<PAGE>
Davenport & Company LLC was originally organized in 1863 and, 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.
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:
JOHN P. ACKERLY IV, CFA, 35, is a graduate of the University of Virginia and
received his MBA from Virginia Commonwealth University. He began his investment
career as a Portfolio Manager with Central Fidelity Bank. Mr. Ackerly is a First
Vice President and a Portfolio Manager with the Advisor.
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.
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.
DAVID M. WEST, CFA, 44, is a graduate of the University of North Carolina at
Chapel Hill and received his MBA from The College of William and Mary. He worked
at several regional banks prior to starting his career in the investment
business in 1984. He joined the Advisor in 1990 and is a Senior Vice President
and Director of the Advisor.
Compensation of the Advisor is at the annual rate of 0.75% of the Fund's average
daily net assets.
The Advisor's address is One James Center, 901 East Cary Street, Richmond,
Virginia 23219.
YEAR 2000 READINESS. Computer users around the world are faced with the dilemma
of the Year 2000 issue, which stems from the use of two digits in most older
computer systems to designate the year. When the year advances from 1999 to
2000, many computers will not recognize "00" as the Year 2000. This issue could
potentially affect every aspect of computer-related activity, on an individual
and corporate level. The Fund could be adversely impacted if the computer
systems used by the Advisor and other service providers have not been converted
to meet the requirements of the new century. The Advisor has evaluated its
internal systems and expects them to handle the change of millennium. The
Advisor is monitoring on an ongoing basis the progress of the Fund's service
providers to convert their systems to comply with the requirements of the Year
2000. The Advisor currently has no reason to believe that these service
providers will not be fully and timely compliant. However, you should be aware
that there can be no assurance that all systems will be successfully converted
prior to January 1, 2000, in which case it would become necessary for the Fund
to enter into agreements with new service providers or to make other
arrangements.
-9-
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
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 United States.
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 you request in writing to receive
dividends and/or capital gains distributions in cash. Your 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.
-10-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance. Certain information reflects financial results for a
single Fund share. The total return in the table represent the rate that an
investor would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Tait, Weller & Baker, whose report, along with the Fund's financial
statements, are included in the Statement of Additional Information, which is
available upon request.
SELECTED PER SHARE DATA AND RATIOS FOR
A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
YEAR PERIOD
ENDED ENDED
MARCH 31, MARCH 31,
1999 1998 (a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period $ 11.14 $ 10.00
-------- --------
Income from investment operations:
Net investment income 0.06 0.01
Net realized and unrealized gains on investments 0.88 1.13
-------- --------
Total from investment operations 0.94 1.14
-------- --------
Less distributions:
Dividends from net investment income (0.06) --
Distributions from net realized gains (0.01) --
-------- --------
Total distributions (0.07) --
-------- --------
Net asset value at end of period $ 12.01 $ 11.14
======== ========
Total return 8.53% 11.40%
======== ========
Net assets at end of period (000's) $ 56,358 $ 24,694
======== ========
Ratio of net expenses to average net assets(b) 1.14% 1.15%(c)
Ratio of net investment income to average net assets 0.64% 0.76%(c)
Portfolio turnover rate 15% 17%(c)
(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) for the period ended March 31, 1998.
(c) Annualized.
-11-
<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
Firstar 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
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
-12-
<PAGE>
Additional information about the Fund is included in the Statement of Additional
Information ("SAI") and which is incorporated by reference in its entirety.
Additional information about the Fund's investments is available in the Funds'
annual and semiannual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and strategies that
significantly affected the Fund's performance during their last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Fund, or to make inquiries about the Fund, please call
1-800-281-3217 (Nationwide).
Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's public reference room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the Commission at 1-800-SEC-0330. Reports and other information about
the Funds are available on the Commission's Internet site at http://www.sec.gov.
Copies of information on the Commission's Internet site may be obtained, upon
payment of a duplicating fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, D.C. 20549-6009.
File No. 811-5685
-13-
<PAGE>
PROSPECTUS
AUGUST 1, 1999
THE JAMESTOWN FUNDS
NO-LOAD FUNDS
THE JAMESTOWN BALANCED FUND
THE JAMESTOWN EQUITY FUND
THE JAMESTOWN INTERNATIONAL EQUITY FUND
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
INVESTMENT ADVISOR
Lowe, Brockenbrough & Company, Inc.
Richmond, Virginia
TABLE OF CONTENTS
Risk/Return Summary........................................................... 2
Synopsis of Costs and Expenses................................................ 6
Investment Objectives, Principal Investment
Strategies and Related Risks................................................ 7
How to Purchase Shares........................................................18
How to Redeem Shares..........................................................20
How Net Asset Value is Determined.............................................22
Management of the Funds.......................................................22
Tax Status of Tax Exempt Virginia Fund........................................25
Dividends, Distributions and Taxes............................................27
Financial Highlights..........................................................28
Application...................................................................
These securities have not been approved nor disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.
<PAGE>
RISK/RETURN SUMMARY
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown
International Equity Fund and The Jamestown 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.
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The JAMESTOWN 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 JAMESTOWN 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 JAMESTOWN 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 JAMESTOWN 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.
WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
Jamestown Balanced Fund
- -----------------------
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
Fund will also invest in a variety of companies, industries and economic
sectors.
Equity securities, including common stocks, preferred stocks, convertible
preferred stocks and convertible bonds, are acquired for capital appreciation or
a combination of capital appreciation and income. Fixed income securities,
including corporate debt obligations and U.S. Government Securities, are
acquired for income and secondarily for capital appreciation.
-1-
<PAGE>
Jamestown Equity Fund
- ---------------------
The Advisor seeks to achieve the Equity Fund's objective through investment in a
diversified portfolio composed primarily of common stocks, preferred stocks,
convertible preferred stocks and convertible bonds. Equity investments are made
using fundamental analysis, proprietary models and qualitative, judgmental
evaluation as selection criteria. The Fund seeks financially strong, relatively
large companies which offer above average earnings and relatively modest
valuations.
Jamestown International Equity Fund
- -----------------------------------
The International Equity Fund will establish concentrated positions in countries
and regions that look most attractive. 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. 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 focus on both country and stock selection.
The Fund will seek to control risk by diversifying its assets among 12 or more
countries and approximately 80 stocks, and by possibly purchasing forward
currency exchange contracts to hedge against anticipated currency fluctuations.
Jamestown Tax Exempt Virginia Fund
- ----------------------------------
At least 65% of the Tax Exempt Virginia Fund's assets will normally be invested
in Virginia tax-exempt securities and at least 80% of the Fund's annual income
will be exempt from federal income tax and excluded from the calculation of the
federal alternative minimum tax.
The Advisor emphasizes a disciplined balance between sector selection and
moderate portfolio duration shifts to enhance income and total return. The
Fund's portfolio duration will range between 2 and 15 years. The Fund intends to
concentrate its investments in "high quality" bonds by maintaining at least 75%
of assets in bonds rated A or better. The Fund also intends to invest in a broad
range of investment grade municipal obligations.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
Jamestown Balanced Fund
- -----------------------
The portion of the Balanced Fund's portfolio invested in equity securities will
fluctuate in response to stock market movements, and the portion of the Fund's
portfolio invested in fixed income securities will fluctuate with changes in
interest rates. Typically a rise in interest rates causes a decline in the
market value of fixed income securities. There is a risk that you could lose
money by investing in the Fund.
-2-
<PAGE>
The Fund may not achieve the degree of capital appreciation that a portfolio
investing solely in equity securities might achieve. The investment results of
the Fund depend upon the ability of the Advisor to correctly anticipate the
relative performance of equity securities and fixed income securities of varying
maturities.
Jamestown Equity Fund
- ---------------------
The return on and value of an investment in the Equity Fund will fluctuate in
response to stock market movements. Equity securities are subject to market
risks and fluctuations in value due to earnings, economic conditions and other
factors beyond the control of the Advisor. As a result, there is a risk that you
could lose money by investing in the Fund.
Jamestown International Equity Fund
- -----------------------------------
Investments in securities of foreign issuers involve somewhat different
investment risks from those affecting securities of domestic issuers. In
addition to credit and market risk, investments in foreign securities involve
sovereign risk, which includes local political and economic developments,
potential nationalization, withholding taxes on dividend or interest payments
and currency blockage. Foreign companies may have less public or less reliable
information available about them and may be subject to less governmental
regulation than U.S. companies. Securities of foreign companies may be less
liquid or more volatile than securities of U.S. companies.
Jamestown Tax Exempt Virginia Fund
- ----------------------------------
Due to the Tax Exempt Virginia 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.
Conversely, when interest rates rise, the value of a portfolio invested at lower
yields can be expected to decline.
The Fund is a non-diversified fund and therefore may invest more than 5% of its
total assets in the securities of one or more issuers. Because a relatively high
percentage of the assets of the Fund may be invested in the securities of a
limited number of issuers, the value of shares of the Fund may be more sensitive
to any single economic, business, political or regulatory occurrence than the
value of shares of a diversified investment company.
PERFORMANCE SUMMARY
The bar charts and performance tables shown below provide an indication of the
risks of investing in the Funds by showing the changes in the performance of the
Funds from year to year since the Funds' inception and by showing how the
average annual returns of the Funds compare to those of a broad-based securities
market index. How the Funds have performed in the past is not
-3-
<PAGE>
necessarily an indication of how the Funds will perform in the future.
JAMESTOWN BALANCED FUND
- -2.59% 22.52% 8.32% 4.35% 0.11% 29.22% 15.75% 16.27% 18.27%
[bar chart]
1990 1991 1992 1993 1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
16.58% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -9.33% during the quarter ended September 30, 1990.
The year-to-date return through June 30, 1999 is 3.74%.
JAMESTOWN EQUITY FUND
2.06% 1.12% 34.27% 21.06% 25.53% 23.97%
[bar chart]
1993 1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
26.90% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -14.56% during the quarter ended September 30, 1998.
The year-to-date return through June 30, 1999 is 5.51%.
JAMESTOWN INTERNATIONAL EQUITY FUND
12.43% 23.95%
[bar chart]
1997 1998
During the period shown in the bar chart, the highest return for a quarter was
18.11% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -13.79% during the quarter ended September 30, 1998.
The year-to-date return through June 30, 1999 is 6.43%.
JAMESTOWN TAX EXEMPT VIRGINIA FUND
- -3.69% 12.21% 3.87% 7.07% 5.40%
[bar chart]
1994 1995 1996 1997 1998
During the period shown in the bar chart, the highest return for a quarter was
4.73% during the quarter ended March 31, 1995 and the lowest return for a
quarter was -4.37% during the quarter ended March 31, 1994.
The year-to-date return through June 30, 1999 is -1.23%.
-4-
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
Since Inception
One Year Five Years Inception Date
-------- ---------- --------- ----
Balanced Fund 18.27% 16.25% 12.44% July 3, 1989
Standard & Poor's
500 Index(1) 28.58% 24.06% 18.39%
Equity Fund 23.97% 20.66% 17.41% December 1, 1992
Standard & Poor's
500 Index(1) 28.58% 24.06% 21.53%
Tax Exempt Virginia Fund 5.40% 4.85% 5.07% September 1, 1993
Lehman Municipal
Bond Index(2) 6.48% 6.22% 6.32%
International Equity Fund 23.95% n/a 12.07% April 16, 1996
Morgan Stanley Europe,
Australia and Far East
("EAFE") Index(3) 20.00% n/a 7.71%
(1) The Standard & Poor's 500 Index ("S&P 500") is a widely recognized,
unmanaged index of common stock prices.
(2) The Lehman Municipal Bond Index is an unmanaged index of approximately
15,000 bonds widely recognized as a broad measure of the municipal bond
market.
(3) The Morgan Stanley EAFE Index is an unmanaged index which tracks the market
performance of small, medium and large capitalization companies in Europe,
Australia and the Far East.
SYNOPSIS OF COSTS AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY IF YOU BUY AND
HOLD SHARES OF THE FUNDS.
SHAREHOLDER FEES (fees paid directly from your investment):
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
---- ---- ------------- -----------
None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
<TABLE>
<CAPTION>
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
---- ---- ------------- -----------
<S> <C> <C> <C> <C>
Investment Advisory Fees 0.65% 0.65% 0.40% 1.00%
Administrator's Fees 0.20% 0.20% 0.15% 0.20%
Other Expenses 0.03% 0.07% 0.18% 0.31%
----- ----- ----- -----
Total Fund Operating Expenses 0.88% 0.92% 0.73% 1.51%
===== ===== ===== =====
</TABLE>
EXAMPLE: This Example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. It assumes that you
invest $10,000 in a Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that a Fund's operating expenses remain
the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
-5-
<PAGE>
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
---- ---- ------------- -----------
1 Year ............ $ 90 $ 94 $ 75 $ 154
3 Years............ 281 293 233 477
5 Years............ 488 509 406 824
10 Years............ 1,084 1,131 906 1,802
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.
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
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 of 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.
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. Equity securities are selected based on 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.
-6-
<PAGE>
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 subjected 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. The Advisor uses these selections 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 and securities issued
or guaranteed as to interest and principal by agencies or instrumentalities of
the U.S. Government, including those subject to 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 the Funds' shares.
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 the Advisor. 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. For as long as the Balanced
Fund holds a fixed income issue, the Advisor monitors the issuer's credit
standing.
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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 3 to 12 years. The average maturity of
the portfolio will be shifted to reflect the Advisor'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 the types of securities described above, the Advisor also invests
its assets among various companies, industries and economic sectors and adjusts
the 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 4-year stock market total returns (using the S&P 500 as a proxy for the
market) and U.S. Treasury Notes with a 4-year maturity. A 4-year time frame is
used in the Advisor's total return projections because the Advisor believes 4
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. The Advisor uses a dividend discount model, based upon
historical S&P 500 price to dividend relationships, to project 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 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
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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.
RISK CONSIDERATIONS. 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. Stocks and other equity securities
are subject to market risks (rapid increase or decrease in value or liquidity of
the security) and fluctuations in value due to earnings, economic conditions and
other factors beyond the control of the Advisor. As a result, there is a risk
that you could lose money by investing in the Funds.
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.
Corporate debt obligations rated less than A 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 than is the case with
higher grade securities.
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
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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.
Oechsle International Advisors, LLC (the "Sub-Advisor") believes that investors
must scan the world for investment opportunities. International diversification
is important because:
(1) non-U.S. stocks now account for more than 60 percent of the world's
stock market capitalization; and
(2) the Sub-Advisor believes that international investing meaningfully
reduces risk while potentially improving returns.
In 1967, the United States represented 70 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.
The Sub-Advisor believes that international diversification significantly
reduces risk and potentially improves returns. Over the last 25 years, non-U.S.
stocks, as measured by the Morgan Stanley Europe, Australia and Far East
("EAFE") Index, have outperformed U.S. equities, as measured by the S&P 500
Index, by a large margin. Furthermore, the Sub-Advisor believes that the
inclusion of international stocks to an existing portfolio of U.S. securities
results in lower risk mainly due to the fact that foreign economies and markets
are not synchronized with the U.S. economy or the U.S. equity market.
Recognition of the enhanced risk/reward characteristics of international
investing on the part of institutional investors is demonstrated by their
rapidly increasing exposure to international equity markets. By the end of 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 5 years.
The Sub-Advisor combines top-down country selection with bottom-up stock
selection in order to exploit the inefficiencies within and between
international equity markets. Various academic studies have shown that 60 to 70
percent of a portfolio's returns are determined by the asset allocation mix,
while the remainder is the result of stock selection.
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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.
The Sub-Advisor believes that to consistently provide investors with superior
returns, it is imperative to focus on both country selection as well as stock
selection. Three primary factors are reviewed in the country selection process
in order to rank all the countries for potential returns in U.S. dollars:
(1) A positive monetary environment that is likely to stimulate economic
growth;
(2) Accelerating corporate earnings in countries selling at reasonable
valuation levels given the expected growth; and
(3) The demand and supply relationship for equities in each country.
The Sub-Advisor seeks to control risk by diversifying across a number of foreign
markets. The Fund will generally have investments in 12 or more countries, and
the Fund will never be completely out of any major market in the EAFE Index. The
Fund will be further diversified by holding, on average, 80 stocks in the
portfolio. A quantitative review of the portfolio serves to identify the risk
and return parameters of the investments.
Once the macro-economic framework is developed, the Sub-Advisor seeks to add
value through security selection. The Sub-Advisor focuses on medium and large
capitalization stocks, but the Fund 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
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accounting and reporting standards are not as standardized as in the United
States, the Sub-Advisor believes that cash earnings are the best reflection of
the true earnings power of a corporation. The Sub-Advisor analyzes accounting
and legal differences in order to compare investments among different countries.
The core of the equity research process is driven by fundamental research. The
Sub-Advisor's investment research professionals annually visit more than 700
companies around the globe that are potential investments. The Sub-Advisor feels
that these company visits are an essential part of understanding the cash
generation capabilities of the companies. The Sub-Advisor is headquartered in
Boston and has offices and investment professionals in Frankfurt, London and
Tokyo.
When the Sub-Advisor believes that the currency of a particular foreign country
may suffer a substantial decline against the U.S. dollar, it may attempt to
hedge some portion or all of this anticipated risk by entering into a forward
contract to sell an amount of foreign currency approximating the value of some
or all of the Fund's portfolio obligations denominated in such foreign currency.
It may also enter into such contracts to protect against loss between trade and
settlement dates resulting from changes in foreign currency exchange rates. Such
contracts will also have the effect of limiting any gains to the Fund between
trade and settlement dates resulting from changes in such rates.
The Fund will use currency hedges only as a defensive measure. Given its outlook
for the various currencies, the Sub-Advisor first seeks beneficial currency
exposure through country allocation. Secondly, the Sub-Advisor will concentrate
investments in securities that are likely to benefit from the currency outlook.
Finally, as a defensive measure, the Sub-Advisor may hedge some of the Fund's
currency position to protect the portfolio against a rise in the dollar of the
United States. The Fund may hedge up to 50% of its investments in international
markets.
CERTAIN RISK CONSIDERATIONS
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
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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.
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 management 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.
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 Fund will maintain at
least 65% of its total assets in Virginia
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tax exempt securities during normal market conditions. The Advisor 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).
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INVESTMENT GRADE SECURITIES. The Fund intends to limit its investment purchases
to investment grade securities. The Fund defines investment grade securities as
those securities which, in the Advisor's opinion, have the characteristics
described by any of the nationally recognized statistical rating organizations
("NRSROs"), Moody's, 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.
The Fund requires that 75% of its assets must be rated at least A by Moody's,
S&P, Fitch or D&P. 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. 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.
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
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regard to whether the interest thereon is also exempt from the personal income
taxes of any State).
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).
RISK CONSIDERATIONS. 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. 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 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.
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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.
HOW TO PURCHASE SHARES
There are NO SALES COMMISSIONS charged to investors. You may obtain assistance
in opening an account from Countrywide Fund Services, Inc. (the "Administrator")
by calling 1-800-443-4249, or by writing to the Funds at the address shown below
for regular mail orders. You may also obtain assistance through any
broker-dealer authorized to sell shares of the Funds. The broker-dealer may
charge you a fee for its services.
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 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.
You 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.
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If an order to purchase shares is 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. You may invest 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. For initial purchases, you should be
prepared to provide us, by mail or facsimile, with a completed, signed account
application. This will ensure prompt and accurate handling of your investment.
Please have your bank use the following wiring instructions to purchase by wire:
Firstar Bank, N.A.
ABA# 042000013
For Williamsburg Investment Trust #485777056
For the (name of 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 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 you to make
regular monthly or quarterly investment in shares through automatic charges to
your checking account. With your authorization and bank approval, the
Administrator will automatically charge your 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
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last business day of the month or both. You 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.
HOW TO REDEEM SHARES
You may redeem shares of the Funds 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 you
bring your account value up to $5,000 or more during the notice period, your
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
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
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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 3 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. You may reduce such delay (which may take up
to 15 days) if you purchase by certified check, government check or wire
transfer. In such cases, the net asset value next determined after receipt by
the Administrator of your request for redemption will be used in processing your
redemption and your redemption proceeds will be mailed to you upon clearance of
your check to purchase shares.
You can choose to have redemption proceeds mailed to you at your address of
record, your bank, or to any other authorized person, or you can have the
proceeds sent by bank wire to your domestic bank ($5,000 minimum). You may not
redeem shares of the Funds 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.
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, (3) requests to establish or change redemption
services other than through your initial account application and (4) if the
name(s) or the address on your account has been changed within 30 days of your
redemption request. 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. If your shares of any Fund are valued at $10,000 or
more at the current offering price, you 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
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<PAGE>
withdrawal amount. You may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to your bank account by completing the applicable section on
the Account Application form accompanying this Prospectus, or by writing the
Funds.
HOW NET ASSET VALUE IS DETERMINED
The net asset value of each Fund is determined on each business day that the
Exchange is open for trading, as of the close of the Exchange (currently 4:00
p.m., Eastern time). Securities held by the International Equity Fund may be
primarily listed on foreign exchanges or traded in foreign markets which are
open on days (such as Saturdays and U.S. holidays) when the New York Stock
Exchange is not open for business. As a result, the net asset value per share of
the International Equity Fund may be significantly affected by trading on days
when the Fund is not open for business. Net asset value per share is determined
by dividing the total value of all Fund securities (valued at market value) and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily. See the Statement of Additional Information for further details.
Securities which are traded over-the-counter are priced at the last sale price,
if available, otherwise; they are valued 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
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, Lowe,
Brockenbrough & Company, Inc., (the "Advisor"), provides the Balanced Fund, the
Equity Fund and the Tax Exempt Virginia Fund with a continuous program of
supervision of each Fund's assets, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments,
-22-
<PAGE>
investment policies and the purchase and sale of securities, pursuant to
Investment Advisory Agreements with the Trust. 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.
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. and Charles M. Caravati III, CFA, are
primarily responsible for managing that portion of the Balanced Fund invested in
equity securities. Mr. Spalding was Executive Vice President of the Advisor
since 1988 and became Managing Director in 1998. Mr. Caravati has been in
various positions with the Advisor since 1992. E. Christian Goetz, CFA, is
primarily responsible for managing that portion of the Balanced Fund invested in
fixed income securities and has acted in this capacity since December 1, 1998.
Mr. Goetz has been a portfolio manager of the Advisor since June 1997. He was
previously employed as a portfolio manager by Crestar Asset Management and by
Virtus Capital Management.
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%.
EQUITY FUND - Charles M. Caravati III, CFA, and Henry C. Spalding, Jr. are
primarily responsible for managing the portfolio of the Equity Fund. Mr.
Spalding was Executive Vice President of the Advisor since 1988 and became
Managing Director in 1998.
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%.
INTERNATIONAL EQUITY FUND - Compensation of the Advisor is at the annual rate of
1.00% of the Fund's average daily net assets.
Subject to the authority of the Board of Trustees and the supervision of the
Advisor, Oechsle International Advisors, LLC (the "Sub-Advisor") 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.
-23-
<PAGE>
Walter Oechsle, who has 37 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 the Sub-Advisor. The founding partners of
the Sub-Advisor have an average tenure of sixteen years with the current
investment team. The Sub-Advisor has twenty investment professionals located in
offices in Boston, Frankfurt, London and Tokyo. The Sub-Advisor manages over $12
billion in international assets in separately managed and commingled accounts
for private and institutional investors. The Sub-Advisor's 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 the Sub-Advisor since January 1995. Prior to her employment
with the Sub-Advisor, 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 the Sub-Advisor is paid by the Advisor (not the Fund) in the
amount of one-half of the advisory fee received by the Advisor (net of any
advisory fee waivers).
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%.
YEAR 2000 READINESS. Computer users around the world are faced with the dilemma
of the Year 2000 issue, which stems from the use of two digits in most older
computer systems to designate the year. When the year advances from 1999 to
2000, many computers will not recognize "00" as the Year 2000. This issue could
potentially affect every aspect of computer-related activity, on an individual
and corporate level. The Funds could be adversely impacted if the computer
systems used by the Advisor and other service providers have not been converted
to meet the requirements of the new century. The Advisor has evaluated its
internal systems and expects them to handle the change of millennium. The
Advisor is monitoring on an ongoing basis the progress of the Funds' service
providers to convert their systems to comply with the requirements of the Year
2000. The Advisor
-24-
<PAGE>
currently has no reason to believe that these service providers will not be
fully and timely compliant. However, you should be aware that there can be no
assurance that all systems will be successfully converted prior to January 1,
2000, in which case it would become necessary for the Funds to enter into
agreements with new service providers or to make other arrangements.
TAX STATUS OF TAX EXEMPT VIRGINIA FUND
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 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
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<PAGE>
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 (1) does not have to pay any federal income
tax and (2) 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 (1) 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 (2) 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 (1) 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 (2) will be deductible for Virginia income tax purposes as an offset against
the portions of the dividends received from the Fund attributable to interest
income not exempt from Virginia income taxation to the extent that such interest
expense is not
-26-
<PAGE>
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 AND TAXES
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 non-refundable 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
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<PAGE>
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 use of these hedging techniques involves greater risk of
unfavorable tax consequences than funds not engaging in such techniques. Hedging
may also result in the application of the mark-to-market and straddle provisions
of the Internal Revenue Code. These provisions could result in an increase (or
decrease) in the amount of taxable dividends paid by the Fund as well as affect
whether dividends paid by the Fund are classified as capital gain or ordinary
income.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains for either Fund. Current
practice of the Balanced Fund, the Equity Fund and the International Equity
Fund, subject to the discretion of the Board of Trustees, is for declaration and
payment of income dividends during the last week of each calendar quarter. All
dividends and capital gains distributions are reinvested in additional shares of
the Funds unless the shareholder requests in writing to receive dividends and/or
capital gains distributions in cash. That request must be received by the Funds
prior to the record date to be effective as to the next dividend. Tax
consequences to shareholders of dividends and distributions are the same if
received in cash or if received in additional shares of the Funds.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Funds (assuming reinvestment of all dividends and distributions). This
information has been audited by Tait, Weller & Baker, whose report, along with
the Funds' financial statements, are included in the Statement of Additional
Information, which is available upon request.
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<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN BALANCED FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 17.38 $ 15.17 $ 14.77 $ 12.76 $ 12.15
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.34 0.37 0.35 0.36 0.33
Net realized and unrealized gains
on investments ............................... 0.95 4.31 1.45 2.50 0.90
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.29 4.68 1.80 2.86 1.23
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.34) (0.37) (0.35) (0.36) (0.33)
Distributions from net realized gains ........... (0.21) (2.10) (1.05) (0.49) (0.29)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.55) (2.47) (1.40) (0.85) (0.62)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 18.12 $ 17.38 $ 15.17 $ 14.77 $ 12.76
========= ========= ========= ========= =========
Total return ....................................... 7.56% 32.42% 12.29% 22.79% 10.54%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 112,804 $ 101,408 $ 70,654 $ 61,576 $ 52,062
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.88% 0.90% 0.91% 0.93% 0.99%
Ratio of net expenses to average net assets (a) .... 0.86% 0.87% 0.87% 0.88% 0.96%
Ratio of net investment income to average net assets 1.95% 2.21% 2.31% 2.52% 2.72%
Portfolio turnover rate ............................ 69% 90% 58% 72% 95%
</TABLE>
(a) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement.
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<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN EQUITY FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 20.16 $ 15.66 $ 13.96 $ 11.29 $ 10.19
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.07 0.11 0.13 0.15 0.10
Net realized and unrealized gains
on investments ............................... 1.60 6.47 2.00 2.98 1.15
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.67 6.58 2.13 3.13 1.25
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.07) (0.11) (0.13) (0.15) (0.12)
Distributions from net realized gains ........... -- (1.97) (0.30) (0.31) (0.03)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.07) (2.08) (0.43) (0.46) (0.15)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 21.76 $ 20.16 $ 15.66 $ 13.96 $ 11.29
========= ========= ========= ========= =========
Total return ....................................... 8.33% 43.74% 15.27% 28.00% 12.33%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 63,416 $ 52,214 $ 31,180 $ 17,857 $ 8,111
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.92% 0.93% 0.98% 1.14% 1.99%
Ratio of net expenses to average net assets ........ 0.89%(a) 0.90%(a) 0.92%(a) 1.01%(a) 1.44%(b)
Ratio of net investment income to average net assets 0.35% 0.60% 0.85% 1.27% 1.18%
Portfolio turnover rate ............................ 66% 59% 44% 54% 48%
</TABLE>
(a) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement.
(b) Ratios were determined based on net expenses after investment advisory fee
waivers and/or other operating expense reimbursements by the Adviser.
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<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 10.16 $ 9.83 $ 9.85 $ 9.68 $ 9.61
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.43 0.44 0.45 0.45 0.44
Net realized and unrealized gains (losses)
on investments ............................... 0.07 0.33 (0.02) 0.17 0.07
--------- --------- --------- --------- ---------
Total from investment operations ................... 0.50 0.77 0.43 0.62 0.51
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.43) (0.44) (0.45) (0.45) (0.44)
Distributions from net realized gains ........... (0.01) -- -- -- --
--------- --------- --------- --------- ---------
Total distributions ................................ (0.44) (0.44) (0.45) (0.45) (0.44)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 10.22 $ 10.16 $ 9.83 $ 9.85 $ 9.68
========= ========= ========= ========= =========
Total return ....................................... 4.92% 8.00% 4.39% 6.51% 5.47%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 25,626 $ 18,213 $ 11,197 $ 8,779 $ 7,712
========= ========= ========= ========= =========
Ratio of net expenses to average net assets (a) .... 0.73% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to average net assets 4.17% 4.40% 4.51% 4.57% 4.64%
Portfolio turnover rate ............................ 31% 33% 24% 14% 97%
</TABLE>
(a) 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% and 1.62% for the years ended March 31, 1998, 1997,
1996 and 1995, respectively.
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<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
======================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997(A)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period .................... $ 12.61 $ 9.81 $ 10.00
--------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) ........................... 0.05 (0.01) (0.01)
Net realized and unrealized gains (losses)
on investments and foreign currencies ............... 1.04 2.91 (0.14)
--------- --------- ---------
Total from investment operations .......................... 1.09 2.90 (0.15)
--------- --------- ---------
Less distributions:
Dividends from net investment income ................... (0.07) (0.10) (0.04)
--------- --------- ---------
Net asset value at end of period .......................... $ 13.63 $ 12.61 $ 9.81
========= ========= =========
Total return .............................................. 8.67% 29.67% (1.56)%(c)
========= ========= =========
Net assets at end of period (000's) ....................... $ 54,019 $ 42,543 $ 29,290
========= ========= =========
Ratio of net expenses to average net assets (b) ........... 1.51% 1.56% 1.60%(c)
Ratio of net investment income (loss) to average net assets 0.38% (0.05)% (0.15)%(c)
Portfolio turnover rate ................................... 39% 47% 70%(c)
</TABLE>
(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.
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<PAGE>
THE JAMESTOWN FUNDS
INVESTMENT ADVISOR
Lowe, Brockenbrough & Company, Inc.
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-443-4249
INDEPENDENT AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
BOARD OF TRUSTEES
Austin Brockenbrough III
John T. Bruce
Charles M. Caravati, Jr.
J. Finley Lee, Jr.
Richard Mitchell
Richard L. Morrill
Harris V. Morrissette
Erwin H. Will, Jr.
Samuel B. Witt III
Additional information about the Funds is included in the Statement of
Additional Information ("SAI") and which is incorporated by reference in its
entirety. Additional information about the Funds' investments is available in
the Funds' annual and semiannual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and strategies that
significantly affected the Funds' performance during their last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Funds, or to make inquiries about the Funds, please call
1-800-443-4249.
Information about the Funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's public reference room in Washington,
D.C. Information about the operation of the public reference room can be
obtained by calling the Commission at 1-800-SEC-0330. Reports and other
information about the Funds are available on the Commission's Internet site at
HTTP://WWW.SEC.GOV. Copies of information on the Commission's Internet site may
be obtained, upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, D.C. 20549-6009.
File No. 811-5685
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE
FLIPPIN, BRUCE & PORTER
FUNDS
FBP CONTRARIAN EQUITY FUND
FBP CONTRARIAN BALANCED FUND
August 1, 1999
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
DESCRIPTION OF BOND RATINGS....................................................7
INVESTMENT LIMITATIONS.........................................................9
TRUSTEES AND OFFICERS.........................................................11
INVESTMENT ADVISER............................................................15
ADMINISTRATOR.................................................................16
DISTRIBUTOR...................................................................16
OTHER SERVICES................................................................17
BROKERAGE.....................................................................17
SPECIAL SHAREHOLDER SERVICES..................................................18
PURCHASE OF SHARES............................................................21
REDEMPTION OF SHARES..........................................................21
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..............................................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, 1999. The
Prospectus may be obtained from the Funds, at the address and phone number shown
above, at no charge.
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INVESTMENT OBJECTIVES AND POLICIES
All information contained herein applies to both the 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. 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. 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
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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 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
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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 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
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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 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.
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.
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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 issuer's financial condition is, in the Adviser's judgment, improving.
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 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.
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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.
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.
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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 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;
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(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 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.
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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, 1999:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
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Austin Brockenbrough III (age 62) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund 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 45) 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 62) Physician $13,500
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 59) Julian Price Professor Emeritus of $13,000
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 50) 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 60) President of $13,500
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 39) President of $13,000
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
Erwin H. Will, Jr. (age 66) Chief Investment Officer of $13,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 63) Senior Vice President and $15,000
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 36) Portfolio Manager of none
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 54) Executive Vice President of none
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Robert L. Bennett (age 57) First Vice President and Chief none
Treasurer, all Funds of the Trust Operating Officer of Countrywide
312 Walnut Street, 21st Floor Fund Services, Inc., (registered transfer
Cincinnati, Ohio 45202 agent and administrator to the Trust)
and of CW Fund Distributors, Inc.
(registered broker-dealer),
Cincinnati, Ohio
Charles M. Caravati III (age 33) Assistant Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
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John M. Flippin (age 57) Principal of none
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 46) Principal of none
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
Tina D. Hosking (age 30) Assistant Vice President and Associate none
Secretary, all Funds of the Trust General Counsel of Countrywide Fund
312 Walnut Street, 21st Floor Services, Inc. (registered transfer agent
Cincinnati, Ohio 45202 and administrator of the Trust) and
CW Fund Distributors, Inc.,
Cincinnati, Ohio
Lee Keiger III (age 44) First Vice President and Chief Financial none
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 58) Principal of none
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Henry C. Spalding, Jr. (age 61) Executive Vice President of none
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Ernest H. Stephenson, Jr. (age 54) Vice President of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
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Connie R. Taylor (age 48) Administrator of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 40) Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 53) President and Chief Executive none
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
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**Indicates that Trustee is an Interested Person for purposes of the Investment
Company Act of 1940. 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 12, 1999, 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 Equity Fund
and less than 1% 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 10.5% of the then-outstanding shares of the Equity Fund.
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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,
2000 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 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, 1999, 1998, 1997 and 1996,
the Equity Fund paid the Adviser advisory fees of $288,068, $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,
1999, 1998 and 1997, the Balanced Fund paid the Adviser advisory fees of
$435,257, $365,477 and $293,819, 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.
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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.
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, 1999, 1998 and 1997, the Administrator
received fees of $73,470, $48,798 and $26,614, respectively, from the Equity
Fund and $105,848, $91,365 and $75,049 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
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<PAGE>
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. Tina
D. Hosking is an officer of both the Trust and the Distributor.
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.
DESCRIPTION OF FUND SHARES AND OTHER MATTERS. The Declaration of Trust of the
Williamsburg Investment Trust currently provides for the shares of ten funds, or
series, to be issued. Shares of all ten 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 & Company, 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.
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 Firstar, 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.
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<PAGE>
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.
For the fiscal years ended March 31, 1999, 1998 and 1997, the total amount of
brokerage commissions paid by the Balanced Fund was $43,130, $20,094 and
$14,442, respectively. For the fiscal years ended March 31, 1999, 1998 and 1997,
the total amount of brokerage commissions paid by the Equity Fund was $45,762,
$36,236 and $14,989, 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.
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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
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.
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<PAGE>
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Funds. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs 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.
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.
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.
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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 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.
If your instructions request a redemption by wire, you will be charged a $9
processing fee by the Fund's Custodian. 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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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.
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.
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ADDITIONAL TAX INFORMATION
TAXATION OF THE FUNDS. Each Fund has qualified and intends to continue 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.
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.
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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 executed.
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 and federal
income tax implications may apply. You should consult your tax advisor for
further information.
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. 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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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, five and
since inception(July 30, 1993) for period ended March 31, 1999 are 7.74%, 20.96%
and 18.89%, respectively. The average annual total return quotations for the
Balanced Fund for the one, five and since inception (July 3, 1989) period ended
March 31, 1999, are 8.74%, 16.82% and 12.36%, 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:
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
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Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that a Fund
owns the security. Generally, interest earned (for the purpose of "a" above) on
debt obligations is computed by reference to the yield to maturity of each
obligation held based on the market value of the obligation (including actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month) period for which yield is being calculated,
or, with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest). The yields of the Balanced Fund and the Equity
Fund for the 30 days ended March 31, 1999 were 1.89% and .65%, 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.
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.
-25-
<PAGE>
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, 1999, together with the report of the independent
accountants thereon, are included on the following pages.
-26-
<PAGE>
The
Flippin, Bruce & porter
Funds
[LOGO]
Annual Report
March 31, 1999
- --------------------------
FBP Contrarian Equity Fund
- --------------------------
- ----------------------------
FBP Contrarian Balanced Fund
- ----------------------------
<PAGE>
LETTER TO SHAREHOLDERS MAY 17, 1999
================================================================================
We are pleased to report on the progress of your Fund and its investments for
the fiscal year ended March 31,1999. The following table displays the annualized
total return (capital change plus income) of the Funds for the most recent year
and longer time periods.
- --------------------------------------------------------------------------------
Twelve Months Three Years Five Years
- --------------------------------------------------------------------------------
FBP Contrarian Equity Fund 7.74% 20.75% 20.96%
FBP Contrarian Balanced Fund 8.74% 17.01% 16.82%
- --------------------------------------------------------------------------------
REVIEW AND OUTLOOK
Over the course of the past year, we have witnessed events that usually would
result in poorly performing financial markets. Economic weakness in most of the
emerging markets, political uncertainty in the United States and other
countries, and increased volatility in the markets were pushed aside by low
inflation, low interest rates and a powerful U.S. economy. Large growth
companies performed particularly well, gaining 18.5% as measured by the S&P
500's total return. However, results were far from even as the Value Line
Composite, a broader measure of companies, fell 18.1%, lagging far behind.
The outlook for the U.S. economy is quite positive. As the fear of a recession
subsided late in 1998, most economists increased their GDP forecasts to around
3% for 1999. The pace for the first quarter was well above this, so the economy
should moderate as the year progresses. The strength in the economy is being
fueled by the consumer as spending is being boosted by employment growth and
rising confidence. Also, the manufacturing sector is beginning to show signs of
improvement as Asian economies stabilize and domestic demand strengthens.
The Federal Reserve remains neutral, letting the markets set the level of
interest rates. It was the Fed's swift reaction to last fall's liquidity crisis
that allowed our markets to recover as sharply as they have. By reducing
interest rates, as well as coaxing other nations to do the same, they stemmed
the fear of a global recession and possible deflation. The Federal Reserve is
now in a monitoring mode. While concerned over the possibility of renewed
inflation accompanying a pickup in global growth, they seem content with the
continued low domestic inflation rate. Interest rates appear to have reached
their lows last October, and have risen recently due to international events and
a stronger economy. With the current level of interest rates, we continue to
remain defensive with our bond purchases in the Balanced Fund, looking for high
coupon callable corporate bonds or short-term government issues.
As we have looked at the valuation of the stock market over the past year, we
have seen two entirely different worlds. The narrow segment of the market that
has provided the bulk of the leadership (large quality growth issues) appears
overvalued to us. While these companies deserve a premium valuation to the
market, the premium has become excessive by almost any standard. The
pharmaceutical, technology and communication services groups are trading at very
high earnings multiples and are discounting long-term earnings growth rates that
will be very difficult to achieve. Conversely, the broader market has been more
reasonably priced, with many companies trading under 15 times earnings and at
low measures of their price to book, cash flow and sales. Over the years, stocks
purchased at these valuation ranges have proven to be good long-term
investments.
Since March 31, investors have been shifting their interest to a broader group
of value stocks as they gain confidence in sustainable worldwide economic
growth. Many of the former market leaders have begun to underperform. This
broadening out of the market based on improving economic growth has been a
multi-year process in the past. Only time will tell if the duration of this
change is a lengthy one. However, Asian economies are stabilizing, Japan's and
other emerging markets' equities are recovering and U.S. manufacturing appears
to be increasing.
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
1
<PAGE>
COMPARATIVE CHARTS
Performance for each Fund is compared 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%
in bonds. Balanced funds have the growth potential to outpace inflation, but
they will typically lag 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.
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
3/99
------
FBP Contrarian Equity Fund $26,668
Standard & Poor's 500 Index $32,513
Consumer Price Index $11,405
- --------------------------------------------------------------------------------
-------------------------------------
FBP Contrarian Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
7.74% 20.96% 18.89%
-------------------------------------
*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
3/99
------
FBP Contrarian Equity Fund $31,127
Standard & Poor's 500 Index $52,192
Consumer Price Index $13,291
- --------------------------------------------------------------------------------
-------------------------------------
FBP Contrarian Balanced Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
8.74% 16.82% 12.36%
-------------------------------------
*Initial public offering of shares was July 3, 1989.
Past performance is not predictive of future performance.
2
<PAGE>
FBP CONTRARIAN EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 95.3% VALUE
- --------------------------------------------------------------------------------
CHEMICALS -- 3.0%
7,000 Dow Chemical Company ........................ $ 652,312
11,500 Ethyl Corporation ........................... 48,875
16,400 Great Lakes Chemical Corporation ............ 602,700
3,900 Octel Corporation(a) ........................ 47,775
-----------
1,351,662
-----------
COMMERCIAL BANKING -- 12.3%
23,960 Banc One Corporation ........................ 1,319,298
22,000 BankAmerica Corporation ..................... 1,553,750
16,000 Chase Manhattan Corporation ................. 1,301,000
21,250 Citigroup, Inc. ............................. 1,357,344
-----------
5,531,392
-----------
COMMUNICATIONS-- 3.1%
11,500 GTE Corporation ............................. 695,750
18,000 Harris Corporation .......................... 515,250
40,000 Paging Network, Inc.(a) ..................... 187,500
-----------
1,398,500
-----------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES-- 13.3%
25,620 Compaq Computer Corporation ................. 811,834
20,000 Electronic Data Systems Corporation ......... 973,750
9,000 Hewlett-Packard Company ..................... 610,313
13,000 International Business Machines Corporation(b) 2,304,250
50,000 Novell, Inc.(a) ............................. 1,259,375
-----------
5,959,522
-----------
CONSUMER GOODS & SERVICES-- 6.5%
74,000 Cendant Corporation(a) ...................... 1,165,500
19,000 Philip Morris Companies, Inc. ............... 668,563
40,000 Shaw Industries, Inc. ....................... 740,000
13,000 UST, Inc. ................................... 339,625
-----------
2,913,688
-----------
DRUGS/MEDICAL EQUIPMENT-- 13.3%
7,000 Allergan, Inc. .............................. 615,125
19,000 Amgen, Inc.(a) .............................. 1,422,625
16,000 Bristol-Myers Squibb Company ................ 1,029,000
6,000 Johnson & Johnson ........................... 562,125
35,000 Mallinckrodt, Inc. .......................... 931,875
7,600 Merck & Company, Inc. ....................... 609,425
13,000 Pharmacia & Upjohn, Inc. .................... 810,875
-----------
5,981,050
-----------
DURABLE GOODS -- 2.2%
4,000 General Electric Company .................... 442,500
12,325 Waste Management, Inc.(a) ................... 546,922
-----------
989,422
-----------
3
<PAGE>
FBP CONTRARIAN EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 95.3% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FINANCE -- 3.5%
25,000 SLM Holding Corporation ..................... $ 1,043,750
50,000 United Dominion Realty ...................... 512,500
-----------
1,556,250
-----------
FUNERAL SERVICES -- 1.4%
44,000 Service Corporation International ........... 627,000
-----------
HUMAN RESOURCES -- 0.7%
50,000 Olsten Corporation .......................... 309,375
-----------
INSURANCE -- 2.9%
10,000 Aetna Life & Casualty Company ............... 830,000
6,600 Marsh & McLennan Companies, Inc. ............ 489,638
-----------
1,319,638
-----------
OIL & OIL DRILLING -- 6.3%
16,000 Equitable Resources, Inc. ................... 417,000
22,000 Kerr-McGee Corporation ...................... 721,865
18,000 Schlumberger Limited ........................ 1,083,375
20,000 Sonat, Inc. ................................. 600,000
-----------
2,822,240
-----------
PACKAGING -- 1.3%
21,000 Crown Cork & Seal Company, Inc. ............. 599,812
-----------
PAPER & FOREST PRODUCTS -- 1.2%
10,000 Weyerhaeuser Company(b) ..................... 555,000
-----------
PHOTOGRAPHICAL PRODUCTS-- 2.0%
14,000 Eastman Kodak Company ....................... 894,250
-----------
PRINTING -- 1.9%
27,000 R. R. Donnelley & Sons Company .............. 869,062
-----------
RETAIL STORES -- 14.7%
12,000 Applebee's International, Inc. .............. 297,750
19,000 Avado Brands, Inc. .......................... 112,812
25,000 CBRL Group, Inc. ............................ 450,000
15,000 Circuit City Stores, Inc. ................... 1,149,375
38,000 Dilliard's, Inc. ............................ 964,250
32,000 IKON Office Solutions, Inc. ................. 410,000
36,500 K-Mart Corporation(a) ....................... 613,656
34,000 The Pep Boys - Manny, Moe & Jack ............ 518,500
51,000 Toys R Us, Inc.(a) .......................... 959,437
12,500 Wal-Mart Stores, Inc. ....................... 1,152,344
-----------
6,628,124
-----------
TRANSPORTATION -- 4.9%
14,000 FDX Corporation(a)(b) ....................... 1,299,375
17,000 Union Pacific Corporation ................... 908,437
-----------
2,207,812
-----------
4
<PAGE>
FBP CONTRARIAN EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 95.3% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
TRAVEL & INVESTMENT SERVICES-- 0.8%
3,000 American Express Company .................... $ 352,500
-----------
TOTAL COMMON STOCKS (COST $30,381,118) $42,866,299
-----------
================================================================================
Face
Amount REPURCHASE AGREEMENTS(c) -- 5.4% Value
- --------------------------------------------------------------------------------
$2,438,000 Firstar Bank, 3.75%, dated 03/31/99,
due 04/01/99, repurchase proceeds
$2,438,254 (Cost $2,438,000) .............. $ 2,438,000
-----------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 100.7% ............. $45,304,299
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7%) (326,417)
-----------
NET ASSETS -- 100.0% $44,977,882
===========
(a) Non-income producing security.
(b) Security covers a call option.
(c) Joint repurchase agreement is fully collateralized by $28,093,000 U.S.
Treasury Note, 5.625%, due 02/28/01. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $2,525,573.
FBP CONTRARIAN EQUITY FUND
SCHEDULE OF OPEN OPTIONS WRITTEN
MARCH 31, 1999
================================================================================
MARKET
OPTION VALUE OF PREMIUMS
CONTRACTS COVERED CALL OPTIONS OPTIONS RECEIVED
- --------------------------------------------------------------------------------
FDX Corporation,
30 04/17/99 at $90 ............. $ 14,625 $ 15,265
International Business Machines Corporation,
10 04/17/99 at $170 ............ 9,500 11,451
Weyerhaeuser Company,
15 04/17/99 at $55 ............. 2,625 4,346
----------- -----------
$ 26,750 $ 31,062
=========== ===========
See accompanying notes to financial statements.
5
<PAGE>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 66.7% VALUE
- --------------------------------------------------------------------------------
CHEMICALS -- 1.9%
8,000 Dow Chemical Company ........................ $ 745,500
20,000 Ethyl Corporation ........................... 85,000
11,700 Great Lakes Chemical Corporation ............ 429,975
-----------
1,260,475
-----------
COMMERCIAL BANKING -- 7.6%
23,745 Banc One Corporation ........................ 1,307,459
20,000 BankAmerica Corporation ..................... 1,412,500
15,350 Chase Manhattan Corporation ................. 1,248,147
15,312 Citigroup, Inc. ............................. 978,054
-----------
4,946,160
-----------
COMMUNICATIONS -- 2.5%
15,000 GTE Corporation ............................. 907,500
17,000 Harris Corporation .......................... 486,625
50,000 Paging Network, Inc.(a) ..................... 234,375
-----------
1,628,500
-----------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES -- 8.6%
25,914 Compaq Computer Corporation ................. 821,150
20,000 Electronic Data Systems Corporation ......... 973,750
6,100 Hewlett-Packard Company ..................... 413,656
12,800 International Business Machines Corporation(b) 2,268,800
43,000 Novell, Inc.(a) ............................. 1,083,063
-----------
5,560,419
-----------
CONSUMER GOODS & SERVICES -- 3.9%
70,000 Cendant Corporation(a) ...................... 1,102,500
19,300 Philip Morris Companies, Inc. ............... 679,119
29,000 Shaw Industries, Inc. ....................... 536,500
8,500 UST, Inc. ................................... 222,063
-----------
2,540,182
-----------
DRUGS/MEDICAL EQUIPMENT -- 9.3%
5,400 Allergan, Inc. .............................. 474,525
15,000 Amgen, Inc.(a) .............................. 1,123,125
12,000 Bristol-Myers Squibb Company ................ 771,750
14,600 Johnson & Johnson ........................... 1,367,837
28,000 Mallinckrodt, Inc. .......................... 745,500
6,400 Merck & Company, Inc. ....................... 513,200
16,400 Pharmacia & Upjohn, Inc. .................... 1,022,950
-----------
6,018,887
-----------
DURABLE GOODS -- 2.7%
11,200 General Electric Company .................... 1,239,000
11,600 Waste Management, Inc.(a) ................... 514,750
-----------
1,753,750
-----------
6
<PAGE>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
SHARES COMMON STOCKS -- 66.7% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FINANCE -- 2.3%
24,000 SLM Holding Corporation ..................... $ 1,002,000
50,000 United Dominion Realty ...................... 512,500
-----------
1,514,500
-----------
FUNERAL SERVICES -- 0.9%
42,000 Service Corporation International ........... 598,500
-----------
HUMAN RESOURCES -- 0.5%
50,000 Olsten Corporation .......................... 309,375
-----------
INSURANCE -- 4.1%
8,300 Aetna Life & Casualty Company ............... 688,900
7,368 American International Group ................ 888,765
15,000 Marsh & McLennan Companies, Inc. ............ 1,112,813
-----------
2,690,478
-----------
OIL & OIL DRILLING -- 3.8%
6,800 Equitable Resources, Inc. ................... 177,225
20,000 Kerr-McGee Corporation ...................... 656,250
17,500 Schlumberger Limited ........................ 1,053,281
20,000 Sonat, Inc. ................................. 600,000
-----------
2,486,756
-----------
PACKAGING -- 0.9%
21,000 Crown Cork & Seal Company, Inc. ............. 599,812
-----------
PAPER & FOREST PRODUCTS -- 0.9%
10,000 Weyerhaeuser Company(b) ..................... 555,000
-----------
PHOTOGRAPHICAL PRODUCTS-- 1.1%
11,000 Eastman Kodak Company ....................... 702,625
-----------
PRINTING -- 1.2%
25,000 R. R. Donnelley & Sons Company .............. 804,687
-----------
RETAIL STORES -- 9.7%
8,200 Applebee's International, Inc. .............. 203,462
23,300 Avado Brands, Inc. .......................... 138,344
18,650 CBRL Group, Inc. ............................ 335,700
10,400 Circuit City Stores, Inc. ................... 796,900
36,000 Dilliard's, Inc. ............................ 913,500
34,000 IKON Office Solutions, Inc. ................. 435,625
39,500 K-Mart Corporation(a) ....................... 664,094
34,100 The Pep Boys - Manny, Moe & Jack ............ 520,025
48,000 Toys R Us, Inc.(a) .......................... 903,000
14,900 Wal-Mart Stores, Inc. ....................... 1,373,594
-----------
6,284,244
-----------
TRANSPORTATION -- 3.3%
13,000 FDX Corporation(a)(b) ....................... 1,206,562
17,200 Union Pacific Corporation ................... 919,125
-----------
2,125,687
-----------
7
<PAGE>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 66.7% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
TRAVEL & INVESTMENT SERVICES -- 1.5%
8,300 American Express Company .................... $ 975,250
-----------
TOTAL COMMON STOCKS (COST $23,615,947) ...... $43,355,287
-----------
================================================================================
PAR VALUE U.S. GOVERNMENT OBLIGATIONS -- 14.1% VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 14.1%
$ 500,000 6.75%, due 06/30/99 ....................... $ 502,657
1,000,000 5.75%, due 09/30/99 ....................... 1,005,000
500,000 7.75%, due 01/31/00 ....................... 511,406
1,000,000 5.875%, due 06/30/00 ...................... 1,010,938
1,000,000 4.625%, due 12/31/00 ...................... 993,125
500,000 5.625%, due 02/28/01 ...................... 505,469
1,000,000 4.875%, due 03/31/01 ...................... 997,656
750,000 5.625%, due 05/15/01 ...................... 758,906
750,000 6.125%, due 12/31/01 ...................... 768,985
500,000 6.625%, due 04/30/02 ...................... 520,625
500,000 6.375%, due 08/15/02 ...................... 518,125
500,000 6.25%, due 02/15/03 ....................... 518,125
500,000 7.25%, due 05/15/04 ....................... 544,688
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $8,971,582) ......................... $ 9,155,705
-----------
================================================================================
PAR VALUE CORPORATE BONDS -- 11.5% VALUE
- --------------------------------------------------------------------------------
FINANCE -- 5.1%
Bankers Trust New York Corporation,
$ 750,000 7.375%, due 05/01/08 ...................... $ 783,229
General Motors Acceptance Corporation,
1,000,000 5.50%, due 01/14/02 ....................... 994,796
Green Tree Financial Corporation,
750,000 7.55%, due 10/15/99 ....................... 752,976
Macsaver Financial Services,
500,000 7.60%, due 08/01/07 ....................... 325,000
Signet Banking Corporation,
150,000 9.625%, due 06/01/99 ...................... 150,915
United Dominion Realty,
300,000 7.25%, due 04/01/99 ....................... 300,000
-----------
3,306,916
-----------
INDUSTRIAL -- 2.2%
Baxter International, Inc.,
75,000 9.25%, due 12/15/99 ....................... 76,934
Dayton Hudson Corporation,
52,000 9.875%, due 06/01/17 ...................... 52,316
Hertz Corporation,
1,000,000 6.00%, due 01/15/03 ....................... 993,692
Hilton Hotels Corporation,
300,000 7.70%, due 07/15/02 ....................... 306,766
-----------
1,429,708
-----------
8
<PAGE>
FBP CONTRARIAN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS -- 11.5% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UTILITIES -- 4.2%
Dayton Power & Light, Inc.,
$ 500,000 8.40%, due 12/01/22 ....................... $ 528,082
Mississippi Power & Light,
750,000 8.50%, due 01/15/23 ....................... 795,571
Niagara Mohawk Power,
525,000 9.50%, due 03/01/21 ....................... 556,972
West Penn Power Company,
775,000 8.875%, due 02/01/21 ...................... 811,726
-----------
2,692,351
-----------
TOTAL CORPORATE BONDS (COST $7,448,613) ..... $ 7,428,975
-----------
TOTAL INVESTMENTS AT VALUE
(COST $40,036,142) -- 92.3% ............... $59,939,967
-----------
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS(C) -- 9.4% VALUE
- --------------------------------------------------------------------------------
$6,128,000 Firstar Bank, 3.75%, dated 03/31/99,
due 04/01/99, repurchase proceeds
$6,128,638 (Cost $6,128,000) .............. $ 6,128,000
-----------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 101.7% ............. $66,067,967
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.7)% (1,105,254)
-----------
NET ASSETS -- 100.0% $64,962,713
===========
(a) Non-income producing security.
(b) Security covers a call option.
(c) Joint repurchase agreement is fully collateralized by $28,093,000 U.S.
Treasury Note, 5.625%, due 02/28/01. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $6,348,119.
See accompanying notes to financial statements.
9
<PAGE>
FBP CONTRARIAN BALANCED FUND
SCHEDULE OF OPEN OPTIONS WRITTEN
MARCH 31, 1999
================================================================================
MARKET
OPTION VALUE OF PREMIUMS
CONTRACTS COVERED CALL OPTIONS OPTIONS RECEIVED
- --------------------------------------------------------------------------------
FDX Corporation,
30 04/17/99 at $90 ............. $ 14,625 $ 15,265
International Business Machines Corporation,
40 04/17/99 at $170 ............ 38,000 45,826
Weyerhaeuser Company,
15 04/17/99 at $55 ............. 2,625 4,346
----------- -----------
$ 55,250 $ 65,437
=========== ===========
See accompanying notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
THE FLIPPIN, BRUCE & PORTER FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999
=========================================================================================
FBP FBP
CONTRARIAN CONTRARIAN
EQUITY BALANCED
FUND FUND
- -----------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C>
At acquisition cost ................................. $30,381,118 $40,036,142
=========== ===========
At value (Note 1) ................................... $42,866,299 $59,939,967
Investments in repurchase agreements (Note 1) .......... 2,438,000 6,128,000
Cash ................................................... 699 --
Interest receivable .................................... 254 233,527
Dividends receivable ................................... 68,319 69,228
Receivable for capital shares sold ..................... 67,303 34,508
Other assets ........................................... 9,500 14,157
----------- -----------
TOTAL ASSETS ........................................ 45,450,374 66,419,387
----------- -----------
LIABILITIES
Bank overdraft ......................................... -- 996,865
Dividends payable ...................................... 9,066 16,740
Distributions payable .................................. 57,911 40,643
Payable for securities purchased ....................... 331,125 264,900
Payable for capital shares redeemed .................... 94 19,465
Accrued investment advisory fees (Note 3) .............. 28,592 41,170
Accrued administration fees (Note 3) ................... 7,050 9,625
Other accrued expenses and liabilities ................. 11,904 12,016
Covered call options, at value (Notes 1 and 4)
(premiums received $31,062 and $65,437, respectively) 26,750 55,250
----------- -----------
TOTAL LIABILITIES ................................... 472,492 1,456,674
----------- -----------
NET ASSETS ................................................ $44,977,882 $64,962,713
=========== ===========
Net assets consist of:
Paid-in capital ........................................ $32,488,389 $45,048,568
Undistributed net investment income .................... -- 133
Net unrealized appreciation on investments ............. 12,489,493 19,914,012
----------- -----------
Net assets ................................................ $44,977,882 $64,962,713
=========== ===========
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ............. 1,992,808 3,356,112
=========== ===========
Net asset value, offering price and
redemption price per share (Note 1) .................... $ 22.57 $ 19.36
=========== ===========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE FLIPPIN, BRUCE & PORTER FUNDS
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1999
================================================================================
FBP FBP
CONTRARIAN CONTRARIAN
EQUITY BALANCED
FUND FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest ........................................ $ 81,153 $1,179,964
Dividends ....................................... 577,102 614,944
---------- ----------
TOTAL INVESTMENT INCOME ...................... 658,255 1,794,908
---------- ----------
EXPENSES
Investment advisory fees (Note 3) ............... 288,068 435,257
Administration fees (Note 3) .................... 73,470 105,848
Postage and supplies ............................ 9,495 10,057
Professional fees ............................... 7,945 11,585
Trustees' fees and expenses ..................... 8,220 8,220
Custodian fees .................................. 6,725 8,119
Printing of shareholder reports ................. 6,821 6,492
Registration fees ............................... 5,687 4,582
Pricing costs ................................... 1,451 4,645
Insurance expense ............................... 2,179 2,490
Other expenses .................................. 5,804 5,908
---------- ----------
TOTAL EXPENSES ............................... 415,865 603,203
---------- ----------
NET INVESTMENT INCOME .............................. 242,390 1,191,705
---------- ----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains on security transactions ..... 685,564 2,907,950
Net realized gains on option contracts written .. 40,022 45,055
Net change in unrealized appreciation/
depreciation on investments .................. 2,399,274 954,092
---------- ----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ... 3,124,860 3,907,097
---------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ......... $3,367,250 $5,098,802
========== ==========
See accompanying notes to financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
THE FLIPPIN, BRUCE & PORTER FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED MARCH 31, 1999 AND 1998
======================================================================================================================
FBP CONTRARIAN FBP CONTRARIAN
EQUITY FUND BALANCED FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income .......................... $ 242,390 $ 256,331 $ 1,191,705 $ 1,134,978
Net realized gains on:
Security transactions ....................... 685,564 691,750 2,907,950 2,146,818
Option contracts written .................... 40,022 11,978 45,055 31,530
Net change in unrealized appreciation/
depreciation on investments ................. 2,399,274 6,925,224 954,092 9,325,106
------------ ------------ ------------ ------------
Net increase in net assets from operations ........ 3,367,250 7,885,283 5,098,802 12,638,432
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ..................... (243,458) (256,571) (1,195,675) (1,138,576)
From net realized gains ........................ (725,822) (865,431) (2,953,025) (2,862,386)
------------ ------------ ------------ ------------
Decrease in net assets from
distributions to shareholders .................. (969,280) (1,122,002) (4,148,700) (4,000,962)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ...................... 9,849,442 12,609,930 9,396,418 5,859,836
Net asset value of shares issued in reinvestment
of distributions to shareholders ............ 836,052 963,147 4,014,589 3,827,435
Payments for shares redeemed ................... (3,427,898) (1,354,310) (5,338,725) (3,238,764)
------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ..................... 7,257,596 12,218,767 8,072,282 6,448,507
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ...................... 9,655,566 18,982,048 9,022,384 15,085,977
NET ASSETS
Beginning of year .............................. 35,322,316 16,340,268 55,940,329 40,854,352
------------ ------------ ------------ ------------
End of year (including undistributed net
investment income of $0, $1,068,
$133 and $4,103, respectively) .............. $ 44,977,882 $ 35,322,316 $ 64,962,713 $ 55,940,329
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Sold ........................................... 471,229 651,600 494,996 323,989
Reinvested ..................................... 39,117 48,841 213,289 211,834
Redeemed ....................................... (164,500) (69,562) (284,114) (177,851)
------------ ------------ ------------ ------------
Net increase in shares outstanding ............. 345,846 630,879 424,171 357,972
Shares outstanding at beginning of year ........ 1,646,962 1,016,083 2,931,941 2,573,969
------------ ------------ ------------ ------------
Shares outstanding at end of year .............. 1,992,808 1,646,962 3,356,112 2,931,941
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
FBP CONTRARIAN EQUITY FUND
FINANCIAL HIGHLIGHTS
========================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- ------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 21.45 $ 16.08 $ 14.21 $ 11.21 $ 10.15
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ........................... 0.13 0.19 0.22 0.24 0.21
Net realized and unrealized gains
on investments ............................... 1.50 5.98 2.24 3.05 1.14
-------- -------- -------- -------- --------
Total from investment operations ................... 1.63 6.17 2.46 3.29 1.35
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ............ (0.13) (0.19) (0.22) (0.24) (0.23)
Distributions from net realized gains ........... (0.38) (0.61) (0.37) (0.05) (0.06)
-------- -------- -------- -------- --------
Total distributions ................................ (0.51) (0.80) (0.59) (0.29) (0.29)
-------- -------- -------- -------- --------
Net asset value at end of year ..................... $ 22.57 $ 21.45 $ 16.08 $ 14.21 $ 11.21
======== ======== ======== ======== ========
Total return ....................................... 7.74% 38.90% 17.65% 29.54% 13.52%
======== ======== ======== ======== ========
Net assets at end of year (000's) .................. $ 44,978 $ 35,322 $ 16,340 $ 9,090 $ 5,323
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) ..... 1.08% 1.12% 1.21% 1.25% 1.25%
Ratio of net investment income to average net assets 0.63% 1.04% 1.50% 1.89% 2.15%
Portfolio turnover rate ............................ 18% 10% 9% 12% 9%
</TABLE>
(a) Absent fee waivers and/or expense reimbursements by the Advisor, the ratios
of expenses to average net assets would have been 1.25%, 1.67% and 2.27%
for the years ended March 31, 1997, 1996 and 1995, respectively.
See accompanying notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
FBP CONTRARIAN BALANCED FUND
FINANCIAL HIGHLIGHTS
========================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- ------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 19.08 $ 15.87 $ 14.86 $ 12.80 $ 12.19
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ........................... 0.39 0.41 0.42 0.43 0.38
Net realized and unrealized gains
on investments ............................... 1.21 4.26 1.49 2.44 0.87
-------- -------- -------- -------- --------
Total from investment operations ................... 1.60 4.67 1.91 2.87 1.25
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ............ (0.39) (0.41) (0.42) (0.43) (0.39)
Distributions from net realized gains ........... (0.93) (1.05) (0.48) (0.38) (0.25)
-------- -------- -------- -------- --------
Total distributions ................................ (1.32) (1.46) (0.90) (0.81) (0.64)
-------- -------- -------- -------- --------
Net asset value at end of year ..................... $ 19.36 $ 19.08 $ 15.87 $ 14.86 $ 12.80
======== ======== ======== ======== ========
Total return ....................................... 8.74% 30.22% 13.15% 22.86% 10.54%
======== ======== ======== ======== ========
Net assets at end of year (000's) .................. $ 64,963 $ 55,940 $ 40,854 $ 35,641 $ 25,976
======== ======== ======== ======== ========
Ratio of net expenses to average net assets ........ 1.04% 1.04% 1.08% 1.17% 1.17%(a)
Ratio of net investment income to average net assets 2.05% 2.33% 2.65% 3.04% 3.10%
Portfolio turnover rate ............................ 25% 21% 24% 17% 14%
</TABLE>
(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.
See accompanying notes to financial statements.
15
<PAGE>
THE FLIPPIN, BRUCE & PORTER FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
================================================================================
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. 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
(normally 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 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.
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.
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.
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.
16
<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 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
investment securities and covered call options as of March 31, 1999:
- --------------------------------------------------------------------------------
FBP Contrarian FBP Contrarian
Equity Fund Balanced Fund
- --------------------------------------------------------------------------------
Gross unrealized appreciation .......... $ 14,792,127 $ 21,685,201
Gross unrealized depreciation .......... (2,302,634) (1,771,189)
------------ ------------
Net unrealized appreciation ............ $ 12,489,493 $ 19,914,012
============ ============
Federal income tax cost ................ $ 30,350,056 $ 39,970,705
============ ============
- --------------------------------------------------------------------------------
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1999, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $13,526,771 and $6,500,301, respectively, for the FBP Contrarian
Equity Fund and $16,348,446 and $13,423,764, 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
Advisor) under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, each Fund pays the Advisor a fee, which is
computed and accrued daily and paid monthly, at an annual rate of .75% on its
average daily net assets up to $250 million; .65% on the next $250 million of
such net assets; and .50% on such net assets in excess of $500 million. Certain
trustees and officers of the Trust are also officers of the Advisor.
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 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 CFS 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, or of CW
Fund Distributors, Inc., the exclusive underwriter of each Funds' shares.
17
<PAGE>
4. COVERED CALL OPTIONS
A summary of covered call option contracts during the year ended March 31, 1999
is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
FBP Contrarian FBP Contrarian
Equity Fund Balanced Fund
----------------------- -----------------------
Option Option Option Option
Contracts Premiums Contracts Premiums
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at beginning of year .. 125 $ 62,686 144 $ 66,996
Options written ........................... 95 52,787 197 142,157
Options expired ........................... (86) (40,023) (104) (45,055)
Options exercised ......................... (79) (44,388) (152) (98,661)
--------- --------- --------- ---------
Options outstanding at end of year ........ 55 $ 31,062 85 $ 65,437
========= ========= ========= =========
- --------------------------------------------------------------------------------------------------
</TABLE>
18
<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 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, 1999, 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 each of the five
years in the period then ended. 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, 1999 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
FBP Contrarian Equity Fund and the FBP Contrarian Balanced Fund as of March 31,
1999, 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 each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 30, 1999
19
<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
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.
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, 1999
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
INVESTMENT OBJECTIVES AND POLICIES........................................... 2
DESCRIPTION OF BOND RATINGS.................................................. 5
INVESTMENT LIMITATIONS....................................................... 8
TRUSTEES AND OFFICERS........................................................ 10
INVESTMENT ADVISOR........................................................... 14
ADMINISTRATOR................................................................ 15
OTHER SERVICES............................................................... 16
BROKERAGE.................................................................... 16
SPECIAL SHAREHOLDER SERVICES................................................. 17
PURCHASE OF SHARES........................................................... 19
REDEMPTION OF SHARES......................................................... 20
NET ASSET VALUE DETERMINATION................................................ 21
ALLOCATION OF TRUST EXPENSES................................................. 21
ADDITIONAL TAX INFORMATION................................................... 21
CAPITAL SHARES AND VOTING.................................................... 23
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 Government Street Equity
Fund and The Government Street Bond Fund (the "Funds") dated August 1, 1999.
Each 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
applicable 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). 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 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.
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
-1-
<PAGE>
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 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
-2-
<PAGE>
loan, including the accrued interest earned thereon. All Repurchase Securities
will be held by the Funds' custodian either directly or through a securities
depository.
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. 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. 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.
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
-3-
<PAGE>
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.
BORROWING. Each 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. Neither Fund will not make
any additional investments while its outstanding borrowings exceed 5% of the
current value of its total assets.
UNSEASONED ISSUERS. Each 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. The
securities of unseasoned companies may have a limited trading market, which may
adversely affect disposition. If other investors attempt to dispose of such
holdings when a Fund desires to do so, the Fund could receive lower prices than
might otherwise be obtained. Because of these and other risks, investment in
unseasoned issuers is restricted by each Fund to no more than 5% of its net
assets.
DESCRIPTION OF BOND RATINGS
In order to achieve its objectives, the Bond 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.
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.
-4-
<PAGE>
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.
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.
-5-
<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.
-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 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, 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
-7-
<PAGE>
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) 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 (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);
(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;
(13) Invest in restricted securities; or
(14) Invest more than 5% of its total assets in the securities of any one issuer
or hold more than 10% of the voting securities of any one issuer.
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.
-8-
<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
The Board of Trustees supervises the activities of the Williamsburg Investment
Trust (the "Trust"). Following are the Trustees and executive officers of 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, 1999:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 62) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund 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 45) 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 62) Physician $13,500
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 59) Julian Price Professor Emeritus of $13,000
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)
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<PAGE>
Richard Mitchell (age 50) 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 60) President of $13,500
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 39) President of $13,000
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
Erwin H. Will, Jr. (age 66) Chief Investment Officer of $13,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 63) Senior Vice President and $15,000
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 36) Portfolio Manager of none
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 54) Executive Vice President of none
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
-10-
<PAGE>
Robert L. Bennett (age 57) First Vice President and Chief none
Treasurer, all Funds of the Trust Operating Officer of Countrywide
312 Walnut Street, 21st Floor Fund Services, Inc., (registered transfer
Cincinnati, Ohio 45202 agent and administrator to the Trust)
and of CW Fund Distributors, Inc.
(registered broker-dealer),
Cincinnati, Ohio
Charles M. Caravati III (age 33) Assistant Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 57) Principal of none
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 46) Principal of none
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
Tina D. Hosking (age 30) Assistant Vice President and Associate none
Secretary, all Funds of the Trust General Counsel of Countrywide Fund
312 Walnut Street, 21st Floor Services, Inc. (registered transfer agent
Cincinnati, Ohio 45202 and administrator of the Trust) and
CW Fund Distributors, Inc.,
Cincinnati, Ohio
Lee Keiger III (age 44) First Vice President and Chief Financial none
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 58) Principal of none
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
-11-
<PAGE>
Henry C. Spalding, Jr. (age 61) Executive Vice President of none
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Ernest H. Stephenson, Jr. (age 54) Vice President of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 48) Administrator of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 40) Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 53) President and Chief Executive none
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 Investment
Company Act of 1940. 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.
-12-
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1999, 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 43.2516% of
the then-outstanding shares of the Equity Fund and 35.0731% of the
then-outstanding shares of the Bond Fund; First Alabama Bank, Successor Trustee
of the Mobile Paint Manufacturing Co., Mobile, Alabama 36622, owned of record
6.5619% of the then-outstanding shares of the Bond Fund; Saltco, P.O. Box 469,
Brewton, Alabama 36427, owned of record 19.2598% of the then-outstanding shares
of the Equity Fund and 11.7532% of the then-outstanding shares of the Bond Fund;
and Sterne Agee & Leach, Inc., CMT Plaza, Suite 100 B, 813 Shades Creek Parkway,
Birmingham, Alabama 35209, owned of record 5.2483% of the then-outstanding
shares of the Bond Fund. As a result, Charles Schwab & Co., Inc. may be deemed
to control the Bond Fund, and Charles Schwab & Co., Inc. may be deemed to
control the Equity Fund.
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,
2000 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, 1999, 1998 and 1997, the Equity Fund paid the Advisor
advisory fees of $478,172, $375,712 and $275,299, 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, 1999, 1998 and 1997, the Bond Fund paid the Advisor advisory
fees of $197,590, $164,236 and $147,268, respectively.
The Advisor, organized as an Alabama corporation in 1979, is controlled by its
shareholders, Thomas W. Leavell, Richard Mitchell,
-13-
<PAGE>
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.
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
The Fund has 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
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
-14-
<PAGE>
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, 1999, 1998 and 1997, the Administrator
received fees of $138,379, $112,821 and $86,708, respectively, from the Equity
Fund and $29,702, $25,069 and $24,000, respectively, from the Bond 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.
The Custodian of the Funds' assets is Firstar 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.
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 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
-15-
<PAGE>
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, 1999, 1998 and 1997, the total amount of
brokerage commissions paid by the Equity Fund was $40,921, $20,136 and $15,451,
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 Fund has
adopted brokerage policies which allow the Advisor to 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.
As of March 31, 1999, 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: 1. Merrill Lynch, Pierce, Fenner & Smith, Inc.,(the market value of
which was $778,000); 2. Salomon Smith Barney, (the market value of which was
$908,000); 3. Bear Stearns & Company,(the market value of which was $182,000);
and 4. J.P. Morgan & Co.,(the market value of which was $998,000).
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
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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.
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
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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 of the Funds 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 particular
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.
Due to Internal Revenue Service ("IRS") regulations, the Fund will not accept
applications without social security or tax identification numbers. If, however,
you have already applied for a social security or tax identification number at
the time of completing your account application, you should indicate this on the
application. 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.
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
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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 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.
If your instructions request a redemption by wire, you will be charged a $9
processing fee by the Fund's Custodian. There is currently no charge by the
Administrator for redemptions, including wire 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. 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 wire transfers.
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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<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.
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.
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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, 1999, the Bond Fund had capital loss carryforwards for federal
income tax purposes of $540,121 which expire through the year 2007. In addition,
the Bond Fund had net realized capital losses of $13,140 during the period from
November 1, 1998 through March 31, 1999, 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 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.
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.
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<PAGE>
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 and federal income tax
implications may apply. You should consult your tax advisor for further
information.
CAPITAL SHARES AND VOTING
The Bond Fund and the Equity Fund are each no-load, diversified, open-ended
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.
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 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.
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;
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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, 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.
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.
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.
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.
Prior to January 24, 1994, the Trust was called the Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
Each Fund may, from time to time, advertise certain total return and yield
information. The average annual total return of a Fund for a period is computed
by subtracting the net asset value per
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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 for the Equity Fund for the one and
five year periods ended March 31, 1999, and for the period since inception (June
3, 1991) to March 31, 1999 are 14.81%, 20.32% and 15.06%, respectively. The
average annual total return for the Bond Fund for the one and five year periods
ended March 31, 1998, and for the period since inception (June 3, 1991) to March
31, 1998 are 5.38%, 6.60% and 7.03%, 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:
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, 1999 were 0.39% and 5.44%, respectively.
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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.
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.
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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, 1999, together with the report of the independent
accountants thereon, are included on the following pages.
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The Government Street Funds
The Alabama Tax Free Bond Fund
------------------------------
No Load Mutual Funds
Annual Report
March 31, 1999
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, 1999.
The Government Street Equity Fund
- ---------------------------------
We are proud to report that The Government Street Equity Fund has received
a four star rating from Morningstar, Inc. for the 1, 3 and 5 year periods
coinciding with the end of its fiscal year on March 31, 1999. The Morningstar
ratings reflect risk-adjusted performance and are subject to change every month.
Ratings are calculated for the Fund's total annual return in excess of the
90-day T-bill return with fee adjustments and a risk factor that reflects Fund
performance below the 90-day T-bill return. A four star rating places the Fund
in the top 32.5% of all domestic stock funds measured. For the five year period
ended March 31, 1999, that universe consisted of 1,810 common stock mutual
funds.
For the year ended March 31, 1999, The Government Street Equity Fund
achieved a solid investment return of 14.8%. This compares favorably with the
Lipper Growth and Income Fund Index whose return was 6.8% for the same twelve
month period.
During 1998 and the first quarter of 1999, common stocks continued their
recent trend of larger capitalization stocks performing well with the broader
market lagging. Most indicative of this phenomenon, perhaps, was the investment
return of the S&P 500 Index. This index-- which is capitalization weighted-- had
a total return of 18.5% for the twelve months ended March 31, 1999; however, on
an equal weighted basis, the S&P 500 would have achieved a return of only 1.9%
for the same period.
In addition, growth stocks have recently outperformed value stocks to an
extent that has not been experienced in at least 20 years. For example, the
average "large growth" fund achieved a return of 26.1% for the 12 months through
March; for the same period, however, the average "small value" fund fell 22.7%.
This extreme disparity is evident within The Government Street Equity Fund's
portfolio. For the year ended March 31, 1999, the return of the growth stocks in
the Fund was 30.4%, while the return of the Fund's value stocks was a mere 1.5%.
It is unlikely that the U.S. stock market will continue indefinitely to be
driven by the narrow leadership of a handful of large capitalization stocks; nor
is it reasonable to expect that growth stocks will continue to outperform value
stocks as they have over the past 18 months.
Looking ahead, it probably would be foolish to predict a continuation of
the recent record setting pace experienced in the stock market. However, the
fundamental economic environment in our country is so healthy that it is equally
difficult to maintain strong negative sentiments about the market. Regardless of
what may occur in the short run, we continue to be positive with respect to
potential long-term growth in equity markets.
The Government Street Equity Fund is currently invested in approximately
120 companies. These investments are spread over most areas of the economy
thereby insuring broad diversification of risk. All of these companies are
quality representatives of their respective industries, and each has passed a
number of fundamental financial and technical screens used in its selection.
During the recent fiscal year, the Fund experienced a turnover rate of only
22%. At year end, the net assets of the Fund were $90,707,450; net asset value
per share was $48.10.
The Government Street Bond Fund
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Following the rally in U.S. Treasury securities that occurred during the
latter part of 1998, bond investors began 1999 with optimism. After all,
inflation continued to be low, the possibility of lower interest rates seemed
likely, and there was a growing feeling among analysts that the U.S. economy
would be slowing throughout the year.
1
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However, these economic conditions actually resulted in a shift in investor
sentiment. As the strength in the U.S. economy became more apparent and as
global economies seemed to improve, fewer investors sought the safety of U.S.
Treasuries. During February, 1999, the Lehman Brothers Treasury Index
experienced a loss of 2.6%-- the worst month for U.S. Treasuries in 18 years.
The sell-off in Treasuries affected most other bonds which also fell in price
during the quarter.
Despite these reverses in the bond market during 1999's first calendar
quarter, The Government Street Bond Fund completed its fiscal year at March 31
with a total return of 5.38%. For this same period, the return of the Lehman
Government/Corporate Intermediate Bond Index was 6.56%. The Fund's ratio of net
investment income to average net assets was 6.01%.
For its fiscal year ended March 31, 1999, 97.7% of The Government Street
Bond Fund's assets were invested in securities rated A or better with over 55%
rated AAA. The average maturity and duration of the Fund were 5.8 years and 4.4
years, respectively. The net assets of the Fund were $43,040,526; net asset
value per share was $20.90. The ratio of expenses to average net assets was
0.73%.
The Alabama Tax Free Bond Fund
- ------------------------------
The Alabama Tax Free Bond Fund was ranked by Lipper Analytical Services,
Inc. as the number one Alabama municipal debt fund based on total return for the
year ended December 31, 1998. Lipper provides mutual fund data and rankings to
The Wall Street Journal and other national financial publications.
This Fund remains the only no-load Alabama municipal bond fund. It invests
in high grade Alabama tax-exempt bonds which carry a Moody's or Standard and
Poor's rating of A or better. As of March 31, 1999, more than half of the Fund's
assets were rated AAA.
The net assets of the Fund as of March 31, 1999 were $21,559,972; the net
asset value per share was $10.54. The weighted average maturity of the Fund's
portfolio was 7.2 years-- an average maturity in keeping with its intermediate
term objective.
The total return of the Fund for its fiscal year ended March 31, 1999 was
4.73%. For the same twelve months period, the Lehman Three Year and Five Year
Indices achieved returns of 5.28% and 5.98%, respectively. The ratio of net
investment income to average net assets was 4.16%. For an Alabama investor in
the maximum combined federal and state income tax bracket of 42.6%, that yield's
taxable equivalent was 7.25%.
Tax-exempt municipal securities continue to provide an attractive option
for investors who are seeking stability of principal as well as income which is
sheltered from federal and state income taxes. Demographic trend suggests that
the interest in such securities will continue to grow in the years ahead as the
aging population focuses increasingly on principal preservation and generation
of income.
Thank you for your continued confidence in The Government Street Funds and
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 Street Funds
The Alabama Tax Free Bond Fund
2
<PAGE>
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
3/99
------
The Government Street Equity Fund $29,816
Standard & Poor's 500 Index $40,940
Consumer Price Index $12,144
- --------------------------------------------------------------------------------
-------------------------------------
The Government Street Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
14.81% 20.32% 15.06%
-------------------------------------
*Initial public offering of shares was June 3, 1991.
Past performance is not predictive of future performance.
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
3/99
------
The Government Street Bond Fund $17,002
Lehman Government/Corporate Intermediate Bond Index $17,611
90-Day Treasury Bill Index $14,453
- --------------------------------------------------------------------------------
-------------------------------------
The Government Street Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
5.38% 6.60% 7.03%
-------------------------------------
*Initial public offering of shares was June 3, 1991.
Past performance is not predictive of future performance.
3
<PAGE>
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
3/99
------
The Alabama Tax Free Bond Fund $13,661
Lehman 7-Year G.O. Municipal Bond Index $14,725
Lehman 3-Year Municipal Bond Index $13,599
- --------------------------------------------------------------------------------
-------------------------------------
The Alabama Tax Free Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
4.73% 5.52% 5.15%
-------------------------------------
*Initial public offering of shares was January 15, 1993.
Past performance is not predictive of future performance.
4
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1999
=====================================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- -----------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C>
At acquisition cost ............................. $45,491,392 $ 41,634,311 $ 20,698,028
=========== ============ ============
At value (Note 1) ............................... $86,838,733 $ 41,770,060 $ 21,515,625
Investments in repurchase agreements (Note 1) ...... 3,833,000 888,000 --
Cash ............................................... 987 898 --
Interest receivable ................................ 399 704,668 273,457
Dividends receivable ............................... 88,884 -- --
Receivable for capital shares sold ................. 50,302 55,344 350
Other assets ....................................... 5,328 3,813 1,338
----------- ------------ ------------
TOTAL ASSETS .................................... 90,817,633 43,422,783 21,790,770
----------- ------------ ------------
LIABILITIES
Dividends payable .................................. 3,238 13,377 16,933
Distributions payable .............................. 35,888 -- --
Payable for securities purchased ................... -- 256,008 199,361
Payable for capital shares redeemed ................ 1,329 77,002 1,500
Accrued investment advisory fees (Note 3) .......... 45,990 18,043 5,087
Accrued administrative fees (Note 3) ............... 12,850 2,700 2,650
Other accrued expenses and liabilities ............. 10,888 15,127 5,267
----------- ------------ ------------
TOTAL LIABILITIES ............................... 110,183 382,257 230,798
----------- ------------ ------------
NET ASSETS ......................................... $90,707,450 $ 43,040,526 $ 21,559,972
=========== ============ ============
Net assets consist of:
Paid-in capital .................................... $49,360,109 $ 43,458,038 $ 20,941,658
Accumulated net realized losses
from security transactions ...................... -- (553,261) (199,283)
Net unrealized appreciation on investments ......... 41,347,341 135,749 817,597
----------- ------------ ------------
Net assets ......................................... $90,707,450 $ 43,040,526 $ 21,559,972
=========== ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ...... 1,885,753 2,059,224 2,044,597
=========== ============ ============
Net asset value, offering price and
redemption price per share (Note 1) ............. $ 48.10 $ 20.90 $ 10.54
=========== ============ ============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF OPERATIONS
Year Ended March 31, 1999
=======================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest ............................. $ 169,115 $ 2,665,381 $ 960,084
Dividends ............................ 995,184 -- --
----------- ----------- -----------
TOTAL INVESTMENT INCOME ........... 1,164,299 2,665,381 960,084
----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 3) .... 478,172 197,590 69,902
Administrative fees (Note 3) ......... 138,379 29,702 29,975
Professional fees .................... 11,145 11,145 8,045
Pricing costs ........................ 2,671 11,810 14,038
Trustees' fees and expenses .......... 8,220 8,220 8,220
Printing of shareholder reports ...... 8,199 6,741 7,843
Custodian fees ....................... 11,302 5,188 3,886
Postage and supplies ................. 6,911 6,229 5,475
Registration fees .................... 2,957 3,222 1,067
Insurance expense .................... 2,802 2,179 1,557
Other expenses ....................... 6,651 6,456 899
----------- ----------- -----------
TOTAL EXPENSES .................... 677,409 288,482 150,907
Fees waived by the Adviser (Note 3) .. -- -- (21,089)
----------- ----------- -----------
NET EXPENSES ...................... 677,409 288,482 129,818
----------- ----------- -----------
NET INVESTMENT INCOME ................... 486,890 2,376,899 830,266
----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses)
from security transactions ........ 1,154,015 (119,151) (347)
Net change in unrealized appreciation/
depreciation on investments ....... 9,951,369 (251,151) 86,422
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS .............. 11,105,384 (370,302) 86,075
----------- ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ...................... $11,592,274 $ 2,006,597 $ 916,341
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1999 and 1998
===================================================================================================================================
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,
1999 1998 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income ................. $ 486,890 $ 516,281 $ 2,376,899 $ 2,087,331 $ 830,266 $ 782,390
Net realized gains (losses)
from security transactions ......... 1,154,015 2,517,491 (119,151) (36,286) (347) 1,079
Net change in unrealized appreciation/
depreciation on investments ........ 9,951,369 17,143,907 (251,151) 906,779 86,422 546,731
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets from operations 11,592,274 20,177,679 2,006,597 2,957,824 916,341 1,330,200
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............ (487,774) (527,419) (2,380,755) (2,095,202) (830,266) (782,390)
From net realized gains ............... (3,083,650) (1,732,108) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Decrease in net assets from
distributions to shareholders ......... (3,571,424) (2,259,527) (2,380,755) (2,095,202) (830,266) (782,390)
------------ ------------ ------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............. 10,535,714 10,616,273 7,618,281 7,696,201 3,032,760 2,804,374
Net asset value of shares issued in
reinvestment of distributions
to shareholders .................... 3,411,170 2,175,993 2,146,286 1,871,979 609,745 555,482
Payments for shares redeemed .......... (6,903,321) (4,696,332) (3,257,836) (2,965,314) (2,106,904) (770,028)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ............ 7,043,563 8,095,934 6,506,731 6,602,866 1,535,601 2,589,828
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ............. 15,064,413 26,014,086 6,132,573 7,465,488 1,621,676 3,137,638
NET ASSETS
Beginning of year ..................... 75,643,037 49,628,951 36,907,953 29,442,465 19,938,296 16,800,658
------------ ------------ ------------ ------------ ------------ ------------
End of year ........................... $ 90,707,450 $ 75,643,037 $ 43,040,526 $ 36,907,953 $ 21,559,972 $ 19,938,296
============ ============ ============ ============ ============ ============
UNDISTRIBUTED NET
INVESTMENT INCOME ..................... $ -- $ 884 $ -- $ 3,856 $ -- $ --
============ ============ ============ ============ ============ ============
Capital share activity
Sold .................................. 233,010 268,759 359,195 365,904 286,831 270,970
Reinvested ............................ 77,139 56,533 101,333 89,389 57,694 53,306
Redeemed .............................. (151,673) (121,016) (153,761) (141,456) (199,887) (73,918)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in shares outstanding .... 158,476 204,276 306,767 313,837 144,638 250,358
Shares outstanding, beginning of year . 1,727,277 1,523,001 1,752,457 1,438,620 1,899,959 1,649,601
------------ ------------ ------------ ------------ ------------ ------------
Shares outstanding, end of year ....... 1,885,753 1,727,277 2,059,224 1,752,457 2,044,597 1,899,959
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
7
<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,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 43.79 $ 32.59 $ 29.41 $ 23.87 $ 22.69
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 0.27 0.32 0.37 0.40 0.38
Net realized and unrealized
gains on investments ................... 6.01 12.28 4.50 5.75 1.19
-------- -------- -------- -------- --------
Total from investment operations ............. 6.28 12.60 4.87 6.15 1.57
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (0.27) (0.32) (0.36) (0.40) (0.39)
Distributions from net realized gains ..... (1.70) (1.08) (1.33) (0.21) --
-------- -------- -------- -------- --------
Total distributions .......................... (1.97) (1.40) (1.69) (0.61) (0.39)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 48.10 $ 43.79 $ 32.59 $ 29.41 $ 23.87
======== ======== ======== ======== ========
Total return ................................. 14.81% 39.31% 16.94% 25.96% 7.02%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 90,707 $ 75,643 $ 49,629 $ 41,421 $ 31,473
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) 0.85% 0.86% 0.89% 0.94% 0.91%
Ratio of net investment income
to average net assets ..................... 0.61% 0.82% 1.17% 1.50% 1.71%
Portfolio turnover rate ...................... 22% 18% 20% 31% 55%
</TABLE>
(a) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's administrative and 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 1.00% for the year ended March 31, 1995.
See accompanying notes to financial statements.
8
<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,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 21.06 $ 20.47 $ 20.87 $ 20.33 $ 20.87
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 1.27 1.32 1.34 1.35 1.35
Net realized and unrealized
gains (losses) on investments .......... (0.16) 0.60 (0.40) 0.54 (0.53)
-------- -------- -------- -------- --------
Total from investment operations ............. 1.11 1.92 0.94 1.89 0.82
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (1.27) (1.33) (1.34) (1.35) (1.36)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 20.90 $ 21.06 $ 20.47 $ 20.87 $ 20.33
======== ======== ======== ======== ========
Total return ................................. 5.38% 9.61% 4.60% 9.43% 4.12%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 43,041 $ 36,908 $ 29,442 $ 28,718 $ 27,780
======== ======== ======== ======== ========
Ratio of net expenses to average net assets .. 0.73% 0.74% 0.75% 0.76% 0.85%
Ratio of net investment income
to average net assets ..................... 6.01% 6.35% 6.44% 6.38% 6.68%
Portfolio turnover rate ...................... 17% 10% 20% 10% 11%
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
==================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
- ------------------------------------------------------------------------------------------------------------------
Years Ended March 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 10.49 $ 10.18 $ 10.23 $ 9.96 $ 9.96
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 0.44 0.44 0.43 0.42 0.45
Net realized and unrealized
gains (losses) on investments .......... 0.05 0.31 (0.05) 0.27 --
-------- -------- -------- -------- --------
Total from investment operations ............. 0.49 0.75 0.38 0.69 0.45
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (0.44) (0.44) (0.43) (0.42) (0.45)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 10.54 $ 10.49 $ 10.18 $ 10.23 $ 9.96
======== ======== ======== ======== ========
Total return ................................. 4.73% 7.44% 3.82% 7.02% 4.66%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 21,560 $ 19,938 $ 16,801 $ 15,480 $ 12,816
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) 0.65% 0.65% 0.66% 0.75% 0.75%
Ratio of net investment income
to average net assets ..................... 4.16% 4.19% 4.24% 4.11% 4.56%
Portfolio turnover rate ...................... 7% 2% 6% 4% 36%
</TABLE>
(a) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been
0.76%, 0.75%, 0.78%, 0.86% and 1.05% for the years ended March 31, 1999,
1998, 1997, 1996 and 1995, respectively (Note 3).
See accompanying notes to financial statements.
10
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 95.7% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 0.5%
6,000 Omnicom Group, Inc. ......................... $ 479,625
-----------
AEROSPACE -- 0.7%
17,000 Boeing Company .............................. 580,125
-----------
CHEMICALS AND DRUGS -- 15.4%
40,000 Becton Dickinson & Company .................. 1,532,500
15,000 Biomet, Inc.(a) ............................. 629,063
30,000 Cardinal Health, Inc. ....................... 1,980,000
18,000 duPont (E.I.) de Nemours & Company .......... 1,045,125
16,000 Eli Lilly & Company ......................... 1,358,000
8,000 Goodrich (B.F.) Company ..................... 274,500
15,000 Johnson & Johnson ........................... 1,405,312
19,400 Merck & Company, Inc. ....................... 1,555,638
10,500 Monsanto Company ............................ 482,344
5,500 Pfizer, Inc. ................................ 763,125
40,000 Schering-Plough Corporation ................. 2,212,500
15,000 Sigma-Aldrich Corporation ................... 438,750
2,700 Waters Corporation .......................... 283,669
-----------
13,960,526
-----------
CONSTRUCTION -- 4.2%
25,500 Blount, Inc. - Class A ...................... 736,312
20,000 Caterpiller, Inc. ........................... 918,750
25,390 Clayton Homes, Inc. ......................... 280,877
3,000 Florida Rock Industries, Inc. ............... 102,375
8,500 Kaufman & Broad Home Corporation ............ 191,781
10,000 Lowe's Companies, Inc. ...................... 605,000
7,000 Masco Corporation ........................... 197,750
25,600 Valspar Corporation ......................... 808,000
-----------
3,840,845
-----------
CONSUMER PRODUCTS -- 7.6%
20,000 Archer-Daniels-Midland Company .............. 293,750
25,000 Belo (A.H.) Corporation - Class A ........... 456,250
4,000 Clorox Company .............................. 468,750
12,000 General Motors Corporation .................. 1,042,500
15,000 Gillette Company ............................ 891,563
5,000 Hewlett-Packard Company ..................... 339,062
3,000 Macromedia, Inc.(a) ......................... 135,938
3,000 Maytag Corporation .......................... 181,125
12,000 Microsoft Corporation(a) .................... 1,075,500
9,000 Newell Company .............................. 427,500
5,000 OshKosh B'Gosh, Inc. - Class A .............. 88,438
15,000 Procter & Gamble Company .................... 1,469,062
-----------
6,869,438
-----------
DURABLE GOODS -- 12.9%
12,000 Advanced Micro Devices, Inc.(a) ............. 186,000
47,000 Cisco Systems, Inc.(a) ...................... 5,149,437
6,000 Costco Companies(a) ......................... 549,375
23,000 General Electric Company .................... 2,544,375
6,000 Ingersoll-Rand Company ...................... 297,750
9,500 Intel Corporation ........................... 1,131,687
3,000 International Business Machines Corporation . 531,750
11,500 Raytheon Company - Class B .................. 674,188
7,500 Shared Medical Systems, Inc. ................ 417,656
5,118 SPX Corporation ............................. 258,139
-----------
11,740,357
-----------
11
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 95.7% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
ELECTRONICS -- 2.9%
15,177 AMP, Inc. ................................... $ 814,815
16,000 Koninklijke (Royal) Philips Electronics N.V . 1,319,000
7,000 Motorola, Inc. .............................. 512,750
-----------
2,646,565
-----------
FINANCIAL -- 15.2%
9,000 Aetna, Inc. ................................. 747,000
30,000 AFLAC, Inc. ................................. 1,633,125
10,000 American Express Company .................... 1,175,000
4,000 Charles Schwab Corporation (The) ............ 384,500
12,000 Citigroup, Inc. ............................. 766,500
28,000 Firstar Corporation ......................... 2,506,000
20,000 Fleet Financial Group, Inc. ................. 752,500
23,000 Freddie Mac ................................. 1,313,875
7,500 Marsh & McLennan Companies, Inc. ............ 556,406
16,000 MBNA Corporation ............................ 382,000
25,000 Mellon Bank Corporation ..................... 1,759,375
21,000 Synovus Financial Corporation ............... 429,187
15,000 Torchmark Corporation ....................... 474,375
11,000 Transamerica Corporation .................... 781,000
853 Waddell & Reed Financial, Inc. - Class A .... 17,486
3,673 Waddell & Reed Financial, Inc. - Class B .... 73,001
-----------
13,751,330
-----------
FOOD/BEVERAGES -- 2.7%
7,500 Anheuser-Busch Companies, Inc. .............. 571,406
12,000 Campbell Soup Company ....................... 488,250
40,000 Coca-Cola Enterprises ....................... 1,210,000
7,000 Pilgrim's Pride Corporation - Class B ....... 115,063
3,000 SYSCO Corporation ........................... 78,937
-----------
2,463,656
-----------
HOTELS -- 0.2%
6,000 Marriott International, Inc. - Class A ...... 201,750
-----------
MANUFACTURING -- 1.6%
6,000 Johnson Controls, Inc. ...................... 374,250
10,000 Leggett & Platt, Inc. ....................... 200,000
19,000 Pall Corporation ............................ 314,688
8,000 Tyco International Ltd. ..................... 574,000
-----------
1,462,938
-----------
METAL AND MINING -- 1.1%
14,000 Alcoa, Inc. ................................. 576,625
10,000 Newmont Mining Corporation .................. 175,000
5,000 Phelps Dodge Corporation .................... 246,250
-----------
997,875
-----------
MULTIMEDIA -- 0.5%
7,000 Meredith Corporation ........................ 220,063
3,000 Viacom, Inc. - Class A(a) ................... 249,938
-----------
470,001
-----------
OIL/ENERGY -- 5.2%
16,541 BP Amoco Plc ................................ 1,669,607
5,000 Burlington Resources, Inc. .................. 199,687
13,000 Chevron Corporation ......................... 1,149,687
14,650 Exxon Corporation ........................... 1,033,741
11,500 Halliburton Company ......................... 442,750
10,000 Helmerich & Payne, Inc. ..................... 226,875
-----------
4,722,347
-----------
12
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 95.7% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS -- 1.2%
5,000 Georgia Pacific Corporation, Timber Group ... $ 112,188
7,000 International Paper Company ................. 295,313
5,000 Mead Corporation ............................ 153,750
3,000 Union Camp Corporation ...................... 201,375
8,000 Willamette Industries, Inc. ................. 302,000
-----------
1,064,626
-----------
RACETRACKS -- 0.4%
9,000 Speedway Motorsports, Inc.(a) ............... 371,250
-----------
RETAIL -- 8.3%
17,000 American Stores Company ..................... 561,000
7,000 AutoZone, Inc.(a) ........................... 212,625
20,000 CBRL Group, Inc. ............................ 360,000
9,000 Circuit City Stores - Circuit City Group .... 689,625
33,000 Home Depot, Inc. ............................ 429,187
10,000 Nike, Inc. - Class B ........................ 576,875
8,000 Sears, Roebuck & Company .................... 361,500
15,000 Wal-Mart Stores, Inc. ....................... 1,382,813
40,000 Walgreen Company ............................ 1,130,000
6,000 Williams-Sonoma, Inc.(a) .................... 169,500
-----------
7,498,188
-----------
SERVICES - COMPUTER -- 3.7%
22,200 Automatic Data Processing, Inc. ............. 918,525
16,000 Ceridian Corporation ........................ 585,000
24,000 Computer Sciences Corporation(a) ............ 1,324,500
8,500 Electronic Data Systems Corporation ......... 413,844
6,000 Wallace Computer Services, Inc. ............. 118,875
-----------
3,360,744
-----------
SERVICES - CONSUMER -- 0.4%
6,000 HEALTHSOUTH Corporation(a) .................. 62,250
7,000 Waste Management, Inc. ...................... 310,625
-----------
372,875
-----------
TELECOMMUNICATION EQUIPMENT -- 2.8%
2,000 Lucent Technologies, Inc. ................... 215,500
12,000 Northern Telecom Limited .................... 745,500
18,000 Scientific-Atlanta, Inc. .................... 490,500
11,500 Tellabs, Inc. ............................... 1,124,125
-----------
2,575,625
-----------
TRANSPORTATION -- 1.6%
15,500 FDX Corporation(a) .......................... 1,438,594
-----------
UTILITIES -- 6.6%
25,000 Ameritech Corporation ....................... 1,446,875
3,000 AT&T Corporation ............................ 239,438
23,000 BellSouth Corporation ....................... 921,437
15,490 Duke Energy Corporation ..................... 846,141
4,000 MCI WorldCom, Inc.(a) ....................... 354,250
26,000 SBC Communications, Inc. .................... 1,225,250
17,000 US WEST, Inc. ............................... 936,062
-----------
5,969,453
-----------
TOTAL COMMON STOCKS (COST $45,491,392) ........ $86,838,733
-----------
13
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
Face
Amount REPURCHASE AGREEMENTS(b) -- 4.2% Value
- --------------------------------------------------------------------------------
Firstar Bank,
$3,833,000 3.75%, dated 03/31/1999, due 04/01/1999,
repurchase proceeds $3,833,399
(Cost $3,833,000) ......................... $ 3,833,000
-----------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 99.9% ................ $90,671,733
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% . 35,717
-----------
NET ASSETS -- 100.0% .......................... $90,707,450
===========
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,000 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $3,970,682.
See accompanying notes to financial statements.
14
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
PAR VALUE U.S. TREASURY AND AGENCY OBLIGATIONS -- 41.3% VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 8.5%
$ 225,000 7.00%, due 04/15/1999 ....................... $ 225,211
150,000 6.375%, due 07/15/1999 ...................... 150,750
100,000 8.00%, due 08/15/1999 ....................... 101,187
250,000 7.50%, due 10/31/1999 ....................... 253,828
50,000 7.875%, due 11/15/1999 ...................... 50,937
100,000 8.50%, due 02/15/2000 ....................... 103,063
20,000 8.75%, due 08/15/2000 ....................... 20,981
50,000 8.50%, due 11/15/2000 ....................... 52,672
140,000 8.00%, due 05/15/2001 ....................... 148,225
125,000 7.875%, due 08/15/2001 ...................... 132,695
850,000 5.75%, due 04/30/2003 ....................... 866,204
750,000 5.875%, due 11/15/2005 ...................... 770,860
750,000 5.50%, due 02/15/2008 ....................... 757,735
-----------
3,634,348
-----------
FEDERAL FARM CREDIT BANK BONDS -- 1.9%
500,000 6.00%, due 01/07/2008 ....................... 503,585
325,000 6.06%, due 05/28/2013 ....................... 324,441
-----------
828,026
-----------
FEDERAL HOME LOAN BANK BONDS -- 7.5%
500,000 7.57%, due 08/19/2004 ....................... 544,676
500,000 6.045%, due 12/10/2004 ...................... 510,163
750,000 5.925%, due 04/09/2008 ...................... 752,374
500,000 5.42%, due 09/23/2008 ....................... 483,462
500,000 5.52%, due 09/23/2008 ....................... 487,082
500,000 5.038%, due 10/14/2008 ...................... 469,487
-----------
3,247,244
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION BONDS -- 7.1%
500,000 6.345%, due 11/01/2005 ...................... 517,749
300,000 7.52%, due 04/21/2006 ....................... 300,420
500,000 7.55%, due 04/26/2006 ....................... 500,885
895,000 7.44%, due 09/20/2006 ....................... 930,106
800,000 7.04%, due 01/09/2007 ....................... 822,390
-----------
3,071,550
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BONDS -- 15.2%
100,000 8.45%, due 07/12/1999 ....................... 100,980
500,000 6.83%, due 04/02/2003 ....................... 500,000
500,000 6.63%, due 06/20/2005 ....................... 520,881
500,000 7.90%, due 06/28/2006 ....................... 499,744
650,000 7.65%, due 10/06/2006 ....................... 659,322
500,000 7.36%, due 02/07/2007 ....................... 504,553
400,000 7.70%, due 04/10/2007 ....................... 407,815
500,000 6.62%, due 06/25/2007 ....................... 524,779
500,000 7.16%, due 06/26/2007 ....................... 505,774
500,000 7.00%, due 07/17/2007 ....................... 506,043
750,000 6.08%, due 12/15/2010 ....................... 758,662
400,000 6.80%, due 08/27/2012 ....................... 416,869
600,000 6.875%, due 09/24/2012 ...................... 623,644
-----------
6,529,066
-----------
PRIVATE EXPORT FUNDING BONDS-- 1.1%
470,000 7.90%, due 03/31/2000 ....................... 482,162
-----------
TOTAL U.S. TREASURY AND AGENCY OBLIGATIONS
(COST $17,875,130) .......................... $17,792,396
-----------
15
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE MORTGAGE-BACKED SECURITIES -- 11.7% VALUE
- --------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 11.7%
$ 17,332 Pool #15032, 7.50%, due 02/15/2007 .......... $ 17,839
432,045 Pool #438434, 6.50%, due 01/01/2013 ......... 437,919
14,205 Pool #176413, 7.50%, due 09/15/2016 ......... 14,620
18,723 Pool #170784, 8.00%, due 12/15/2016 ......... 19,497
13,842 Pool #181540, 8.00%, due 02/15/2017 ......... 14,414
496,979 Pool #493659, 6.50%, due 12/15/2018 ......... 494,669
482,719 Pool #476695, 6.50%, due 10/15/2023 ......... 480,476
442,073 Pool #366710, 6.50%, due 02/01/2024 ......... 440,019
545,800 Pool #453826, 7.25%, due 09/01/2027 ......... 557,551
868,998 Pool #412360, 7.00%, due 11/15/2027 ......... 882,271
687,931 Pool #454162, 7.00%, due 05/15/2028 ......... 698,439
499,974 Pool #158794, 7.00%, due 09/15/2028 ......... 507,610
496,851 Pool #48760, 6.50%, due 12/15/2028 .......... 494,542
-----------
TOTAL MORTGAGE-BACKED SECURITIES (COST $5,080,623) $ 5,059,866
-----------
================================================================================
PAR VALUE CORPORATE BONDS -- 44.0% VALUE
- --------------------------------------------------------------------------------
FINANCE -- 23.0%
American Express Company,
$ 350,000 8.50%, due 08/15/2001 ..................... $ 370,985
-----------
AmSouth Bancorp,
425,000 9.375%, due 05/01/1999 .................... 426,163
550,000 7.75%, due 05/15/2004 ..................... 583,520
-----------
1,009,683
-----------
Associate Corporation,
500,000 6.25%, due 11/01/2008 ..................... 498,307
-----------
Banc One Corporation,
600,000 7.00%, due 07/15/2005 ..................... 625,998
-----------
BankAmerica Corporation,
496,000 8.375%, due 03/15/2002 .................... 528,900
-----------
Bear Stearns Company,
170,000 9.375%, due 06/01/2001 .................... 181,542
-----------
General Electric Capital Corporation,
100,000 7.24%, due 01/15/2002 ..................... 104,331
150,000 7.50%, due 03/15/2002 ..................... 157,796
-----------
262,127
-----------
Merrill Lynch & Company, Inc.,
745,000 7.375%, due 08/17/2002 .................... 777,864
-----------
J.P. Morgan & Company,
500,000 7.25%, due 01/15/2002 ..................... 515,948
500,000 6.00%, due 01/15/2009 ..................... 482,297
-----------
998,245
-----------
NationsBank,
550,000 7.625%, due 04/15/2005 .................... 591,488
-----------
Regions Financial Corporation,
350,000 7.80%, due 12/01/2002 ..................... 368,578
-----------
16
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS -- 44.0% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Salomon, Inc.,
$ 400,000 7.25%, due 01/15/2000 ..................... $ 405,222
480,000 7.50%, due 02/01/2003 ..................... 502,899
-----------
908,121
-----------
Sears Roebuck Acceptance Corporation,
700,000 6.00%, due 03/20/2003 ..................... 700,406
-----------
SouthTrust Bank of Alabama, N.A.,
665,000 7.00%, due 11/15/2008 ..................... 683,779
-----------
Transamerica Financial Corporation,
785,000 7.50%, due 03/15/2004 ..................... 827,521
-----------
Wachovia Corporation,
535,000 7.00%, due 12/15/1999 ..................... 540,881
-----------
TOTAL FINANCE CORPORATE BONDS ................. 9,874,425
-----------
INDUSTRIAL -- 16.1%
BP America, Inc.,
265,000 8.50%, due 04/15/2001 ..................... 280,286
-----------
Coca-Cola Company,
500,000 6.625%, due 08/01/2004 .................... 512,830
-----------
duPont (E.I.) de Nemours & Company,
150,000 9.15%, due 04/15/2000 ..................... 155,641
300,000 6.75%, due 10/15/2002 ..................... 310,434
-----------
466,075
-----------
Hanson Overseas,
1,100,000 7.375%, due 01/15/2003 .................... 1,150,009
-----------
International Business Machines Corporation,
1,000,000 7.25%, due 11/01/2002 ..................... 1,046,058
-----------
Kimberly-Clark Corporation,
240,000 8.625%, due 05/01/2001 .................... 255,879
-----------
Limited, Inc.,
150,000 8.875%, due 08/15/1999 .................... 151,751
-----------
Mobil Corporation,
100,000 8.375%, due 02/12/2001 .................... 104,779
-----------
Philip Morris Companies, Inc.,
175,000 7.75%, due 05/01/1999 ..................... 175,284
700,000 7.125%, due 10/01/2004 .................... 727,870
-----------
903,154
-----------
Procter & Gamble Company,
150,000 8.70%, due 08/01/2001 ..................... 161,011
-----------
17
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
Par Value CORPORATE BONDS -- 44.0% (Continued) Value
- --------------------------------------------------------------------------------
Raytheon Company,
$ 800,000 6.50%, due 07/15/2005 ..................... $ 815,058
-----------
Wal-Mart Stores, Inc.,
170,000 9.10%, due 07/15/2000 ..................... 177,733
100,000 8.625%, due 04/01/2001 .................... 105,890
745,000 7.50%, due 05/15/2004 ..................... 806,212
-----------
1,089,835
-----------
TOTAL INDUSTRIAL CORPORATE BONDS .............. 6,936,725
-----------
UTILITY -- 4.9%
AT&T Corporation,
250,000 6.00%, due 03/15/2009 ..................... 248,439
-----------
Consolidated Edison,
785,000 7.60%, due 01/15/2000 ..................... 798,281
-----------
Emerson Electric Company,
552,000 6.30%, due 11/01/2005 ..................... 560,893
-----------
Scana Corporation,
500,000 6.05%, due 01/13/2003 ..................... 499,035
-----------
TOTAL UTILITY CORPORATE BONDS ................. 2,106,648
-----------
TOTAL CORPORATE BONDS (COST $18,678,558) ...... $18,917,798
-----------
TOTAL INVESTMENTS AT VALUE
(COST $41,634,311) -- 97.0% ................. $41,770,060
-----------
================================================================================
Face
Amount REPURCHASE AGREEMENTS(a) -- 2.1% Value
- --------------------------------------------------------------------------------
Firstar Bank,
$ 888,000 3.75%, dated 03/31/1999, due 04/01/1999,
repurchase proceeds $888,093 (Cost $888,000) $ 888,000
-----------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 99.1% ................ $42,658,060
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.9% . 382,466
-----------
NET ASSETS -- 100.0% .......................... $43,040,526
===========
(a) Joint repurchase agreement is fully collateralized by $28,093,000 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $919,897.
See accompanying notes to financial statements.
18
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% VALUE
- --------------------------------------------------------------------------------
Alabama Mental Health Finance Auth. Special Tax,
$ 300,000 5.00%, due 05/01/2006 ..................... $ 315,501
-----------
Alabama Special Care Facilities Financing Auth. Rev.,
250,000 5.375%, due 11/01/2012 .................... 257,522
-----------
Alabama State, GO,
100,000 5.70%, due 12/01/2002 ..................... 105,936
-----------
Alabama State Industrial Access Road & Bridge Corp., GO,
100,000 5.25%, due 06/01/2003 ..................... 104,866
-----------
Alabama State Mun. Elec. Auth. Power Supply Rev.,
150,000 5.625%, due 09/01/2000 .................... 154,490
340,000 5.75%, due 09/01/2001 ..................... 355,616
400,000 6.50%, due 09/01/2005, prerefunded
09/01/2001 at 101 ....................... 430,592
-----------
940,698
-----------
Alabama State Public School & College Auth. Rev.,
100,000 4.40%, due 12/01/2000 ..................... 101,748
250,000 5.25%, due 11/01/2005 ..................... 267,325
205,000 5.00%, due 12/01/2005 ..................... 216,267
200,000 5.125%, due 11/01/2010 .................... 210,442
300,000 5.00%, due 11/01/2012 ..................... 308,178
-----------
1,103,960
-----------
Alabama Water Pollution Control Rev.,
25,000 7.00%, due 08/15/2001, prerefunded
08/15/1999 at 100 ....................... 25,360
190,000 6.25%, due 08/15/2004 ..................... 211,054
-----------
236,414
-----------
Anniston, AL, GO,
250,000 5.50%, due 01/01/2004 ..................... 267,287
-----------
Anniston, AL, Regional Medical Center Board Hospital Rev.,
25,000 7.375%, due 07/01/2006, ETM ............... 27,775
-----------
Auburn University, Alabama, Rev.,
25,000 6.10%, due 06/01/1999 ..................... 25,123
150,000 5.20%, due 06/01/2004 ..................... 158,821
325,000 5.25%, due 04/01/2005 ..................... 344,806
-----------
528,750
-----------
Baldwin Co., AL, GO,
200,000 5.85%, due 08/01/2003 ..................... 216,228
400,000 5.00%, due 02/01/2007 ..................... 419,788
200,000 4.55%, due 02/01/2009 ..................... 197,338
-----------
833,354
-----------
Baldwin Co., AL, Board of Education Rev.,
300,000 5.90%, due 12/01/2001 ..................... 304,095
-----------
Birmingham, AL, GO,
100,000 5.80%, due 04/01/2002 ..................... 105,737
200,000 5.90%, due 04/01/2003 ..................... 214,974
-----------
320,711
-----------
19
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Birmingham, AL, Industrial Water Board Rev.,
$ 100,000 5.00%, due 03/01/2001 ..................... $ 102,592
100,000 6.00%, due 07/01/2007 ..................... 112,508
-----------
215,100
-----------
Birmingham, AL, Medical Clinic Board Rev.,
60,000 7.30%, due 07/01/2005, ETM ................ 66,823
-----------
Birmingham, AL, Special Facilities Rev.,
100,000 4.45%, due 06/01/1999 ..................... 100,222
-----------
Birmingham, AL, Waterworks & Sewer Board Rev.,
50,000 5.90%, due 01/01/2003 ..................... 53,698
400,000 6.15%, due 01/01/2006 ..................... 432,168
-----------
485,866
-----------
Birmingham-Southern College, AL,
Private Education Bldg. Auth. Rev.,
500,000 5.10%, due 12/01/2012 ..................... 508,210
-----------
DCH Health Care Auth. of Alabama Rev.,
55,000 5.00%, due 06/01/2004 ..................... 57,358
-----------
Decatur, AL, GO,
300,000 5.00%, due 06/01/2009 ..................... 313,440
-----------
Fairhope, AL, Utility Rev.,
200,000 5.10%, due 12/01/2008 ..................... 207,044
-----------
Florence, AL, School Warrants,
200,000 4.65%, due 12/01/2012 ..................... 197,678
-----------
Greenville, AL, GO,
300,000 5.10%, due 12/01/2009 ..................... 315,360
-----------
Hoover, AL, Board of Education, GO,
400,000 6.00%, due 02/15/2006 ..................... 439,240
-----------
Hoover, AL, Board of Education Special Tax,
200,000 6.625%, due 02/01/2010, prerefunded
02/01/2001 at 102 ....................... 214,550
-----------
Houston Co., AL, GO,
250,000 5.00%, due 07/01/2002 ..................... 259,542
-----------
Huntsville, AL, GO,
115,000 5.15%, due 08/01/2000 ..................... 117,661
100,000 5.20%, due 11/01/2000 ..................... 102,785
500,000 5.50%, due 11/01/2002 ..................... 528,895
100,000 5.90%, due 11/01/2005 ..................... 108,893
300,000 5.40%, due 02/01/2010 ..................... 314,670
200,000 5.25%, due 11/01/2011 ..................... 210,792
-----------
1,383,696
-----------
Huntsville, AL, Electric Systems Rev.,
150,000 6.10%, due 12/01/2000 ..................... 156,517
150,000 5.00%, due 12/01/2003 ..................... 157,232
250,000 4.80%, due 12/01/2012 ..................... 250,522
-----------
564,271
-----------
20
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Huntsville, AL, Water Systems Rev.,
$ 150,000 5.15%, due 05/01/2004 ..................... $ 157,922
150,000 5.25%, due 05/01/2005 ..................... 157,813
200,000 4.70%, due 11/01/2013 ..................... 197,912
-----------
513,647
-----------
Jefferson Co., AL, GO,
150,000 5.55%, due 04/01/2002 ..................... 157,290
100,000 5.00%, due 04/01/2004 ..................... 104,399
-----------
261,689
-----------
Jefferson Co., AL, Board of Education
Capital Outlay Warrants,
300,000 5.70%, due 02/15/2011 ..................... 331,029
-----------
Jefferson Co., AL, Sewer Rev.,
140,000 5.15%, due 09/01/2002 ..................... 146,409
50,000 5.50%, due 09/01/2003, ETM ................ 53,418
300,000 5.75%, due 09/01/2005 ..................... 324,798
-----------
524,625
-----------
Lee Co., AL, GO,
300,000 5.50%, due 02/01/2007 ..................... 323,871
-----------
Madison, AL, Warrants,
325,000 5.55%, due 04/01/2007 ..................... 352,401
200,000 4.40%, due 02/01/2011 ..................... 194,838
400,000 4.85%, due 02/01/2013 ..................... 396,872
-----------
944,111
-----------
Madison Co., AL, Board of Education
Capital Outlay Tax Antic. Warrants,
175,000 5.20%, due 09/01/2004 ..................... 185,568
250,000 5.10%, due 09/01/2011 ..................... 259,818
-----------
445,386
-----------
Mobile, AL, GO,
200,000 5.40%, due 08/15/2000 ..................... 205,622
25,000 6.25%, due 08/01/2001 ..................... 26,490
25,000 6.30%, due 08/01/2001 ..................... 26,517
275,000 6.20%, due 02/15/2007, ETM ................ 308,784
-----------
567,413
-----------
Mobile, AL, Water & Sewer Commissioners Rev.,
55,000 6.30%, due 01/01/2003 ..................... 59,438
-----------
Mobile Co., AL, GO,
50,000 6.10%, due 02/01/2002, prerefunded
02/01/2000 at 102 ....................... 52,175
160,000 6.70%, due 02/01/2011, prerefunded
02/01/2000 at 102 ....................... 167,786
-----------
219,961
-----------
Mobile Co., AL, Board of Education
Capital Outlay Warrants,
400,000 5.00%, due 03/01/2008 ..................... 416,100
-----------
Mobile Co., AL, Gas Tax Antic. Warrants,
100,000 4.50%, due 02/01/2003 ..................... 101,517
-----------
Montgomery, AL, GO,
200,000 4.25%, due 05/01/1999, ETM ................ 200,190
200,000 4.70%, due 05/01/2002 ..................... 205,536
500,000 5.10%, due 10/01/2008 ..................... 527,735
-----------
933,461
-----------
21
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Montgomery, AL, Waterworks & Sanitation Rev.,
$ 200,000 5.85%, due 03/01/2003 ..................... $ 213,882
400,000 5.60%, due 09/01/2009 ..................... 431,920
-----------
645,802
-----------
Montgomery Co., AL, GO,
100,000 5.20%, due 11/01/2006 ..................... 105,131
-----------
Mountain Brook, AL, Board of Education
Capital Outlay Warrants,
405,000 4.80%, due 02/15/2011 ..................... 411,079
-----------
Muscle Shoals, AL, GO,
400,000 5.60%, due 08/01/2010 ..................... 434,376
-----------
Opelika, AL, GO,
100,000 4.60%, due 03/01/2003 ..................... 102,883
100,000 5.30%, due 07/01/2003 ..................... 105,830
-----------
208,713
-----------
Scottsboro, AL, Waterworks Sewer & Gas Rev.,
200,000 4.35%, due 08/01/2011 ..................... 193,966
-----------
Shelby Co., AL, GO,
205,000 5.20%, due 08/01/2000 ..................... 210,072
50,000 5.35%, due 08/01/2001 ..................... 52,030
-----------
262,102
-----------
Shelby Co., AL, Hospital Board Rev.,
35,000 6.60%, due 02/01/2001, ETM ................ 36,817
25,000 6.60%, due 02/01/2002, ETM ................ 26,860
40,000 6.60%, due 02/01/2003, ETM ................ 43,808
-----------
107,485
-----------
Tuscaloosa, AL, Board of Education, GO,
100,000 5.10%, due 02/01/2004 ..................... 105,099
300,000 4.625%, due 08/01/2008 .................... 305,115
-----------
410,214
-----------
Tuscaloosa, AL, Board of Education
Special Tax Warrants,
75,000 5.70%, due 02/15/2005 ..................... 79,657
125,000 6.00%, due 02/15/2009 ..................... 134,440
-----------
214,097
-----------
University of Alabama General Fee Series A Rev.,
250,000 4.15%, due 10/01/1999 ..................... 251,323
50,000 5.00%, due 11/01/2000 ..................... 51,263
240,000 5.10%, due 10/01/2002 ..................... 250,694
400,000 5.25%, due 06/01/2010 ..................... 421,076
100,000 5.375%, due 06/01/2013 .................... 104,822
-----------
1,079,178
-----------
Vestavia Hills, AL, Board of Education
Capital Outlay Rev.,
55,000 5.25%, due 02/01/2004 ..................... 57,294
-----------
Vestavia Hills, AL, Warrants,
125,000 4.90%, due 04/01/2005 ..................... 130,339
-----------
TOTAL ALABAMA (COST $19,759,696) .............. $20,577,293
-----------
22
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS -- 4.4% VALUE
- --------------------------------------------------------------------------------
938,332 Firstar Tax-Free Money Market Fund (Cost $938,332) $ 938,332
-----------
TOTAL INVESTMENTS AT VALUE
(COST $20,698,028)-- 99.8% .................. $21,515,625
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2% . 44,347
-----------
NET ASSETS -- 100.0% .......................... $21,559,972
===========
ETM - Escrowed to maturity.
See accompanying notes to financial statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
================================================================================
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, was
organized as a Massachusetts business trust on July 18, 1988.
The Government Street Equity Fund's investment objective is 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
(normally 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 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.
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.
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 dividends and capital gain
distributions are determined in accordance with income tax regulations.
24
<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, 1999:
- --------------------------------------------------------------------------------
Government Government Alabama
Street Street Tax Free
Equity Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Gross unrealized appreciation . $ 42,337,895 $ 653,317 $ 861,851
Gross unrealized depreciation . (990,554) (517,568) (44,254)
------------ ------------ ------------
Net unrealized appreciation ... $ 41,347,341 $ 135,749 $ 817,597
============ ============ ============
Federal income tax cost ....... $ 45,491,392 $ 41,634,311 $ 20,698,028
============ ============ ============
- --------------------------------------------------------------------------------
As of March 31, 1999, The Government Street Bond Fund and The Alabama Tax Free
Bond Fund had capital loss carryforwards for federal income tax purposes of
$540,121 and $199,283, respectively, which expire through the year 2007. In
addition, The Government Street Bond Fund had net realized capital losses of
$13,140 during the period from November 1, 1998 through March 31, 1999, which
are treated for federal income tax purposes as arising during the Fund's tax
year ending March 31, 2000. These capital loss carryforwards and "post-October"
losses may be utilized in future years to offset net realized capital gains
prior to distributing such gains to shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1999, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $22,246,919 and $16,504,497, respectively, for The Government Street
Equity Fund, $13,200,689 and $6,549,408, respectively, for The Government Street
Bond Fund, and $2,840,186 and $1,250,000, respectively, for The Alabama Tax Free
Bond Fund.
25
<PAGE>
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.
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 $21,089 of its investment advisory fees for the
Fund during the year ended March 31, 1999.
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 CFS 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.
26
<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, 1999, 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 each of the five years in the period then ended. 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, 1999 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
Government Street Equity Fund, The Government Street Bond Fund and The Alabama
Tax Free Bond Fund, as of March 31, 1999, 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 each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 30, 1999
27
<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.
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,
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 ALABAMA
TAX FREE BOND FUND
August 1, 1999
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....................................................... 13
TRUSTEES AND OFFICERS........................................................ 15
INVESTMENT ADVISOR........................................................... 19
ADMINISTRATOR................................................................ 20
OTHER SERVICES............................................................... 21
BROKERAGE.................................................................... 21
SPECIAL SHAREHOLDER SERVICES................................................. 22
PURCHASE OF SHARES........................................................... 24
REDEMPTION OF SHARES......................................................... 25
NET ASSET VALUE DETERMINATION................................................ 25
ALLOCATION OF TRUST EXPENSES................................................. 26
ADDITIONAL TAX INFORMATION................................................... 26
CAPITAL SHARES AND VOTING.................................................... 28
CALCULATION OF PERFORMANCE DATA.............................................. 30
FINANCIAL STATEMENTS AND REPORTS............................................. 33
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, 1999. 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.
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.
-1-
<PAGE>
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:
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.
-2-
<PAGE>
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.
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.
-3-
<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 greater 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.
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 Statement of
Additional Information, 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.
-4-
<PAGE>
In 1998, the Alabama economy remained healthy. Almost 40,000 net new jobs were
created, which represented an increase of 2.1%. Most of the new jobs (45%) were
created in the services sector. Retail trade, one of the fastest growing
sectors, accounted for another 35% of all new jobs. Surprisingly, one of the
strongest components within the services sector in recent years, the health
services industry, lost approximately 500 jobs in 1998. The manufacturing sector
lost approximately 200 net jobs during 1998.
Among the leading manufacturing industries have been pulp, paper and chemicals,
the development and growth of which have been made possible by abundant rainfall
(the mean annual average of which varies between 52 and 68 inches) and a high
pulpwood growth rate (averaging approximately one-half cord per acre per year).
In recent years Alabama has ranked as the fifth largest producer of timber in
the nation. Alabama has fresh water availability of twenty times present usage.
The State's growing chemical industry has been the natural complement of
production of wood pulp and paper.
Mining, oil and gas production, textiles and apparel, rubber and plastics,
printing and publishing, steel, manufactured housing, motor vehicles, machinery
and service industries are also important to the Alabama economy. Coal mining
and the textile industry have both been in decline during recent years.
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.
The fastest job growth in the State during 1998 was in the Birmingham and Mobile
metropolitan areas, which added 11,200 and 6,700 jobs, respectively. These two
areas accounted for almost 45% of the 1998 total job growth in the State. Major
factors contributing to the relatively faster than expected rate of growth
include very strong consumer spending; low inflation and unemployment rates; low
energy and commodity prices; low interest rates; strong demand for residential
housing; and strong commercial construction.
-5-
<PAGE>
INDUSTRIAL REVENUE BONDS. 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.
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.
-6-
<PAGE>
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 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.
-7-
<PAGE>
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.
-8-
<PAGE>
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.
-9-
<PAGE>
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.
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.
-10-
<PAGE>
MONEY MARKET INSTRUMENTS. Money market instruments may include U.S. Government
Securities or corporate debt obligations (including those subject to repurchase
agreements) as described herein, provided that they mature in thirteen months or
less from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Bankers' Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). BANKERS' ACCEPTANCES are
time drafts drawn on and "accepted" by a bank, are the customary means of
effecting payment for merchandise sold in import-export transactions and are a
source of financing used extensively in international trade. When a bank
"accepts" such a time draft, it assumes liability for its payment. When the Fund
acquires a Bankers' Acceptance, the bank which "accepted" the time draft is
liable 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
-11-
<PAGE>
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.
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.
INVESTMENT COMPANIES. 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.
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 for the purpose of exercising control or management of another
issuer;
-12-
<PAGE>
(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;
(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;
(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; or
-13-
<PAGE>
(12) 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
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, 1999:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 62) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund 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 45) 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 62) Physician $13,500
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 59) Julian Price Professor Emeritus of $13,000
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 50) 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 60) President of $13,500
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc. (plastics manufacturer)
-15-
<PAGE>
Harris V. Morrissette (age 39) President of $13,000
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
Erwin H. Will, Jr. (age 66) Chief Investment Officer of $13,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 63) Senior Vice President and $15,000
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 36) Portfolio Manager of none
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 54) Executive Vice President of none
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Robert L. Bennett (age 57) First Vice President and Chief none
Treasurer, all Funds of the Trust Operating Officer of Countrywide
312 Walnut Street, 21st Floor Fund Services, Inc., (registered transfer
Cincinnati, Ohio 45202 agent and administrator to the Trust)
and of CW Fund Distributors, Inc.
(registered broker-dealer),
Cincinnati, Ohio
-16-
<PAGE>
Charles M. Caravati III (age 33) Assistant Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 57) Principal of none
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 46) Principal of none
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
Tina D. Hosking (age 30) Assistant Vice President and Associate none
Secretary, all Funds of the Trust General Counsel of Countrywide Fund
312 Walnut Street, 21st Floor Services, Inc. (registered transfer agent
Cincinnati, Ohio 45202 and administrator of the Trust) and
CW Fund Distributors, Inc.,
Cincinnati, Ohio
Lee Keiger III (age 44) First Vice President and Chief Financial none
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 58) Principal of none
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
-17-
<PAGE>
Henry C. Spalding, Jr. (age 61) Executive Vice President of none
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Ernest H. Stephenson, Jr. (age 54) Vice President of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 48) Administrator of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 40) Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 53) President and Chief Executive none
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 Investment
Company Act of 1940. 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
-18-
<PAGE>
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 12, 1999, 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 17.7% of the then-outstanding shares of the Fund and Charles
Schwab & Co., Inc., 101 Montgomery Street, San Francisco, California 94104,
owned of record 34.2% of the then-outstanding shares of the Fund. As a result,
Charles Schwab & Co., Inc., may be deemed to control the Fund.
INVESTMENT ADVISOR
T. Leavell & Associates, Inc. (the "Advisor") supervises the Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement"). The
Advisory Agreement is effective until April 1, 2000 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, 1999, 1998 and 1997, the
Fund paid the Advisor advisory fees of $48,813 (which was net of voluntary fees
waivers of $21,089), $46,538 (net of voluntary fee waivers of $18,821), and
$36,816 (net of voluntary fee waivers of $19,812), respectively.
-19-
<PAGE>
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
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
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 maintains the
records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions
-20-
<PAGE>
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, 1999, 1998 and 1997,
the Administrator received from the Fund fees of $29,975, $28,029 and $24,513,
respectively.
OTHER SERVICES
The firm of Tait, Weller & Baker, Eight Penn Center Plaza, 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 Firstar 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.
Subject to the
-21-
<PAGE>
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 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 Fund has
adopted policies which allow the Advisor to 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.
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.
-22-
<PAGE>
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.
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 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.
-23-
<PAGE>
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.
PURCHASE OF SHARES
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.
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.
-24-
<PAGE>
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.
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
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<PAGE>
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.
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
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<PAGE>
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.
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, 1999, the Fund had capital loss carryforwards for federal income
tax purposes of $199,283, which expire through the year 2007. 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
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<PAGE>
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 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.
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 and federal income tax
implications may apply. You should consult your tax advisor for further
information.
CAPITAL SHARES AND VOTING
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 Declaration of 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
-28-
<PAGE>
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
-29-
<PAGE>
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.
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.
-30-
<PAGE>
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.
CALCULATION OF PERFORMANCE DATA
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,
1999, for the five year period ended March 31, 1999 and for the period since
inception (January 15, 1993) to March 31, 1999 are 4.73%, 5.52% and 5.15%,
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
-31-
<PAGE>
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, 1999 was 3.62%.
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, 1999, based on the highest
marginal combined federal and Alabama income tax rate, was 6.31%.
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. The maximum rating is five stars, and ratings are effective for
two weeks.
-32-
<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
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
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<PAGE>
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.
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, 1999, together with the report of the independent
accountants thereon, are included on the following pages.
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<PAGE>
The Government Street Funds
The Alabama Tax Free Bond Fund
------------------------------
No Load Mutual Funds
Annual Report
March 31, 1999
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, 1999.
The Government Street Equity Fund
- ---------------------------------
We are proud to report that The Government Street Equity Fund has received
a four star rating from Morningstar, Inc. for the 1, 3 and 5 year periods
coinciding with the end of its fiscal year on March 31, 1999. The Morningstar
ratings reflect risk-adjusted performance and are subject to change every month.
Ratings are calculated for the Fund's total annual return in excess of the
90-day T-bill return with fee adjustments and a risk factor that reflects Fund
performance below the 90-day T-bill return. A four star rating places the Fund
in the top 32.5% of all domestic stock funds measured. For the five year period
ended March 31, 1999, that universe consisted of 1,810 common stock mutual
funds.
For the year ended March 31, 1999, The Government Street Equity Fund
achieved a solid investment return of 14.8%. This compares favorably with the
Lipper Growth and Income Fund Index whose return was 6.8% for the same twelve
month period.
During 1998 and the first quarter of 1999, common stocks continued their
recent trend of larger capitalization stocks performing well with the broader
market lagging. Most indicative of this phenomenon, perhaps, was the investment
return of the S&P 500 Index. This index-- which is capitalization weighted-- had
a total return of 18.5% for the twelve months ended March 31, 1999; however, on
an equal weighted basis, the S&P 500 would have achieved a return of only 1.9%
for the same period.
In addition, growth stocks have recently outperformed value stocks to an
extent that has not been experienced in at least 20 years. For example, the
average "large growth" fund achieved a return of 26.1% for the 12 months through
March; for the same period, however, the average "small value" fund fell 22.7%.
This extreme disparity is evident within The Government Street Equity Fund's
portfolio. For the year ended March 31, 1999, the return of the growth stocks in
the Fund was 30.4%, while the return of the Fund's value stocks was a mere 1.5%.
It is unlikely that the U.S. stock market will continue indefinitely to be
driven by the narrow leadership of a handful of large capitalization stocks; nor
is it reasonable to expect that growth stocks will continue to outperform value
stocks as they have over the past 18 months.
Looking ahead, it probably would be foolish to predict a continuation of
the recent record setting pace experienced in the stock market. However, the
fundamental economic environment in our country is so healthy that it is equally
difficult to maintain strong negative sentiments about the market. Regardless of
what may occur in the short run, we continue to be positive with respect to
potential long-term growth in equity markets.
The Government Street Equity Fund is currently invested in approximately
120 companies. These investments are spread over most areas of the economy
thereby insuring broad diversification of risk. All of these companies are
quality representatives of their respective industries, and each has passed a
number of fundamental financial and technical screens used in its selection.
During the recent fiscal year, the Fund experienced a turnover rate of only
22%. At year end, the net assets of the Fund were $90,707,450; net asset value
per share was $48.10.
The Government Street Bond Fund
- -------------------------------
Following the rally in U.S. Treasury securities that occurred during the
latter part of 1998, bond investors began 1999 with optimism. After all,
inflation continued to be low, the possibility of lower interest rates seemed
likely, and there was a growing feeling among analysts that the U.S. economy
would be slowing throughout the year.
1
<PAGE>
However, these economic conditions actually resulted in a shift in investor
sentiment. As the strength in the U.S. economy became more apparent and as
global economies seemed to improve, fewer investors sought the safety of U.S.
Treasuries. During February, 1999, the Lehman Brothers Treasury Index
experienced a loss of 2.6%-- the worst month for U.S. Treasuries in 18 years.
The sell-off in Treasuries affected most other bonds which also fell in price
during the quarter.
Despite these reverses in the bond market during 1999's first calendar
quarter, The Government Street Bond Fund completed its fiscal year at March 31
with a total return of 5.38%. For this same period, the return of the Lehman
Government/Corporate Intermediate Bond Index was 6.56%. The Fund's ratio of net
investment income to average net assets was 6.01%.
For its fiscal year ended March 31, 1999, 97.7% of The Government Street
Bond Fund's assets were invested in securities rated A or better with over 55%
rated AAA. The average maturity and duration of the Fund were 5.8 years and 4.4
years, respectively. The net assets of the Fund were $43,040,526; net asset
value per share was $20.90. The ratio of expenses to average net assets was
0.73%.
The Alabama Tax Free Bond Fund
- ------------------------------
The Alabama Tax Free Bond Fund was ranked by Lipper Analytical Services,
Inc. as the number one Alabama municipal debt fund based on total return for the
year ended December 31, 1998. Lipper provides mutual fund data and rankings to
The Wall Street Journal and other national financial publications.
This Fund remains the only no-load Alabama municipal bond fund. It invests
in high grade Alabama tax-exempt bonds which carry a Moody's or Standard and
Poor's rating of A or better. As of March 31, 1999, more than half of the Fund's
assets were rated AAA.
The net assets of the Fund as of March 31, 1999 were $21,559,972; the net
asset value per share was $10.54. The weighted average maturity of the Fund's
portfolio was 7.2 years-- an average maturity in keeping with its intermediate
term objective.
The total return of the Fund for its fiscal year ended March 31, 1999 was
4.73%. For the same twelve months period, the Lehman Three Year and Five Year
Indices achieved returns of 5.28% and 5.98%, respectively. The ratio of net
investment income to average net assets was 4.16%. For an Alabama investor in
the maximum combined federal and state income tax bracket of 42.6%, that yield's
taxable equivalent was 7.25%.
Tax-exempt municipal securities continue to provide an attractive option
for investors who are seeking stability of principal as well as income which is
sheltered from federal and state income taxes. Demographic trend suggests that
the interest in such securities will continue to grow in the years ahead as the
aging population focuses increasingly on principal preservation and generation
of income.
Thank you for your continued confidence in The Government Street Funds and
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 Street Funds
The Alabama Tax Free Bond Fund
2
<PAGE>
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
3/99
------
The Government Street Equity Fund $29,816
Standard & Poor's 500 Index $40,940
Consumer Price Index $12,144
- --------------------------------------------------------------------------------
-------------------------------------
The Government Street Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
14.81% 20.32% 15.06%
-------------------------------------
*Initial public offering of shares was June 3, 1991.
Past performance is not predictive of future performance.
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
3/99
------
The Government Street Bond Fund $17,002
Lehman Government/Corporate Intermediate Bond Index $17,611
90-Day Treasury Bill Index $14,453
- --------------------------------------------------------------------------------
-------------------------------------
The Government Street Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
5.38% 6.60% 7.03%
-------------------------------------
*Initial public offering of shares was June 3, 1991.
Past performance is not predictive of future performance.
3
<PAGE>
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
3/99
------
The Alabama Tax Free Bond Fund $13,661
Lehman 7-Year G.O. Municipal Bond Index $14,725
Lehman 3-Year Municipal Bond Index $13,599
- --------------------------------------------------------------------------------
-------------------------------------
The Alabama Tax Free Bond Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
4.73% 5.52% 5.15%
-------------------------------------
*Initial public offering of shares was January 15, 1993.
Past performance is not predictive of future performance.
4
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1999
=====================================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- -----------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C>
At acquisition cost ............................. $45,491,392 $ 41,634,311 $ 20,698,028
=========== ============ ============
At value (Note 1) ............................... $86,838,733 $ 41,770,060 $ 21,515,625
Investments in repurchase agreements (Note 1) ...... 3,833,000 888,000 --
Cash ............................................... 987 898 --
Interest receivable ................................ 399 704,668 273,457
Dividends receivable ............................... 88,884 -- --
Receivable for capital shares sold ................. 50,302 55,344 350
Other assets ....................................... 5,328 3,813 1,338
----------- ------------ ------------
TOTAL ASSETS .................................... 90,817,633 43,422,783 21,790,770
----------- ------------ ------------
LIABILITIES
Dividends payable .................................. 3,238 13,377 16,933
Distributions payable .............................. 35,888 -- --
Payable for securities purchased ................... -- 256,008 199,361
Payable for capital shares redeemed ................ 1,329 77,002 1,500
Accrued investment advisory fees (Note 3) .......... 45,990 18,043 5,087
Accrued administrative fees (Note 3) ............... 12,850 2,700 2,650
Other accrued expenses and liabilities ............. 10,888 15,127 5,267
----------- ------------ ------------
TOTAL LIABILITIES ............................... 110,183 382,257 230,798
----------- ------------ ------------
NET ASSETS ......................................... $90,707,450 $ 43,040,526 $ 21,559,972
=========== ============ ============
Net assets consist of:
Paid-in capital .................................... $49,360,109 $ 43,458,038 $ 20,941,658
Accumulated net realized losses
from security transactions ...................... -- (553,261) (199,283)
Net unrealized appreciation on investments ......... 41,347,341 135,749 817,597
----------- ------------ ------------
Net assets ......................................... $90,707,450 $ 43,040,526 $ 21,559,972
=========== ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ...... 1,885,753 2,059,224 2,044,597
=========== ============ ============
Net asset value, offering price and
redemption price per share (Note 1) ............. $ 48.10 $ 20.90 $ 10.54
=========== ============ ============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF OPERATIONS
Year Ended March 31, 1999
=======================================================================================
Government Government Alabama
Street Street Tax Free
Equity Bond Bond
Fund Fund Fund
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest ............................. $ 169,115 $ 2,665,381 $ 960,084
Dividends ............................ 995,184 -- --
----------- ----------- -----------
TOTAL INVESTMENT INCOME ........... 1,164,299 2,665,381 960,084
----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 3) .... 478,172 197,590 69,902
Administrative fees (Note 3) ......... 138,379 29,702 29,975
Professional fees .................... 11,145 11,145 8,045
Pricing costs ........................ 2,671 11,810 14,038
Trustees' fees and expenses .......... 8,220 8,220 8,220
Printing of shareholder reports ...... 8,199 6,741 7,843
Custodian fees ....................... 11,302 5,188 3,886
Postage and supplies ................. 6,911 6,229 5,475
Registration fees .................... 2,957 3,222 1,067
Insurance expense .................... 2,802 2,179 1,557
Other expenses ....................... 6,651 6,456 899
----------- ----------- -----------
TOTAL EXPENSES .................... 677,409 288,482 150,907
Fees waived by the Adviser (Note 3) .. -- -- (21,089)
----------- ----------- -----------
NET EXPENSES ...................... 677,409 288,482 129,818
----------- ----------- -----------
NET INVESTMENT INCOME ................... 486,890 2,376,899 830,266
----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses)
from security transactions ........ 1,154,015 (119,151) (347)
Net change in unrealized appreciation/
depreciation on investments ....... 9,951,369 (251,151) 86,422
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS .............. 11,105,384 (370,302) 86,075
----------- ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ...................... $11,592,274 $ 2,006,597 $ 916,341
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
THE GOVERNMENT STREET FUNDS
THE ALABAMA TAX FREE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 1999 and 1998
===================================================================================================================================
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,
1999 1998 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income ................. $ 486,890 $ 516,281 $ 2,376,899 $ 2,087,331 $ 830,266 $ 782,390
Net realized gains (losses)
from security transactions ......... 1,154,015 2,517,491 (119,151) (36,286) (347) 1,079
Net change in unrealized appreciation/
depreciation on investments ........ 9,951,369 17,143,907 (251,151) 906,779 86,422 546,731
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets from operations 11,592,274 20,177,679 2,006,597 2,957,824 916,341 1,330,200
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............ (487,774) (527,419) (2,380,755) (2,095,202) (830,266) (782,390)
From net realized gains ............... (3,083,650) (1,732,108) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Decrease in net assets from
distributions to shareholders ......... (3,571,424) (2,259,527) (2,380,755) (2,095,202) (830,266) (782,390)
------------ ------------ ------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............. 10,535,714 10,616,273 7,618,281 7,696,201 3,032,760 2,804,374
Net asset value of shares issued in
reinvestment of distributions
to shareholders .................... 3,411,170 2,175,993 2,146,286 1,871,979 609,745 555,482
Payments for shares redeemed .......... (6,903,321) (4,696,332) (3,257,836) (2,965,314) (2,106,904) (770,028)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ............ 7,043,563 8,095,934 6,506,731 6,602,866 1,535,601 2,589,828
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ............. 15,064,413 26,014,086 6,132,573 7,465,488 1,621,676 3,137,638
NET ASSETS
Beginning of year ..................... 75,643,037 49,628,951 36,907,953 29,442,465 19,938,296 16,800,658
------------ ------------ ------------ ------------ ------------ ------------
End of year ........................... $ 90,707,450 $ 75,643,037 $ 43,040,526 $ 36,907,953 $ 21,559,972 $ 19,938,296
============ ============ ============ ============ ============ ============
UNDISTRIBUTED NET
INVESTMENT INCOME ..................... $ -- $ 884 $ -- $ 3,856 $ -- $ --
============ ============ ============ ============ ============ ============
Capital share activity
Sold .................................. 233,010 268,759 359,195 365,904 286,831 270,970
Reinvested ............................ 77,139 56,533 101,333 89,389 57,694 53,306
Redeemed .............................. (151,673) (121,016) (153,761) (141,456) (199,887) (73,918)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in shares outstanding .... 158,476 204,276 306,767 313,837 144,638 250,358
Shares outstanding, beginning of year . 1,727,277 1,523,001 1,752,457 1,438,620 1,899,959 1,649,601
------------ ------------ ------------ ------------ ------------ ------------
Shares outstanding, end of year ....... 1,885,753 1,727,277 2,059,224 1,752,457 2,044,597 1,899,959
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
7
<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,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 43.79 $ 32.59 $ 29.41 $ 23.87 $ 22.69
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 0.27 0.32 0.37 0.40 0.38
Net realized and unrealized
gains on investments ................... 6.01 12.28 4.50 5.75 1.19
-------- -------- -------- -------- --------
Total from investment operations ............. 6.28 12.60 4.87 6.15 1.57
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (0.27) (0.32) (0.36) (0.40) (0.39)
Distributions from net realized gains ..... (1.70) (1.08) (1.33) (0.21) --
-------- -------- -------- -------- --------
Total distributions .......................... (1.97) (1.40) (1.69) (0.61) (0.39)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 48.10 $ 43.79 $ 32.59 $ 29.41 $ 23.87
======== ======== ======== ======== ========
Total return ................................. 14.81% 39.31% 16.94% 25.96% 7.02%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 90,707 $ 75,643 $ 49,629 $ 41,421 $ 31,473
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) 0.85% 0.86% 0.89% 0.94% 0.91%
Ratio of net investment income
to average net assets ..................... 0.61% 0.82% 1.17% 1.50% 1.71%
Portfolio turnover rate ...................... 22% 18% 20% 31% 55%
</TABLE>
(a) In an effort to reduce the total operating expenses of the Fund, a portion
of the Fund's administrative and 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 1.00% for the year ended March 31, 1995.
See accompanying notes to financial statements.
8
<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,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 21.06 $ 20.47 $ 20.87 $ 20.33 $ 20.87
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 1.27 1.32 1.34 1.35 1.35
Net realized and unrealized
gains (losses) on investments .......... (0.16) 0.60 (0.40) 0.54 (0.53)
-------- -------- -------- -------- --------
Total from investment operations ............. 1.11 1.92 0.94 1.89 0.82
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (1.27) (1.33) (1.34) (1.35) (1.36)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 20.90 $ 21.06 $ 20.47 $ 20.87 $ 20.33
======== ======== ======== ======== ========
Total return ................................. 5.38% 9.61% 4.60% 9.43% 4.12%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 43,041 $ 36,908 $ 29,442 $ 28,718 $ 27,780
======== ======== ======== ======== ========
Ratio of net expenses to average net assets .. 0.73% 0.74% 0.75% 0.76% 0.85%
Ratio of net investment income
to average net assets ..................... 6.01% 6.35% 6.44% 6.38% 6.68%
Portfolio turnover rate ...................... 17% 10% 20% 10% 11%
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
THE ALABAMA TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
==================================================================================================================
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
- ------------------------------------------------------------------------------------------------------------------
Years Ended March 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 10.49 $ 10.18 $ 10.23 $ 9.96 $ 9.96
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ..................... 0.44 0.44 0.43 0.42 0.45
Net realized and unrealized
gains (losses) on investments .......... 0.05 0.31 (0.05) 0.27 --
-------- -------- -------- -------- --------
Total from investment operations ............. 0.49 0.75 0.38 0.69 0.45
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ...... (0.44) (0.44) (0.43) (0.42) (0.45)
-------- -------- -------- -------- --------
Net asset value at end of year ............... $ 10.54 $ 10.49 $ 10.18 $ 10.23 $ 9.96
======== ======== ======== ======== ========
Total return ................................. 4.73% 7.44% 3.82% 7.02% 4.66%
======== ======== ======== ======== ========
Net assets at end of year (000's) ............ $ 21,560 $ 19,938 $ 16,801 $ 15,480 $ 12,816
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(a) 0.65% 0.65% 0.66% 0.75% 0.75%
Ratio of net investment income
to average net assets ..................... 4.16% 4.19% 4.24% 4.11% 4.56%
Portfolio turnover rate ...................... 7% 2% 6% 4% 36%
</TABLE>
(a) Absent investment advisory fees waived and/or expenses reimbursed by the
Adviser, the ratios of expenses to average net assets would have been
0.76%, 0.75%, 0.78%, 0.86% and 1.05% for the years ended March 31, 1999,
1998, 1997, 1996 and 1995, respectively (Note 3).
See accompanying notes to financial statements.
10
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 95.7% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 0.5%
6,000 Omnicom Group, Inc. ......................... $ 479,625
-----------
AEROSPACE -- 0.7%
17,000 Boeing Company .............................. 580,125
-----------
CHEMICALS AND DRUGS -- 15.4%
40,000 Becton Dickinson & Company .................. 1,532,500
15,000 Biomet, Inc.(a) ............................. 629,063
30,000 Cardinal Health, Inc. ....................... 1,980,000
18,000 duPont (E.I.) de Nemours & Company .......... 1,045,125
16,000 Eli Lilly & Company ......................... 1,358,000
8,000 Goodrich (B.F.) Company ..................... 274,500
15,000 Johnson & Johnson ........................... 1,405,312
19,400 Merck & Company, Inc. ....................... 1,555,638
10,500 Monsanto Company ............................ 482,344
5,500 Pfizer, Inc. ................................ 763,125
40,000 Schering-Plough Corporation ................. 2,212,500
15,000 Sigma-Aldrich Corporation ................... 438,750
2,700 Waters Corporation .......................... 283,669
-----------
13,960,526
-----------
CONSTRUCTION -- 4.2%
25,500 Blount, Inc. - Class A ...................... 736,312
20,000 Caterpiller, Inc. ........................... 918,750
25,390 Clayton Homes, Inc. ......................... 280,877
3,000 Florida Rock Industries, Inc. ............... 102,375
8,500 Kaufman & Broad Home Corporation ............ 191,781
10,000 Lowe's Companies, Inc. ...................... 605,000
7,000 Masco Corporation ........................... 197,750
25,600 Valspar Corporation ......................... 808,000
-----------
3,840,845
-----------
CONSUMER PRODUCTS -- 7.6%
20,000 Archer-Daniels-Midland Company .............. 293,750
25,000 Belo (A.H.) Corporation - Class A ........... 456,250
4,000 Clorox Company .............................. 468,750
12,000 General Motors Corporation .................. 1,042,500
15,000 Gillette Company ............................ 891,563
5,000 Hewlett-Packard Company ..................... 339,062
3,000 Macromedia, Inc.(a) ......................... 135,938
3,000 Maytag Corporation .......................... 181,125
12,000 Microsoft Corporation(a) .................... 1,075,500
9,000 Newell Company .............................. 427,500
5,000 OshKosh B'Gosh, Inc. - Class A .............. 88,438
15,000 Procter & Gamble Company .................... 1,469,062
-----------
6,869,438
-----------
DURABLE GOODS -- 12.9%
12,000 Advanced Micro Devices, Inc.(a) ............. 186,000
47,000 Cisco Systems, Inc.(a) ...................... 5,149,437
6,000 Costco Companies(a) ......................... 549,375
23,000 General Electric Company .................... 2,544,375
6,000 Ingersoll-Rand Company ...................... 297,750
9,500 Intel Corporation ........................... 1,131,687
3,000 International Business Machines Corporation . 531,750
11,500 Raytheon Company - Class B .................. 674,188
7,500 Shared Medical Systems, Inc. ................ 417,656
5,118 SPX Corporation ............................. 258,139
-----------
11,740,357
-----------
11
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 95.7% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
ELECTRONICS -- 2.9%
15,177 AMP, Inc. ................................... $ 814,815
16,000 Koninklijke (Royal) Philips Electronics N.V . 1,319,000
7,000 Motorola, Inc. .............................. 512,750
-----------
2,646,565
-----------
FINANCIAL -- 15.2%
9,000 Aetna, Inc. ................................. 747,000
30,000 AFLAC, Inc. ................................. 1,633,125
10,000 American Express Company .................... 1,175,000
4,000 Charles Schwab Corporation (The) ............ 384,500
12,000 Citigroup, Inc. ............................. 766,500
28,000 Firstar Corporation ......................... 2,506,000
20,000 Fleet Financial Group, Inc. ................. 752,500
23,000 Freddie Mac ................................. 1,313,875
7,500 Marsh & McLennan Companies, Inc. ............ 556,406
16,000 MBNA Corporation ............................ 382,000
25,000 Mellon Bank Corporation ..................... 1,759,375
21,000 Synovus Financial Corporation ............... 429,187
15,000 Torchmark Corporation ....................... 474,375
11,000 Transamerica Corporation .................... 781,000
853 Waddell & Reed Financial, Inc. - Class A .... 17,486
3,673 Waddell & Reed Financial, Inc. - Class B .... 73,001
-----------
13,751,330
-----------
FOOD/BEVERAGES -- 2.7%
7,500 Anheuser-Busch Companies, Inc. .............. 571,406
12,000 Campbell Soup Company ....................... 488,250
40,000 Coca-Cola Enterprises ....................... 1,210,000
7,000 Pilgrim's Pride Corporation - Class B ....... 115,063
3,000 SYSCO Corporation ........................... 78,937
-----------
2,463,656
-----------
HOTELS -- 0.2%
6,000 Marriott International, Inc. - Class A ...... 201,750
-----------
MANUFACTURING -- 1.6%
6,000 Johnson Controls, Inc. ...................... 374,250
10,000 Leggett & Platt, Inc. ....................... 200,000
19,000 Pall Corporation ............................ 314,688
8,000 Tyco International Ltd. ..................... 574,000
-----------
1,462,938
-----------
METAL AND MINING -- 1.1%
14,000 Alcoa, Inc. ................................. 576,625
10,000 Newmont Mining Corporation .................. 175,000
5,000 Phelps Dodge Corporation .................... 246,250
-----------
997,875
-----------
MULTIMEDIA -- 0.5%
7,000 Meredith Corporation ........................ 220,063
3,000 Viacom, Inc. - Class A(a) ................... 249,938
-----------
470,001
-----------
OIL/ENERGY -- 5.2%
16,541 BP Amoco Plc ................................ 1,669,607
5,000 Burlington Resources, Inc. .................. 199,687
13,000 Chevron Corporation ......................... 1,149,687
14,650 Exxon Corporation ........................... 1,033,741
11,500 Halliburton Company ......................... 442,750
10,000 Helmerich & Payne, Inc. ..................... 226,875
-----------
4,722,347
-----------
12
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 95.7% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS -- 1.2%
5,000 Georgia Pacific Corporation, Timber Group ... $ 112,188
7,000 International Paper Company ................. 295,313
5,000 Mead Corporation ............................ 153,750
3,000 Union Camp Corporation ...................... 201,375
8,000 Willamette Industries, Inc. ................. 302,000
-----------
1,064,626
-----------
RACETRACKS -- 0.4%
9,000 Speedway Motorsports, Inc.(a) ............... 371,250
-----------
RETAIL -- 8.3%
17,000 American Stores Company ..................... 561,000
7,000 AutoZone, Inc.(a) ........................... 212,625
20,000 CBRL Group, Inc. ............................ 360,000
9,000 Circuit City Stores - Circuit City Group .... 689,625
33,000 Home Depot, Inc. ............................ 429,187
10,000 Nike, Inc. - Class B ........................ 576,875
8,000 Sears, Roebuck & Company .................... 361,500
15,000 Wal-Mart Stores, Inc. ....................... 1,382,813
40,000 Walgreen Company ............................ 1,130,000
6,000 Williams-Sonoma, Inc.(a) .................... 169,500
-----------
7,498,188
-----------
SERVICES - COMPUTER -- 3.7%
22,200 Automatic Data Processing, Inc. ............. 918,525
16,000 Ceridian Corporation ........................ 585,000
24,000 Computer Sciences Corporation(a) ............ 1,324,500
8,500 Electronic Data Systems Corporation ......... 413,844
6,000 Wallace Computer Services, Inc. ............. 118,875
-----------
3,360,744
-----------
SERVICES - CONSUMER -- 0.4%
6,000 HEALTHSOUTH Corporation(a) .................. 62,250
7,000 Waste Management, Inc. ...................... 310,625
-----------
372,875
-----------
TELECOMMUNICATION EQUIPMENT -- 2.8%
2,000 Lucent Technologies, Inc. ................... 215,500
12,000 Northern Telecom Limited .................... 745,500
18,000 Scientific-Atlanta, Inc. .................... 490,500
11,500 Tellabs, Inc. ............................... 1,124,125
-----------
2,575,625
-----------
TRANSPORTATION -- 1.6%
15,500 FDX Corporation(a) .......................... 1,438,594
-----------
UTILITIES -- 6.6%
25,000 Ameritech Corporation ....................... 1,446,875
3,000 AT&T Corporation ............................ 239,438
23,000 BellSouth Corporation ....................... 921,437
15,490 Duke Energy Corporation ..................... 846,141
4,000 MCI WorldCom, Inc.(a) ....................... 354,250
26,000 SBC Communications, Inc. .................... 1,225,250
17,000 US WEST, Inc. ............................... 936,062
-----------
5,969,453
-----------
TOTAL COMMON STOCKS (COST $45,491,392) ........ $86,838,733
-----------
13
<PAGE>
THE GOVERNMENT STREET EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
Face
Amount REPURCHASE AGREEMENTS(b) -- 4.2% Value
- --------------------------------------------------------------------------------
Firstar Bank,
$3,833,000 3.75%, dated 03/31/1999, due 04/01/1999,
repurchase proceeds $3,833,399
(Cost $3,833,000) ......................... $ 3,833,000
-----------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 99.9% ................ $90,671,733
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% . 35,717
-----------
NET ASSETS -- 100.0% .......................... $90,707,450
===========
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,000 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $3,970,682.
See accompanying notes to financial statements.
14
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
PAR VALUE U.S. TREASURY AND AGENCY OBLIGATIONS -- 41.3% VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 8.5%
$ 225,000 7.00%, due 04/15/1999 ....................... $ 225,211
150,000 6.375%, due 07/15/1999 ...................... 150,750
100,000 8.00%, due 08/15/1999 ....................... 101,187
250,000 7.50%, due 10/31/1999 ....................... 253,828
50,000 7.875%, due 11/15/1999 ...................... 50,937
100,000 8.50%, due 02/15/2000 ....................... 103,063
20,000 8.75%, due 08/15/2000 ....................... 20,981
50,000 8.50%, due 11/15/2000 ....................... 52,672
140,000 8.00%, due 05/15/2001 ....................... 148,225
125,000 7.875%, due 08/15/2001 ...................... 132,695
850,000 5.75%, due 04/30/2003 ....................... 866,204
750,000 5.875%, due 11/15/2005 ...................... 770,860
750,000 5.50%, due 02/15/2008 ....................... 757,735
-----------
3,634,348
-----------
FEDERAL FARM CREDIT BANK BONDS -- 1.9%
500,000 6.00%, due 01/07/2008 ....................... 503,585
325,000 6.06%, due 05/28/2013 ....................... 324,441
-----------
828,026
-----------
FEDERAL HOME LOAN BANK BONDS -- 7.5%
500,000 7.57%, due 08/19/2004 ....................... 544,676
500,000 6.045%, due 12/10/2004 ...................... 510,163
750,000 5.925%, due 04/09/2008 ...................... 752,374
500,000 5.42%, due 09/23/2008 ....................... 483,462
500,000 5.52%, due 09/23/2008 ....................... 487,082
500,000 5.038%, due 10/14/2008 ...................... 469,487
-----------
3,247,244
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION BONDS -- 7.1%
500,000 6.345%, due 11/01/2005 ...................... 517,749
300,000 7.52%, due 04/21/2006 ....................... 300,420
500,000 7.55%, due 04/26/2006 ....................... 500,885
895,000 7.44%, due 09/20/2006 ....................... 930,106
800,000 7.04%, due 01/09/2007 ....................... 822,390
-----------
3,071,550
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BONDS -- 15.2%
100,000 8.45%, due 07/12/1999 ....................... 100,980
500,000 6.83%, due 04/02/2003 ....................... 500,000
500,000 6.63%, due 06/20/2005 ....................... 520,881
500,000 7.90%, due 06/28/2006 ....................... 499,744
650,000 7.65%, due 10/06/2006 ....................... 659,322
500,000 7.36%, due 02/07/2007 ....................... 504,553
400,000 7.70%, due 04/10/2007 ....................... 407,815
500,000 6.62%, due 06/25/2007 ....................... 524,779
500,000 7.16%, due 06/26/2007 ....................... 505,774
500,000 7.00%, due 07/17/2007 ....................... 506,043
750,000 6.08%, due 12/15/2010 ....................... 758,662
400,000 6.80%, due 08/27/2012 ....................... 416,869
600,000 6.875%, due 09/24/2012 ...................... 623,644
-----------
6,529,066
-----------
PRIVATE EXPORT FUNDING BONDS-- 1.1%
470,000 7.90%, due 03/31/2000 ....................... 482,162
-----------
TOTAL U.S. TREASURY AND AGENCY OBLIGATIONS
(COST $17,875,130) .......................... $17,792,396
-----------
15
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE MORTGAGE-BACKED SECURITIES -- 11.7% VALUE
- --------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 11.7%
$ 17,332 Pool #15032, 7.50%, due 02/15/2007 .......... $ 17,839
432,045 Pool #438434, 6.50%, due 01/01/2013 ......... 437,919
14,205 Pool #176413, 7.50%, due 09/15/2016 ......... 14,620
18,723 Pool #170784, 8.00%, due 12/15/2016 ......... 19,497
13,842 Pool #181540, 8.00%, due 02/15/2017 ......... 14,414
496,979 Pool #493659, 6.50%, due 12/15/2018 ......... 494,669
482,719 Pool #476695, 6.50%, due 10/15/2023 ......... 480,476
442,073 Pool #366710, 6.50%, due 02/01/2024 ......... 440,019
545,800 Pool #453826, 7.25%, due 09/01/2027 ......... 557,551
868,998 Pool #412360, 7.00%, due 11/15/2027 ......... 882,271
687,931 Pool #454162, 7.00%, due 05/15/2028 ......... 698,439
499,974 Pool #158794, 7.00%, due 09/15/2028 ......... 507,610
496,851 Pool #48760, 6.50%, due 12/15/2028 .......... 494,542
-----------
TOTAL MORTGAGE-BACKED SECURITIES (COST $5,080,623) $ 5,059,866
-----------
================================================================================
PAR VALUE CORPORATE BONDS -- 44.0% VALUE
- --------------------------------------------------------------------------------
FINANCE -- 23.0%
American Express Company,
$ 350,000 8.50%, due 08/15/2001 ..................... $ 370,985
-----------
AmSouth Bancorp,
425,000 9.375%, due 05/01/1999 .................... 426,163
550,000 7.75%, due 05/15/2004 ..................... 583,520
-----------
1,009,683
-----------
Associate Corporation,
500,000 6.25%, due 11/01/2008 ..................... 498,307
-----------
Banc One Corporation,
600,000 7.00%, due 07/15/2005 ..................... 625,998
-----------
BankAmerica Corporation,
496,000 8.375%, due 03/15/2002 .................... 528,900
-----------
Bear Stearns Company,
170,000 9.375%, due 06/01/2001 .................... 181,542
-----------
General Electric Capital Corporation,
100,000 7.24%, due 01/15/2002 ..................... 104,331
150,000 7.50%, due 03/15/2002 ..................... 157,796
-----------
262,127
-----------
Merrill Lynch & Company, Inc.,
745,000 7.375%, due 08/17/2002 .................... 777,864
-----------
J.P. Morgan & Company,
500,000 7.25%, due 01/15/2002 ..................... 515,948
500,000 6.00%, due 01/15/2009 ..................... 482,297
-----------
998,245
-----------
NationsBank,
550,000 7.625%, due 04/15/2005 .................... 591,488
-----------
Regions Financial Corporation,
350,000 7.80%, due 12/01/2002 ..................... 368,578
-----------
16
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VALUE CORPORATE BONDS -- 44.0% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Salomon, Inc.,
$ 400,000 7.25%, due 01/15/2000 ..................... $ 405,222
480,000 7.50%, due 02/01/2003 ..................... 502,899
-----------
908,121
-----------
Sears Roebuck Acceptance Corporation,
700,000 6.00%, due 03/20/2003 ..................... 700,406
-----------
SouthTrust Bank of Alabama, N.A.,
665,000 7.00%, due 11/15/2008 ..................... 683,779
-----------
Transamerica Financial Corporation,
785,000 7.50%, due 03/15/2004 ..................... 827,521
-----------
Wachovia Corporation,
535,000 7.00%, due 12/15/1999 ..................... 540,881
-----------
TOTAL FINANCE CORPORATE BONDS ................. 9,874,425
-----------
INDUSTRIAL -- 16.1%
BP America, Inc.,
265,000 8.50%, due 04/15/2001 ..................... 280,286
-----------
Coca-Cola Company,
500,000 6.625%, due 08/01/2004 .................... 512,830
-----------
duPont (E.I.) de Nemours & Company,
150,000 9.15%, due 04/15/2000 ..................... 155,641
300,000 6.75%, due 10/15/2002 ..................... 310,434
-----------
466,075
-----------
Hanson Overseas,
1,100,000 7.375%, due 01/15/2003 .................... 1,150,009
-----------
International Business Machines Corporation,
1,000,000 7.25%, due 11/01/2002 ..................... 1,046,058
-----------
Kimberly-Clark Corporation,
240,000 8.625%, due 05/01/2001 .................... 255,879
-----------
Limited, Inc.,
150,000 8.875%, due 08/15/1999 .................... 151,751
-----------
Mobil Corporation,
100,000 8.375%, due 02/12/2001 .................... 104,779
-----------
Philip Morris Companies, Inc.,
175,000 7.75%, due 05/01/1999 ..................... 175,284
700,000 7.125%, due 10/01/2004 .................... 727,870
-----------
903,154
-----------
Procter & Gamble Company,
150,000 8.70%, due 08/01/2001 ..................... 161,011
-----------
17
<PAGE>
THE GOVERNMENT STREET BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
Par Value CORPORATE BONDS -- 44.0% (Continued) Value
- --------------------------------------------------------------------------------
Raytheon Company,
$ 800,000 6.50%, due 07/15/2005 ..................... $ 815,058
-----------
Wal-Mart Stores, Inc.,
170,000 9.10%, due 07/15/2000 ..................... 177,733
100,000 8.625%, due 04/01/2001 .................... 105,890
745,000 7.50%, due 05/15/2004 ..................... 806,212
-----------
1,089,835
-----------
TOTAL INDUSTRIAL CORPORATE BONDS .............. 6,936,725
-----------
UTILITY -- 4.9%
AT&T Corporation,
250,000 6.00%, due 03/15/2009 ..................... 248,439
-----------
Consolidated Edison,
785,000 7.60%, due 01/15/2000 ..................... 798,281
-----------
Emerson Electric Company,
552,000 6.30%, due 11/01/2005 ..................... 560,893
-----------
Scana Corporation,
500,000 6.05%, due 01/13/2003 ..................... 499,035
-----------
TOTAL UTILITY CORPORATE BONDS ................. 2,106,648
-----------
TOTAL CORPORATE BONDS (COST $18,678,558) ...... $18,917,798
-----------
TOTAL INVESTMENTS AT VALUE
(COST $41,634,311) -- 97.0% ................. $41,770,060
-----------
================================================================================
Face
Amount REPURCHASE AGREEMENTS(a) -- 2.1% Value
- --------------------------------------------------------------------------------
Firstar Bank,
$ 888,000 3.75%, dated 03/31/1999, due 04/01/1999,
repurchase proceeds $888,093 (Cost $888,000) $ 888,000
-----------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 99.1% ................ $42,658,060
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.9% . 382,466
-----------
NET ASSETS -- 100.0% .......................... $43,040,526
===========
(a) Joint repurchase agreement is fully collateralized by $28,093,000 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $919,897.
See accompanying notes to financial statements.
18
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% VALUE
- --------------------------------------------------------------------------------
Alabama Mental Health Finance Auth. Special Tax,
$ 300,000 5.00%, due 05/01/2006 ..................... $ 315,501
-----------
Alabama Special Care Facilities Financing Auth. Rev.,
250,000 5.375%, due 11/01/2012 .................... 257,522
-----------
Alabama State, GO,
100,000 5.70%, due 12/01/2002 ..................... 105,936
-----------
Alabama State Industrial Access Road & Bridge Corp., GO,
100,000 5.25%, due 06/01/2003 ..................... 104,866
-----------
Alabama State Mun. Elec. Auth. Power Supply Rev.,
150,000 5.625%, due 09/01/2000 .................... 154,490
340,000 5.75%, due 09/01/2001 ..................... 355,616
400,000 6.50%, due 09/01/2005, prerefunded
09/01/2001 at 101 ....................... 430,592
-----------
940,698
-----------
Alabama State Public School & College Auth. Rev.,
100,000 4.40%, due 12/01/2000 ..................... 101,748
250,000 5.25%, due 11/01/2005 ..................... 267,325
205,000 5.00%, due 12/01/2005 ..................... 216,267
200,000 5.125%, due 11/01/2010 .................... 210,442
300,000 5.00%, due 11/01/2012 ..................... 308,178
-----------
1,103,960
-----------
Alabama Water Pollution Control Rev.,
25,000 7.00%, due 08/15/2001, prerefunded
08/15/1999 at 100 ....................... 25,360
190,000 6.25%, due 08/15/2004 ..................... 211,054
-----------
236,414
-----------
Anniston, AL, GO,
250,000 5.50%, due 01/01/2004 ..................... 267,287
-----------
Anniston, AL, Regional Medical Center Board Hospital Rev.,
25,000 7.375%, due 07/01/2006, ETM ............... 27,775
-----------
Auburn University, Alabama, Rev.,
25,000 6.10%, due 06/01/1999 ..................... 25,123
150,000 5.20%, due 06/01/2004 ..................... 158,821
325,000 5.25%, due 04/01/2005 ..................... 344,806
-----------
528,750
-----------
Baldwin Co., AL, GO,
200,000 5.85%, due 08/01/2003 ..................... 216,228
400,000 5.00%, due 02/01/2007 ..................... 419,788
200,000 4.55%, due 02/01/2009 ..................... 197,338
-----------
833,354
-----------
Baldwin Co., AL, Board of Education Rev.,
300,000 5.90%, due 12/01/2001 ..................... 304,095
-----------
Birmingham, AL, GO,
100,000 5.80%, due 04/01/2002 ..................... 105,737
200,000 5.90%, due 04/01/2003 ..................... 214,974
-----------
320,711
-----------
19
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Birmingham, AL, Industrial Water Board Rev.,
$ 100,000 5.00%, due 03/01/2001 ..................... $ 102,592
100,000 6.00%, due 07/01/2007 ..................... 112,508
-----------
215,100
-----------
Birmingham, AL, Medical Clinic Board Rev.,
60,000 7.30%, due 07/01/2005, ETM ................ 66,823
-----------
Birmingham, AL, Special Facilities Rev.,
100,000 4.45%, due 06/01/1999 ..................... 100,222
-----------
Birmingham, AL, Waterworks & Sewer Board Rev.,
50,000 5.90%, due 01/01/2003 ..................... 53,698
400,000 6.15%, due 01/01/2006 ..................... 432,168
-----------
485,866
-----------
Birmingham-Southern College, AL,
Private Education Bldg. Auth. Rev.,
500,000 5.10%, due 12/01/2012 ..................... 508,210
-----------
DCH Health Care Auth. of Alabama Rev.,
55,000 5.00%, due 06/01/2004 ..................... 57,358
-----------
Decatur, AL, GO,
300,000 5.00%, due 06/01/2009 ..................... 313,440
-----------
Fairhope, AL, Utility Rev.,
200,000 5.10%, due 12/01/2008 ..................... 207,044
-----------
Florence, AL, School Warrants,
200,000 4.65%, due 12/01/2012 ..................... 197,678
-----------
Greenville, AL, GO,
300,000 5.10%, due 12/01/2009 ..................... 315,360
-----------
Hoover, AL, Board of Education, GO,
400,000 6.00%, due 02/15/2006 ..................... 439,240
-----------
Hoover, AL, Board of Education Special Tax,
200,000 6.625%, due 02/01/2010, prerefunded
02/01/2001 at 102 ....................... 214,550
-----------
Houston Co., AL, GO,
250,000 5.00%, due 07/01/2002 ..................... 259,542
-----------
Huntsville, AL, GO,
115,000 5.15%, due 08/01/2000 ..................... 117,661
100,000 5.20%, due 11/01/2000 ..................... 102,785
500,000 5.50%, due 11/01/2002 ..................... 528,895
100,000 5.90%, due 11/01/2005 ..................... 108,893
300,000 5.40%, due 02/01/2010 ..................... 314,670
200,000 5.25%, due 11/01/2011 ..................... 210,792
-----------
1,383,696
-----------
Huntsville, AL, Electric Systems Rev.,
150,000 6.10%, due 12/01/2000 ..................... 156,517
150,000 5.00%, due 12/01/2003 ..................... 157,232
250,000 4.80%, due 12/01/2012 ..................... 250,522
-----------
564,271
-----------
20
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Huntsville, AL, Water Systems Rev.,
$ 150,000 5.15%, due 05/01/2004 ..................... $ 157,922
150,000 5.25%, due 05/01/2005 ..................... 157,813
200,000 4.70%, due 11/01/2013 ..................... 197,912
-----------
513,647
-----------
Jefferson Co., AL, GO,
150,000 5.55%, due 04/01/2002 ..................... 157,290
100,000 5.00%, due 04/01/2004 ..................... 104,399
-----------
261,689
-----------
Jefferson Co., AL, Board of Education
Capital Outlay Warrants,
300,000 5.70%, due 02/15/2011 ..................... 331,029
-----------
Jefferson Co., AL, Sewer Rev.,
140,000 5.15%, due 09/01/2002 ..................... 146,409
50,000 5.50%, due 09/01/2003, ETM ................ 53,418
300,000 5.75%, due 09/01/2005 ..................... 324,798
-----------
524,625
-----------
Lee Co., AL, GO,
300,000 5.50%, due 02/01/2007 ..................... 323,871
-----------
Madison, AL, Warrants,
325,000 5.55%, due 04/01/2007 ..................... 352,401
200,000 4.40%, due 02/01/2011 ..................... 194,838
400,000 4.85%, due 02/01/2013 ..................... 396,872
-----------
944,111
-----------
Madison Co., AL, Board of Education
Capital Outlay Tax Antic. Warrants,
175,000 5.20%, due 09/01/2004 ..................... 185,568
250,000 5.10%, due 09/01/2011 ..................... 259,818
-----------
445,386
-----------
Mobile, AL, GO,
200,000 5.40%, due 08/15/2000 ..................... 205,622
25,000 6.25%, due 08/01/2001 ..................... 26,490
25,000 6.30%, due 08/01/2001 ..................... 26,517
275,000 6.20%, due 02/15/2007, ETM ................ 308,784
-----------
567,413
-----------
Mobile, AL, Water & Sewer Commissioners Rev.,
55,000 6.30%, due 01/01/2003 ..................... 59,438
-----------
Mobile Co., AL, GO,
50,000 6.10%, due 02/01/2002, prerefunded
02/01/2000 at 102 ....................... 52,175
160,000 6.70%, due 02/01/2011, prerefunded
02/01/2000 at 102 ....................... 167,786
-----------
219,961
-----------
Mobile Co., AL, Board of Education
Capital Outlay Warrants,
400,000 5.00%, due 03/01/2008 ..................... 416,100
-----------
Mobile Co., AL, Gas Tax Antic. Warrants,
100,000 4.50%, due 02/01/2003 ..................... 101,517
-----------
Montgomery, AL, GO,
200,000 4.25%, due 05/01/1999, ETM ................ 200,190
200,000 4.70%, due 05/01/2002 ..................... 205,536
500,000 5.10%, due 10/01/2008 ..................... 527,735
-----------
933,461
-----------
21
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
ALABAMA FIXED RATE REVENUE AND GENERAL
PAR VALUE OBLIGATION (GO) BONDS -- 95.4% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Montgomery, AL, Waterworks & Sanitation Rev.,
$ 200,000 5.85%, due 03/01/2003 ..................... $ 213,882
400,000 5.60%, due 09/01/2009 ..................... 431,920
-----------
645,802
-----------
Montgomery Co., AL, GO,
100,000 5.20%, due 11/01/2006 ..................... 105,131
-----------
Mountain Brook, AL, Board of Education
Capital Outlay Warrants,
405,000 4.80%, due 02/15/2011 ..................... 411,079
-----------
Muscle Shoals, AL, GO,
400,000 5.60%, due 08/01/2010 ..................... 434,376
-----------
Opelika, AL, GO,
100,000 4.60%, due 03/01/2003 ..................... 102,883
100,000 5.30%, due 07/01/2003 ..................... 105,830
-----------
208,713
-----------
Scottsboro, AL, Waterworks Sewer & Gas Rev.,
200,000 4.35%, due 08/01/2011 ..................... 193,966
-----------
Shelby Co., AL, GO,
205,000 5.20%, due 08/01/2000 ..................... 210,072
50,000 5.35%, due 08/01/2001 ..................... 52,030
-----------
262,102
-----------
Shelby Co., AL, Hospital Board Rev.,
35,000 6.60%, due 02/01/2001, ETM ................ 36,817
25,000 6.60%, due 02/01/2002, ETM ................ 26,860
40,000 6.60%, due 02/01/2003, ETM ................ 43,808
-----------
107,485
-----------
Tuscaloosa, AL, Board of Education, GO,
100,000 5.10%, due 02/01/2004 ..................... 105,099
300,000 4.625%, due 08/01/2008 .................... 305,115
-----------
410,214
-----------
Tuscaloosa, AL, Board of Education
Special Tax Warrants,
75,000 5.70%, due 02/15/2005 ..................... 79,657
125,000 6.00%, due 02/15/2009 ..................... 134,440
-----------
214,097
-----------
University of Alabama General Fee Series A Rev.,
250,000 4.15%, due 10/01/1999 ..................... 251,323
50,000 5.00%, due 11/01/2000 ..................... 51,263
240,000 5.10%, due 10/01/2002 ..................... 250,694
400,000 5.25%, due 06/01/2010 ..................... 421,076
100,000 5.375%, due 06/01/2013 .................... 104,822
-----------
1,079,178
-----------
Vestavia Hills, AL, Board of Education
Capital Outlay Rev.,
55,000 5.25%, due 02/01/2004 ..................... 57,294
-----------
Vestavia Hills, AL, Warrants,
125,000 4.90%, due 04/01/2005 ..................... 130,339
-----------
TOTAL ALABAMA (COST $19,759,696) .............. $20,577,293
-----------
22
<PAGE>
THE ALABAMA TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS -- 4.4% VALUE
- --------------------------------------------------------------------------------
938,332 Firstar Tax-Free Money Market Fund (Cost $938,332) $ 938,332
-----------
TOTAL INVESTMENTS AT VALUE
(COST $20,698,028)-- 99.8% .................. $21,515,625
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2% . 44,347
-----------
NET ASSETS -- 100.0% .......................... $21,559,972
===========
ETM - Escrowed to maturity.
See accompanying notes to financial statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
================================================================================
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, was
organized as a Massachusetts business trust on July 18, 1988.
The Government Street Equity Fund's investment objective is 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
(normally 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 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.
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.
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 dividends and capital gain
distributions are determined in accordance with income tax regulations.
24
<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, 1999:
- --------------------------------------------------------------------------------
Government Government Alabama
Street Street Tax Free
Equity Fund Bond Fund Bond Fund
- --------------------------------------------------------------------------------
Gross unrealized appreciation . $ 42,337,895 $ 653,317 $ 861,851
Gross unrealized depreciation . (990,554) (517,568) (44,254)
------------ ------------ ------------
Net unrealized appreciation ... $ 41,347,341 $ 135,749 $ 817,597
============ ============ ============
Federal income tax cost ....... $ 45,491,392 $ 41,634,311 $ 20,698,028
============ ============ ============
- --------------------------------------------------------------------------------
As of March 31, 1999, The Government Street Bond Fund and The Alabama Tax Free
Bond Fund had capital loss carryforwards for federal income tax purposes of
$540,121 and $199,283, respectively, which expire through the year 2007. In
addition, The Government Street Bond Fund had net realized capital losses of
$13,140 during the period from November 1, 1998 through March 31, 1999, which
are treated for federal income tax purposes as arising during the Fund's tax
year ending March 31, 2000. These capital loss carryforwards and "post-October"
losses may be utilized in future years to offset net realized capital gains
prior to distributing such gains to shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1999, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $22,246,919 and $16,504,497, respectively, for The Government Street
Equity Fund, $13,200,689 and $6,549,408, respectively, for The Government Street
Bond Fund, and $2,840,186 and $1,250,000, respectively, for The Alabama Tax Free
Bond Fund.
25
<PAGE>
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.
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 $21,089 of its investment advisory fees for the
Fund during the year ended March 31, 1999.
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 CFS 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.
26
<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, 1999, 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 each of the five years in the period then ended. 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, 1999 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
Government Street Equity Fund, The Government Street Bond Fund and The Alabama
Tax Free Bond Fund, as of March 31, 1999, 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 each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 30, 1999
27
<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.
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,
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, 1999
A Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, STRATEGIES AND RELATED RISKS.............................2
INVESTMENT LIMITATIONS.........................................................5
TRUSTEES AND OFFICERS..........................................................7
INVESTMENT ADVISOR............................................................11
ADMINISTRATOR.................................................................12
OTHER SERVICES................................................................13
BROKERAGE.....................................................................14
SPECIAL SHAREHOLDER SERVICES..................................................15
PURCHASE OF SHARES............................................................17
REDEMPTION OF SHARES..........................................................18
NET ASSET VALUE DETERMINATION.................................................18
ALLOCATION OF TRUST EXPENSES..................................................19
ADDITIONAL TAX INFORMATION....................................................19
CAPITAL SHARES AND VOTING.....................................................20
CALCULATION OF PERFORMANCE DATA...............................................22
FINANCIAL STATEMENTS AND REPORTS..............................................25
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of The Davenport Equity Fund (the
"Fund") dated August 1, 1999. The Prospectus may be obtained from the Fund at
the address and phone number shown above at no charge.
<PAGE>
INVESTMENT OBJECTIVE, STRATEGIES AND RELATED RISKS
The investment objective and principal strategies 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 up to 10% of its assets in foreign
securities if the Advisor believes such investment would be consistent with the
Fund's investment objective. The Fund may invest in securities of foreign
issuers directly or in the form of sponsored American Depository
Receipts("ADR"). ADR's are receipts typically issued by an American bank or
trust company that evidence ownership of underlying securities issued by a
foreign corporation. 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>
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 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
-3-
<PAGE>
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.
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.
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
-4-
<PAGE>
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.
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
-5-
<PAGE>
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.);
(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;
(11) Borrow money or pledge its assets, except that it may borrow from banks as
a temporary measure for extraordinary or emergency purposes, in amounts not
exceeding 5% of the Fund's assets, or 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
borrowings;
(12) 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;
(13) Write, acquire or sell puts, calls or combinations thereof, or purchase or
sell commodities, commodities contracts, futures contracts or related
options; and
(14) 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
-6-
<PAGE>
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.
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 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 Funds, age,
principal occupation during the past 5 years and their aggregate compensation
from the Trust for the fiscal year ended March 31, 1999:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 62) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund 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 45) 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 62) Physician $13,500
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
-7-
<PAGE>
J. Finley Lee (age 59) Julian Price Professor Emeritus of $13,000
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 50) 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 60) President of $13,500
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 39) President of $13,000
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
Erwin H. Will, Jr. (age 66) Chief Investment Officer of $13,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 63) Senior Vice President and $15,000
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 36) Portfolio Manager of none
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
-8-
<PAGE>
Joseph L. Antrim III (age 54) Executive Vice President of none
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Robert L. Bennett (age 57) First Vice President and Chief none
Treasurer, all Funds of the Trust Operating Officer of Countrywide
312 Walnut Street, 21st Floor Fund Services, Inc., (registered transfer
Cincinnati, Ohio 45202 agent and administrator to the Trust)
and of CW Fund Distributors, Inc.
(registered broker-dealer),
Cincinnati, Ohio
Charles M. Caravati III (age 33) Assistant Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 57) Principal of none
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 46) Principal of none
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
Tina D. Hosking (age 30) Assistant Vice President and Associate none
Secretary, all Funds of the Trust General Counsel of Countrywide Fund
312 Walnut Street, 21st Floor Services, Inc. (registered transfer agent
Cincinnati, Ohio 45202 and administrator of the Trust) and
CW Fund Distributors, Inc.,
Cincinnati, Ohio
Lee Keiger III (age 44) First Vice President and Chief Financial none
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
-9-
<PAGE>
R. Gregory Porter III (age 58) Principal of none
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Henry C. Spalding, Jr. (age 61) Executive Vice President of none
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Ernest H. Stephenson, Jr. (age 54) Vice President of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 48) Administrator of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 40) Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 53) President and Chief Executive none
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 Investment
Company Act of 1940. 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.
-10-
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 2, 1999, 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.
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, 2000 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 periods ended March
31, 1999 and 1998, the Fund paid the Advisor advisory fees of $329,707 and the
Advisor voluntarily waived its entire investment advisory fee of $24,350 and
reimbursed the Fund for $7,571 of other operating expenses, respectively.
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.
-11-
<PAGE>
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 principal strategies 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 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.
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
The Fund has 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
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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 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 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 periods ended March 31, 1999 and 1998 the Administrator received
from the Fund fees of $83,035 and $6,011, 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.
The Custodian of the Fund's assets is Firstar 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.
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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.
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.
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
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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.
The Fund paid brokerage commissions of $0 for the fiscal period ended March 31,
1999. All transactions were executed through the Fund's Advisor, Davenport and
Company LLC, at no commission.
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
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"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 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
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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.
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.
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.
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.
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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.
There is currently no charge by the Administrator for redemptions, including
wire 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. 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 wire transfers. In the event that wire transfer
of funds is impossible or impractical, the redemption proceeds will be sent by
mail to the designated account.
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.
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
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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.
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
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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, 1999, the Fund had capital loss carryforwards for federal income
tax purposes of $334,879, which expire through the year 2007. In addition, the
Fund had net realized capital losses of $952,944 during the period from November
1, 1998 through March 31, 1999, which are treated for federal income tax
purposes as arising during the Fund's tax year ending March 31, 2000. These
capital loss carryforwards and "post-October" losses 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. 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 fractional vote for each fractional share held. Shares have
noncumulative voting rights, which means that the holders of more
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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.
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, 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.
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
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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.
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.
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.
Prior to January 24, 1994, the Trust was called The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
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 Fund's average
annual total return as of March 31, 1999 for one year is 8.53% and for the
period since inception (January 15, 1998) is 17.01%.
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
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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:
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, 1999 was .34%.
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.
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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.
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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, 1999, together with the report of the independent
accountants thereon, are included on the following pages.
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DAVENPORT
Equity Fund
-----------
ANNUAL REPORT
March 31, 1999
<PAGE>
LETTER TO SHAREHOLDERS MAY 7, 1999
================================================================================
Dear Fellow Shareholder:
We welcome you as a shareholder of the Davenport Equity Fund and thank you for
your support as we close our first full fiscal year. We are pleased to report
that during the first calendar quarter of 1999 your Fund was up 5.0%. For the
year ended March 31, 1999, the Fund increased 8.5% and, since inception, the
Fund has returned 17.0% on an average annual basis. For comparison, the Standard
& Poor's 500 Index and the Lipper Universe of General Equity Funds were up 5.0%
and 0.9%, respectively, for the quarter and 18.5% and 3.6%, respectively, for
the year ended March 31, 1999.
While large company indices such as the Standard & Poor's 500 have sailed
through many milestones over the past couple of years, the average stock has had
difficulty keeping pace. Smaller to mid-size corporations, especially those that
are industrial or commodity based, have hardly budged. The negative 3.5% first
quarter performance of the Value Line Index of 1700 companies is typical of the
broader markets' performance of late.
The companies whose stocks have performed well generally share a common
characteristic: the ability to raise prices. Investors are willing to pay
substantial premiums to own dominant companies with proprietary products. Price
or value is not a concern. Investors want growth. Unfortunately, growth and
pricing power are scarce. Most companies are flush with inventory due to years
of increasing capacity, technological advancements and slack overseas demand. To
reduce inventory, companies have resorted to price-cutting.
The winner in this benign inflationary environment is the consumer. Consumers
now enjoy price stability and an increase in discretionary income despite tepid
wage growth. Consumers feel confident. Jobs are plentiful. Interest rates are
low. The economy is chugging along comfortably. It is no wonder that consumers
are spending. Compounding this spending trend is the baby boomer generation.
Boomers' incomes are close to peak levels, while the bulk of their fixed
expenses, such as mortgage and childcare payments, are behind them. Industries
that offer products that appeal to this bulging segment of society are enjoying
strong growth. For example:
Car manufacturers that produce sports utility vehicles have experienced a
long string of record sales. Ford continues to increase production of the
very popular Explorer, Expedition and Navigator. These vehicles have had a
major impact on Ford's bottom line as the company makes approximately
$10,000 on each vehicle sold.
Pharmaceutical companies and their stock prices have also performed well.
As people age they require more medicines, not only for traditional
ailments like arthritis, heart disease and cholesterol, but also for
lifestyle improvement like baldness, weight problems and allergies. We
believe Schering-Plough and Bristol-Myers Squibb are well positioned to
take advantage of this increase in health care spending.
The Internet and related technologies are also having a dramatic impact on
our economy and lifestyle. Companies are investing heavily in technology to
boost productivity and to gain a competitive advantage. Furthermore, good
workers are scarce and companies are substituting technology for wages.
Companies that sell proprietary technology that dominate its field enjoy
monopoly size margins. Cisco Systems and EMC, we believe, are well
entrenched in their areas of expertise.
Circuit City and other electronics stores are also experiencing a pickup in
sales as consumers are buying DVD players, satellite dishes and large
screen televisions. Further excitement can be anticipated with the
introduction of high definition television. The home entertainment center
is becoming a necessity for some and status for others.
1
<PAGE>
We continue to search for stocks that represent good value and offer the growth
characteristics that make them attractive on a long-term basis. However, in this
market, finding growth and value in the same stock is fairly elusive. We have
tackled this challenge by investing in companies such as those mentioned above
that we believe will lead their field for years to come. While we own a number
of traditional growth companies, a majority of your portfolio is invested in
more value-oriented companies.
We believe that many value companies offer tremendous long-term potential
despite currently being out of favor. Enron and Schlumberger in the energy
sector are typical of the value stocks we own. Both companies are leaders in
their field and have the expertise and financial wherewithal to take advantage
of depressed prices and to position themselves for future growth. We also find
companies, like Tredegar Industries and Capital One Financial, that are focused
on cutting costs, growing revenues and increasing shareholder value, attractive.
We look forward to facing the challenges in the market. After all, Davenport's
own profit sharing plan is invested in the same fashion as the Davenport Equity
Fund. In this way, we have aligned your interest with that of our 300 plus
employees. You can be sure we will work hard to do our best for the Davenport
Equity Fund for years to come.
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.
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment in the
Davenport Equity Fund and the Standard & Poor's 500 Index
3/99
------
Davenport Equity Fund $12,090
Standard & Poor's 500 Index $13,771
- --------------------------------------------------------------------------------
------------------------------
Davenport Equity Fund
Average Annual Total Return
1 Year Since Inception*
8.53% 17.01%
------------------------------
*Initial public offering of shares was January 15, 1998
Past performance is not predictive of future performance.
2
<PAGE>
THE DAVENPORT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
================================================================================
ASSETS
Investments in securities:
At acquisition cost $ 48,091,959
============
At market value (Note 1) $ 55,258,175
Investments in repurchase agreements (Note 1) 1,186,000
Cash 642
Dividends and interest receivable 73,790
Receivable for capital shares sold 86,885
Other assets 18,101
------------
TOTAL ASSETS 56,623,593
------------
LIABILITIES
Dividends payable 3,784
Payable for capital shares redeemed 189,404
Accrued investment advisory fees (Note 3) 37,295
Accrued administration fees (Note 3) 8,550
Other accrued expenses and liabilities 26,660
------------
TOTAL LIABILITIES 265,693
------------
NET ASSETS $ 56,357,900
============
Net assets consist of:
Paid-in capital $ 50,456,935
Undistributed net investment income 22,572
Accumulated net realized losses from security transactions (1,287,823)
Net unrealized appreciation on investments 7,166,216
------------
Net assets $ 56,357,900
============
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) 4,692,814
============
Net asset value, offering price and
redemption price per share (Note 1) $ 12.01
============
See accompanying notes to financial statements.
3
<PAGE>
THE DAVENPORT EQUITY FUND
STATEMENT OF OPERATIONS
Year Ended March 31, 1999
================================================================================
INVESTMENT INCOME
Dividends $ 712,045
Interest 71,568
-----------
TOTAL INVESTMENT INCOME 783,613
-----------
EXPENSES
Investment advisory fees (Note 3) 329,707
Administration fees (Note 3) 83,035
Registration fees 16,220
Custodian fees 10,943
Printing of shareholder reports 10,880
Postage and supplies 9,827
Professional fees 8,845
Trustees' fees and expenses 8,220
Insurance expense 1,556
Pricing costs 1,494
Other expenses 19,945
-----------
TOTAL EXPENSES 500,672
-----------
NET INVESTMENT INCOME 282,941
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions (1,287,823)
Net change in unrealized appreciation/
depreciation on investments 5,647,305
-----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 4,359,482
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,642,423
===========
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
THE DAVENPORT EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Periods Ended March 31, 1999 and 1998
=====================================================================================================
Year Period
Ended Ended
March 31, March 31,
1999 1998 (a)
- -----------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 282,941 $ 24,604
Net realized gains (losses) from security transactions (1,287,823) 22,572
Net change in unrealized appreciation/depreciation on investments 5,647,305 1,518,911
------------ ------------
Net increase in net assets from operations 4,642,423 1,566,087
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (284,973) --
From net realized gains (22,572) --
------------ ------------
Decrease in net assets from distributions to shareholders (307,545) --
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 33,435,301 23,577,618
Net asset value of shares issued in reinvestment
of distributions to shareholders 292,444 --
Payments for shares redeemed (6,398,898) (449,530)
------------ ------------
Net increase in net assets from capital share transactions 27,328,847 23,128,088
------------ ------------
TOTAL INCREASE IN NET ASSETS 31,663,725 24,694,175
NET ASSETS
Beginning of period 24,694,175 --
------------ ------------
End of period (including undistributed net investment
income of $22,572 and $24,604, respectively) $ 56,357,900 $ 24,694,175
============ ============
CAPITAL SHARE ACTIVITY
Sold 3,018,408 2,259,111
Reinvested 26,301 --
Redeemed (569,249) (41,757)
------------ ------------
Net increase in shares outstanding 2,475,460 2,217,354
Shares outstanding at beginning of period 2,217,354 --
------------ ------------
Shares outstanding at end of period 4,692,814 2,217,354
============ ============
</TABLE>
(a) Represents the period from the commencement of operations (January 15,
1998) through March 31, 1998.
See accompanying notes to financial statements.
5
<PAGE>
THE DAVENPORT EQUITY FUND
FINANCIAL HIGHLIGHTS
================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR
A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
YEAR PERIOD
ENDED ENDED
MARCH 31, MARCH 31,
1999 1998 (a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period $ 11.14 $ 10.00
-------- --------
Income from investment operations:
Net investment income 0.06 0.01
Net realized and unrealized gains on investments 0.88 1.13
-------- --------
Total from investment operations 0.94 1.14
-------- --------
Less distributions:
Dividends from net investment income (0.06) --
Distributions from net realized gains (0.01) --
-------- --------
Total distributions (0.07) --
-------- --------
Net asset value at end of period $ 12.01 $ 11.14
======== ========
Total return 8.53% 11.40%
======== ========
Net assets at end of period (000's) $ 56,358 $ 24,694
======== ========
Ratio of net expenses to average net assets(b) 1.14% 1.15%(c)
Ratio of net investment income to average net assets 0.64% 0.76%(c)
Portfolio turnover rate 15% 17%(c)
(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) for the period ended March 31, 1998.
(c) Annualized.
See accompanying notes to financial statements.
6
<PAGE>
THE DAVENPORT EQUITY FUND
PORTFOLIO OF INVESTMENTS
March 31, 1999
================================================================================
MARKET
SHARES COMMON STOCKS -- 98.1% VALUE
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 3.2%
18,568 Alcoa, Inc. $ 764,769
19,766 Chesapeake Corporation 536,153
13,837 Cleveland-Cliffs, Inc. 471,323
-----------
1,772,245
-----------
CHEMICALS AND DRUGS -- 8.8%
19,766 Air Products & Chemicals, Inc. 676,985
14,629 duPont (E.I.) de Nemours & Company 849,396
19,766 Merck & Company, Inc. 1,584,986
33,193 Schering-Plough Corporation 1,835,988
-----------
4,947,355
-----------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES-- 14.7%
19,872 Allied Signal, Inc. 977,454
8,300 Cisco Systems, Inc.(a) 909,369
9,000 EMC Corporation 1,149,750
15,812 Hewlett-Packard Company 1,072,251
10,690 Intel Corporation 1,273,446
13,837 Lockheed Martin Corporation 521,482
21,379 Media General, Inc. 999,468
9,000 Microsoft Corporation(a) 806,625
7,903 Motorola, Inc. 578,895
-----------
8,288,740
-----------
CONGLOMERATES -- 1.7%
416 Berkshire Hathaway, Inc. - Class B(a) 978,016
-----------
CONSUMER PRODUCTS -- 14.8%
19,766 American Home Products Corporation 1,289,732
15,806 Amgen, Inc.(a) 1,183,474
24,190 Bristol-Myers Squibb Company 1,555,719
15,812 Ford Motor Company 897,331
16,035 Gillette Company 953,080
14,629 Johnson & Johnson 1,370,554
41,353 SYSCO Corporation 1,088,101
-----------
8,337,991
-----------
DURABLE GOODS -- 10.9%
12,095 Deere & Company 467,169
9,883 General Electric Company 1,093,307
14,629 Koninklijke Philips Electronics N.V. 1,205,978
19,766 Martin Marietta Materials, Inc. 1,127,897
20,751 Norfolk Southern Corporation 547,308
54,854 Tredegar Industries, Inc. 1,697,046
-----------
6,138,705
-----------
ENTERTAINMENT -- 1.8%
32,069 The Walt Disney Company 998,148
-----------
7
<PAGE>
THE DAVENPORT EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
MARKET
SHARES COMMON STOCKS-- 98.1% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FINANCIAL SERVICES -- 17.6%
13,342 American International Group, Inc. $ 1,609,379
7,996 Associates First Capital Corporation 359,820
19,766 BB&T Corporation 715,282
7,879 Capital One Financial Corporation 1,189,729
14,629 CCB Financial Corporation 790,880
25,319 Federal Realty Investments Trust 536,446
8,156 Markel Corporation(a) 1,470,119
45,006 MGI Properties, Inc. 1,232,039
6,337 The Pioneer Group, Inc. 93,867
19,766 St. Paul Companies, Inc. 613,981
12,095 SunTrust Banks, Inc. 752,914
6,919 Wachovia Corporation 561,736
-----------
9,926,192
-----------
FOOD/BEVERAGES -- 4.5%
15,812 Anheuser-Busch Company, Inc. 1,204,677
11,857 Coca-Cola Company 727,723
23,310 Sara Lee Corporation 576,923
-----------
2,509,323
-----------
OIL/ENERGY -- 9.3%
7,879 Atlantic Richfield Company 575,167
9,883 Chevron Corporation 874,028
14,822 Enron Corporation 952,314
19,766 Halliburton Company 760,991
9,883 Mobil Corporation 869,704
11,857 Schlumberger Limited 713,643
19,075 Tidewater, Inc. 493,566
-----------
5,239,413
-----------
RETAIL STORES -- 5.8%
19,766 Circuit City Stores, Inc. 1,514,570
19,766 Saks, Inc.(a) 513,916
44,270 Walgreen Company 1,250,628
-----------
3,279,114
-----------
UTILITIES -- 5.0%
10,690 Cox Communications, Inc.(a) 808,431
9,500 MCI WorldCom, Inc.(a) 841,344
25,319 SBC Communications, Inc. 1,193,158
-----------
2,842,933
-----------
TOTAL COMMON STOCKS (COST $48,091,959) $55,258,175
-----------
8
<PAGE>
THE DAVENPORT EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS(B)-- 2.1% VALUE
- --------------------------------------------------------------------------------
$1,186,000 Firstar Bank, 3.75%, dated 03/31/99, due 04/01/99,
repurchase proceeds $1,186,124 (Cost $1,186,000) $ 1,186,000
-----------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS
AT VALUE -- 100.2% $56,444,175
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.2%) (86,275)
-----------
NET ASSETS -- 100.0% $56,357,900
===========
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,000 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $1,228,601.
See accompanying notes to financial statements.
9
<PAGE>
THE DAVENPORT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
================================================================================
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. 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
(normally 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.
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.
10
<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
investment securities of $48,091,959 as of March 31, 1999:
- --------------------------------------------------------------------------------
Gross unrealized appreciation ............................ $ 9,655,864
Gross unrealized depreciation ............................ (2,489,648)
------------
Net unrealized appreciation .............................. $ 7,166,216
============
- --------------------------------------------------------------------------------
As of March 31,1999, the Fund had capital loss carryforwards for federal income
tax purposes of $334,879, which expire through the year 2007. In addition, the
Fund had net realized capital losses of $952,944 during the period from November
1, 1998 through March 31,1999, which are treated for federal income tax purposes
as arising during the Fund's tax year ending March 31, 2000. These capital loss
carryforwards and "post-October" losses may be utilized in future years to
offset net realized capital gains prior to distributing such gains to
shareholders.
2. INVESTMENT TRANSACTIONS
During the year ended March 31, 1999, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $34,403,126 and $6,218,581, 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. Certain officers of the Fund 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 Fund. For these services, CFS receives a monthly fee from the
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. In
addition, the Fund pays CFS 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.
11
<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, 1999, 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 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 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, 1999 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
Davenport Equity Fund as of March 31, 1999, the results of its operations for
the year then ended and the changes in its net assets and financial highlights
for the year then ended and for the period January 15, 1998 to March 31, 1998,
in conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 30, 1999
12
<PAGE>
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13
<PAGE>
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14
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
15
<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
Firstar Bank
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
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN BALANCED FUND
THE JAMESTOWN EQUITY FUND
August 1, 1999
Series of
WILLIAMSBURG INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-443-4249
TABLE OF CONTENTS
-----------------
INVESTMENT OBJECTIVES AND POLICIES.............................................2
DESCRIPTION OF BOND RATINGS....................................................5
INVESTMENT LIMITATIONS.........................................................8
TRUSTEES AND OFFICERS.........................................................10
INVESTMENT ADVISOR............................................................14
ADMINISTRATOR.................................................................15
OTHER SERVICES................................................................16
BROKERAGE.....................................................................16
SPECIAL SHAREHOLDER SERVICES..................................................17
PURCHASE OF SHARES............................................................19
REDEMPTION OF SHARES..........................................................20
NET ASSET VALUE DETERMINATION.................................................20
ALLOCATION OF TRUST EXPENSES..................................................21
ADDITIONAL TAX INFORMATION....................................................21
CAPITAL SHARES AND VOTING.....................................................22
CALCULATION OF PERFORMANCE DATA...............................................23
FINANCIAL STATEMENTS AND REPORTS..............................................25
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectus of both The Jamestown Balanced Fund and
The Jamestown Equity Fund (the "Funds") dated August 1, 1999. 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.
-1-
<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
-2-
<PAGE>
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 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 generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument.
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<PAGE>
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 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
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<PAGE>
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.
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.
-5-
<PAGE>
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S BOND RATINGS:
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
DESCRIPTION OF DUFF & PHELPS CREDIT RATING CO.'S BOND RATINGS:
AAA: This is the highest rating credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
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<PAGE>
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average protection factors. However risk factors are
more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
INVESTMENT LIMITATIONS
The 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;
(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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<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 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.
While the Funds have reserved the right to make short sales "against the box"
(limitation number 8, above), the Advisor has no present intention of engaging
in such transactions at this time or during the coming year.
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<PAGE>
TRUSTEES AND OFFICERS
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.
Following are the Trustees and executive officers of 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, 1999:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 62) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund 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 45) 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 62) Physician $13,500
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 59) Julian Price Professor Emeritus of $13,000
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)
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<PAGE>
Richard Mitchell (age 50) 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 60) President of $13,500
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 39) President of $13,000
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
Erwin H. Will, Jr. (age 66) Chief Investment Officer of $13,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 63) Senior Vice President and $15,000
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 36) Portfolio Manager of none
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 54) Executive Vice President of none
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
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<PAGE>
Robert L. Bennett (age 57) First Vice President and Chief none
Treasurer, all Funds of the Trust Operating Officer of Countrywide
312 Walnut Street, 21st Floor Fund Services, Inc., (registered transfer
Cincinnati, Ohio 45202 agent and administrator to the Trust)
and of CW Fund Distributors, Inc.
(registered broker-dealer),
Cincinnati, Ohio
Charles M. Caravati III (age 33) Assistant Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 57) Principal of none
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 46) Principal of none
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
Tina D. Hosking (age 30) Assistant Vice President and Associate none
Secretary, all Funds of the Trust General Counsel of Countrywide Fund
312 Walnut Street, 21st Floor Services, Inc. (registered transfer agent
Cincinnati, Ohio 45202 and administrator of the Trust) and
CW Fund Distributors, Inc.,
Cincinnati, Ohio
Lee Keiger III (age 44) First Vice President and Chief Financial none
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 58) Principal of none
Vice 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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<PAGE>
Henry C. Spalding, Jr. (age 61) Executive Vice President of none
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Ernest H. Stephenson, Jr. (age 54) Vice President of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 48) Administrator of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 40) Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 53) President and Chief Executive none
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 Investment
Company Act of 1940. 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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<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of July 12, 1999, 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 Balanced
Fund and less than 1% of the then-outstanding shares of the Equity Fund. On the
same date, Wachovia Bank, N.A. TTEE U/A DT 6/1/93 Halifax Regional Hospital
Pension Plan, P.O. Box 3073, Winston-Salem,N.C. 27150 owned beneficially 7.1%
and Bova & Co., 1525 West WT Harris Blvd., Charlotte, N.C. 28288 owned
beneficially 7.1% of the then-outstanding shares of the Balanced Fund. Also on
the same date Crestar Bank, TTEE FBO Virginia Multispecialty SVCS Organization,
P.O. Box 26246, Richmond, Virginia 23260 owned beneficially 8.9% and John M.
Street and Joanne N. Street, 315 Cheswick Lane, Richmond, Virginia 23229 owned
of record 6.5% of the then-outstanding shares of the Equity Fund.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Company, 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, 2000 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, 1999, 1998 and 1997, the
Balanced Fund paid the Advisor advisory fees of $680,064, $561,887 and $430,381,
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, 1999, 1998 and 1997, the Equity Fund paid the Advisor
advisory fees of $361,874, $259,757 and $160,646, 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.
-13-
<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.
Prior to December 1, 1998, Tattersall Advisory Group, Inc. (the "Sub-Advisor")
was responsible for supervising the Balanced Fund's fixed income investments
pursuant to a Sub-Advisory Agreement among the Sub-Advisor, the Advisor and the
Trust. Compensation of the Sub-Advisor was paid by the Advisor (not the Balanced
Fund) in the amount of $5,000 per year.
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
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<PAGE>
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, 1999, 1998 and 1997, the Administrator
received fees of $175,782, $148,539 and $118,380, respectively, from the
Balanced Fund and $102,461, $76,276 and $49,129, 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 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 Firstar 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.
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<PAGE>
For the fiscal years ended March 31, 1999, 1998 and 1997, the total amount of
brokerage commissions paid by the Balanced Fund was $150,621, $91,394 and
$63,382, respectively. For the fiscal years ended March 31, 1999, 1998 and 1997,
the total amount of brokerage commissions paid by the Equity Fund was $129,714,
$66,628 and $47,290, 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 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, 1999 were $24,000 for the
Balanced Fund and $17,500 for the Equity Fund.
As of March 31, 1999, the Balanced Fund held securities issued by Merrill Lynch,
Pierce, Fenner & Smith, Inc. (the market value of which was $262,000). Merrill
Lynch, Pierce, Fenner & Smith, Inc. is 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.
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<PAGE>
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 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.
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<PAGE>
REDEMPTIONS IN KIND. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in portfolio
securities or other property of the Funds. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs 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.
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.
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
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<PAGE>
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 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,
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<PAGE>
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 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.
-20-
<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 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
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<PAGE>
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, 1999, for the five year period ended March 31, 1999 and
for the period since inception (July 3, 1989) to March 31, 1999 are 7.56%,
16.77% and 12.17%, respectively. The average annual total return quotations for
the Equity Fund for the one year period ended March 31, 1999, for the five year
period ended March 31, 1999, and for the period since inception (December 1,
1992) to March 31, 1999 are 8.33%, 20.88% and 16.68%, 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
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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 Balanced Fund and the Equity
Fund for the 30 days ended March 31, 1999 were 1.75% and 0.18%, 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
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<PAGE>
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.
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, 1999, together with the report of the independent
accountants thereon, are included on the following pages.
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<PAGE>
THE
JAMESTOWN
FUNDS
No-Load Funds
ANNUAL REPORT
March 31, 1999
INVESTMENT ADVISER
Lowe, Brockenbrough & Company, Inc.
Richmond, Virginia
<PAGE>
LETTER TO SHAREHOLDERS MAY 18, 1999
================================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the audited annual report of The
Jamestown Funds for the year ended March 31, 1999.
THE JAMESTOWN BALANCED FUND
For the fiscal year ended March 31, 1999, The Jamestown Balanced Fund produced a
total return of 7.6% compared to the Lipper Balanced Index of 8.4%. The equity
market had very narrow leadership during this period, with the technology sector
leading the way by a wide margin. That sector alone was up 62.7%, followed by
the communication services sector up 34.6%, and the health care sector up 28.5%.
The other nine equity sectors failed to keep pace with the 18.5% return of the
Standard & Poor's 500 Index, and four of these sectors actually produced
negative returns. The basic industry sector, which includes metal and chemical
companies, as well as paper and forest product companies, had the poorest
showing with a return of -14.1%.
The Jamestown Balanced Fund returned 16.9% on an annualized basis for the three
years ended March 31, 1999, comparing favorably to the 15.9% return for the
Lipper Balanced Index. For the five-year period, the Fund generated a return of
16.8% versus 15.0% for the comparable Lipper Balanced Index.
Your Fund grew in size to over $112 million in total net assets with 294
shareholders as of March 31, 1999.
THE JAMESTOWN EQUITY FUND
For the year ended March 31, 1999, The Jamestown Equity Fund had a total return
of 8.3%, failing to keep up with the 17.5% return for the Lipper Growth Index
and the 18.5% return for the Standard & Poor's 500 Index. Fueled by the
technology sector in general, and by many of the Internet stocks in particular,
the Lipper Growth Index was difficult for us to match, as we believe a large
number of the Internet stocks are selling at hyper-inflated valuations. Our
risk-averse style has kept us from owning those equities.
The Jamestown Equity Fund returned 21.5% on an annualized basis for the three
years ended March 31, 1999, versus 23.9% for the Lipper Growth Index. For the
five-year period, your Fund has returned 20.9% as compared to 21.8% for the
Index.
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
For the fiscal year ended March 31, 1999, the Jamestown Tax Exempt Virginia Fund
had a total return of 4.9% compared to 5.2% for the Lipper Intermediate
Municipal Fund Index and 6.2% for the Lehman Municipal Bond Index. Yields and
prices on municipal bonds have been extraordinarily stable by historical
standards. Over the past twelve months, Treasury yield volatility has been
roughly three times as great as municipal yield volatility, with a range of 110
basis points on the 30-year Treasury versus a difference of 31 basis points on
the Municipal Revenue Bond Index.
Some key characteristics of The Jamestown Tax Exempt Virginia Fund are as
follows:
Average Effective Maturity ......... 7.6 years
Average Effective Duration ......... 5.9 years
Average Weighted Coupon ............ 5.1%
SEC Yield .......................... 3.9%
Average Credit Quality ............. AA+
1
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
For the year ended March 31, 1999, The Jamestown International Equity Fund had a
total return of 8.7%. This return compares favorably with the 6.0% return
generated by the Morgan Stanley EAFE Index and the -0.6% return generated by the
Lipper International Index. The period was characterized by continued strength
throughout Europe and weakness in Japan and the rest of Asia.
Throughout the year, the Fund benefited from its heavy weighting in European
markets and its low weighting in Asian Pacific markets. European markets
benefited from the convergence of interest rates in preparation for the launch
of the Euro and the massive corporate restructuring programs that supported
stronger earnings growth. Beginning with the devaluation of the Thailand
currency last summer, most Asian Pacific equity markets fell 50% or more in the
second half of 1998.
The global crisis that was born out of the economic and financial turmoil in
Southeast Asia appears to have eased significantly. The Federal Reserve played a
leading role by cutting interest rates in the United States three times last
fall. Oechsle International Advisors used the turmoil to reduce their holdings
in Continental Europe and to reallocate money into the United Kingdom and Japan.
The regional allocations of the portfolio as of March 31, 1999 are shown in the
chart below:
The Jamestown
International Morgan Stanley
Equity Fund EAFE Index
----------- ----------
Continental Europe .................... 45.3% 48.7%
United Kingdom ........................ 21.5% 22.3%
Japan ................................. 18.3% 23.1%
Pacific Basin, ex Japan ............... 5.9% 5.9%
Emerging Markets ...................... 2.7% 0.0%
Cash/North America .................... 6.3% 0.0%
------ ------
100.0% 100.0%
Thank you for your continued confidence in The Jamestown Funds.
Sincerely,
/s/ Austin Brockenbrough, III
Austin Brockenbrough, III
President
Jamestown Tax Exempt Virginia Fund
Jamestown International Equity Fund
/s/ Henry C. Spalding, Jr.
Henry C. Spalding, Jr.
President
Jamestown Balanced Fund
Jamestown Equity Fund
2
<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
3/99
------
The Jamestown Balanced Fund $30,623
Standard & Poor's 500 Index $52,192
Consumer Price Index $13,290
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Balanced Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
7.56% 16.77% 12.17%
-------------------------------------
*Initial public offering of shares was July 3, 1989.
Past performance is not predictive of future performance.
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
3/99
------
The Jamestown Equity Fund $26,560
Standard & Poor's 500 Index $34,375
Consumer Price Index $11,598
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
8.33% 20.88% 16.68%
-------------------------------------
*Initial public offering of shares was December 1, 1992.
Past performance is not predictive of future performance.
3
<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, the Lipper Intermediate Municipal Fund Index and
the Lehman Municipal Bond Index
3/99
------
The Jamestown Tax Exempt Virginia Fund $13,060
Lipper Intermediate Municipal Fund Index $12,653
Lehman Municipal Bond Index $13,993
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Tax Exempt Virginia Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
4.92% 5.85% 4.90%
-------------------------------------
*Initial public offering of shares was September 1, 1993.
Past performance is not predictive of future performance.
The 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
3/99
------
The Jamestown International Equity Fund $13,878
Morgan Stanley EAFE Index $12,402
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown International Equity Fund
Average Annual Total Returns
1 Year Since Inception*
8.67% 11.72%
-------------------------------------
*Initial public offering of shares was April 16, 1996.
Past performance is not predictive of future performance.
4
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999
======================================================================================================================
JAMESTOWN JAMESTOWN
JAMESTOWN JAMESTOWN TAX EXEMPT INTERNATIONAL
BALANCED EQUITY VIRGINIA EQUITY
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C> <C>
At acquisition cost .......................... $ 80,224,277 $ 42,050,206 $ 24,600,110 $ 40,485,195
============ ============ ============ ============
At value (Note 1) ............................ $111,101,623 $ 62,915,109 $ 25,263,919 $ 51,967,556
Investments in repurchase agreements (Note 1) ... 1,868,000 679,000 -- --
Cash ............................................ 218 438 -- 1,837,687
Cash denominated in foreign currency ............ -- -- -- 4,985
Dividends receivable ............................ 72,234 60,380 -- 199,689
Interest receivable ............................. 450,221 71 320,333 4,341
Receivable for securities sold .................. -- 347,139 -- 104,814
Receivable for capital shares sold .............. -- 5,837 100,264 11,979
Net unrealized appreciation on forward foreign
currency exchange contracts (Note 6) ......... -- -- -- 5,824
Other assets .................................... 15,286 24,067 891 13,704
------------ ------------ ------------ ------------
TOTAL ASSETS ................................. 113,507,582 64,032,041 25,685,407 54,150,579
------------ ------------ ------------ ------------
LIABILITIES
Dividends payable ............................... 42,499 5,737 39,003 --
Distributions payable ........................... 79,100 -- -- --
Payable for securities purchased ................ 317,954 526,001 -- 41,737
Payable for capital shares redeemed ............. 165,732 30,916 1,219 --
Accrued investment advisory fees (Note 3) ....... 62,999 35,501 8,423 44,922
Accrued administration fees (Note 3) ............ 15,850 9,600 3,100 10,350
Other accrued expenses and liabilities .......... 19,643 8,318 7,867 34,313
------------ ------------ ------------ ------------
TOTAL LIABILITIES ............................ 703,777 616,073 59,612 131,322
------------ ------------ ------------ ------------
NET ASSETS ......................................... $112,803,805 $ 63,415,968 $ 25,625,795 $ 54,019,257
============ ============ ============ ============
Net assets consist of:
Paid-in capital ................................. $ 82,006,322 $ 42,935,120 $ 24,935,618 $ 41,845,573
Accumulated net realized gains (losses) from
security and foreign currency transactions ... (79,863) (384,055) 26,368 686,231
Net unrealized appreciation on investments ...... 30,877,346 20,864,903 663,809 11,482,361
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies . -- -- -- 5,092
------------ ------------ ------------ ------------
Net assets ......................................... $112,803,805 $ 63,415,968 $ 25,625,795 $ 54,019,257
============ ============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ...... 6,226,192 2,914,908 2,506,203 3,961,839
============ ============ ============ ============
Net asset value, offering price and
redemption price per share (Note 1) ............. $ 18.12 $ 21.76 $ 10.22 $ 13.63
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
=============================================================================================================
JAMESTOWN JAMESTOWN
JAMESTOWN JAMESTOWN TAX EXEMPT INTERNATIONAL
BALANCED EQUITY VIRGINIA EQUITY
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividends .............................. $ 739,421 $ 562,424 $ -- $ 882,162
Foreign withholding taxes on dividends . -- -- -- (91,794)
Interest ............................... 2,204,935 127,509 1,042,494 89,187
------------ ------------ ------------ ------------
TOTAL INVESTMENT INCOME ............. 2,944,356 689,933 1,042,494 879,555
------------ ------------ ------------ ------------
EXPENSES
Investment advisory fees (Note 3) ...... 680,064 361,874 85,055 464,912
Administration fees (Note 3) ........... 175,782 102,461 31,931 110,789
Custodian fees ......................... 14,825 8,047 3,795 72,618
Professional fees ...................... 13,185 8,045 8,045 11,775
Trustees' fees and expenses ............ 8,220 8,220 8,220 8,220
Pricing costs .......................... 9,712 1,015 6,782 8,559
Registration fees ...................... 7,626 6,122 2,202 7,518
Postage and supplies ................... 3,939 3,903 2,441 5,880
Printing of shareholder reports ........ 4,072 4,264 2,043 3,577
Insurance expense ...................... 3,268 2,490 1,401 1,868
Other expenses ......................... 3,083 6,687 3,615 5,339
------------ ------------ ------------ ------------
TOTAL EXPENSES ...................... 923,776 513,128 155,530 701,055
Expenses reimbursed through a directed
brokerage arrangement (Note 4) ...... (24,000) (17,500) -- --
------------ ------------ ------------ ------------
NET EXPENSES ........................ 899,776 495,628 155,530 701,055
------------ ------------ ------------ ------------
NET INVESTMENT INCOME ..................... 2,044,580 194,305 886,964 178,500
------------ ------------ ------------ ------------
REALIZEDAND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCIES (Note 5)
Net realized gains (losses) from:
Security transactions ............... 1,234,403 (369,569) 36,651 2,205,161
Foreign currency transactions ....... -- -- -- (56,520)
Net change in unrealized appreciation/
depreciation on:
Investments ......................... 4,507,324 5,043,678 81,607 1,511,375
Foreign currency translation ........ -- -- -- (120,768)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS
AND FOREIGN CURRENCIES ................. 5,741,727 4,674,109 118,258 3,539,248
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ........................ $ 7,786,307 $ 4,868,414 $ 1,005,222 $ 3,717,748
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
==========================================================================================================================
JAMESTOWN JAMESTOWN
BALANCED FUND EQUITY FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income .............................. $ 2,044,580 $ 1,911,506 $ 194,305 $ 238,229
Net realized gains (losses) from
security transactions ........................... 1,234,403 9,533,601 (369,569) 3,855,317
Net change in unrealized appreciation/
depreciation on investments ..................... 4,507,324 12,603,990 5,043,678 10,606,115
------------ ------------ ------------ ------------
Net increase in net assets from operations ............ 7,786,307 24,049,097 4,868,414 14,699,661
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ......................... (2,047,558) (1,934,092) (198,327) (242,370)
From net realized gains from security transactions . (1,302,068) (10,800,423) -- (4,379,490)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders .................................... (3,349,626) (12,734,515) (198,327) (4,621,860)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .......................... 13,392,101 17,601,307 11,342,221 10,499,561
Net asset value of shares issued in reinvestment
of distributions to shareholders ................ 3,140,088 12,174,707 171,755 4,351,536
Payments for shares redeemed ....................... (9,573,352) (10,335,880) (4,982,200) (3,895,041)
------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ......................... 6,958,837 19,440,134 6,531,776 10,956,056
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS .......................... 11,395,518 30,754,716 11,201,863 21,033,857
NET ASSETS
Beginning of year .................................. 101,408,287 70,653,571 52,214,105 31,180,248
------------ ------------ ------------ ------------
End of year ........................................ $112,803,805 $101,408,287 $ 63,415,968 $ 52,214,105
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Sold ............................................... 766,478 1,041,126 565,307 571,636
Reinvested ......................................... 178,274 735,126 8,737 236,191
Redeemed ........................................... (554,334) (599,080) (248,873) (209,264)
------------ ------------ ------------ ------------
Net increase in shares outstanding ................. 390,418 1,177,172 325,171 598,563
Shares outstanding, beginning of year .............. 5,835,774 4,658,602 2,589,737 1,991,174
------------ ------------ ------------ ------------
Shares outstanding, end of year .................... 6,226,192 5,835,774 2,914,908 2,589,737
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
==============================================================================================================================
JAMESTOWN TAX EXEMPT JAMESTOWN
VIRGINIA FUND INTERNATIONAL EQUITY FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income (loss) ........................... $ 886,964 $ 673,872 $ 178,500 $ (19,285)
Net realized gains (losses) from:
Security transactions ............................... 36,651 57,902 2,205,161 (60,926)
Foreign currency transactions ....................... -- -- (56,520) 190,757
Net change in unrealized appreciation/depreciation on:
Investments ......................................... 81,607 399,917 1,511,375 8,970,013
Foreign currency translation ........................ -- -- (120,768) 126,420
------------ ------------ ------------ ------------
Net increase in net assets from operations ................ 1,005,222 1,131,691 3,717,748 9,206,979
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............................. (886,964) (673,872) (238,226) (325,257)
From net realized gains from security transactions ..... (11,065) -- -- --
------------ ------------ ------------ ------------
Decrease in net assets from
distributions to shareholders .......................... (898,029) (673,872) (238,226) (325,257)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .............................. 8,922,497 8,481,218 9,046,185 4,706,633
Net asset value of shares issued in reinvestment
of distributions to shareholders .................... 487,854 360,594 231,344 321,283
Payments for shares redeemed ........................... (2,104,477) (2,284,029) (1,280,438) (657,411)
------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ............................. 7,305,874 6,557,783 7,997,091 4,370,505
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS .............................. 7,413,067 7,015,602 11,476,613 13,252,227
NET ASSETS
Beginning of year ...................................... 18,212,728 11,197,126 42,542,644 29,290,417
------------ ------------ ------------ ------------
End of year ............................................ $ 25,625,795 $ 18,212,728 $ 54,019,257 $ 42,542,644
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Sold ................................................... 871,702 843,460 673,952 418,420
Reinvested ............................................. 47,603 35,724 17,619 28,068
Redeemed ............................................... (206,362) (225,366) (102,274) (60,156)
------------ ------------ ------------ ------------
Net increase in shares outstanding ..................... 712,943 653,818 589,297 386,332
Shares outstanding, beginning of year .................. 1,793,260 1,139,442 3,372,542 2,986,210
------------ ------------ ------------ ------------
Shares outstanding, end of year ........................ 2,506,203 1,793,260 3,961,839 3,372,542
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN BALANCED FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 17.38 $ 15.17 $ 14.77 $ 12.76 $ 12.15
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.34 0.37 0.35 0.36 0.33
Net realized and unrealized gains
on investments ............................... 0.95 4.31 1.45 2.50 0.90
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.29 4.68 1.80 2.86 1.23
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.34) (0.37) (0.35) (0.36) (0.33)
Distributions from net realized gains ........... (0.21) (2.10) (1.05) (0.49) (0.29)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.55) (2.47) (1.40) (0.85) (0.62)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 18.12 $ 17.38 $ 15.17 $ 14.77 $ 12.76
========= ========= ========= ========= =========
Total return ....................................... 7.56% 32.42% 12.29% 22.79% 10.54%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 112,804 $ 101,408 $ 70,654 $ 61,576 $ 52,062
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.88% 0.90% 0.91% 0.93% 0.99%
Ratio of net expenses to average net assets (a) .... 0.86% 0.87% 0.87% 0.88% 0.96%
Ratio of net investment income to average net assets 1.95% 2.21% 2.31% 2.52% 2.72%
Portfolio turnover rate ............................ 69% 90% 58% 72% 95%
</TABLE>
(a) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement (Note 4).
See accompanying notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN EQUITY FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 20.16 $ 15.66 $ 13.96 $ 11.29 $ 10.19
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.07 0.11 0.13 0.15 0.10
Net realized and unrealized gains
on investments ............................... 1.60 6.47 2.00 2.98 1.15
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.67 6.58 2.13 3.13 1.25
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.07) (0.11) (0.13) (0.15) (0.12)
Distributions from net realized gains ........... -- (1.97) (0.30) (0.31) (0.03)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.07) (2.08) (0.43) (0.46) (0.15)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 21.76 $ 20.16 $ 15.66 $ 13.96 $ 11.29
========= ========= ========= ========= =========
Total return ....................................... 8.33% 43.74% 15.27% 28.00% 12.33%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 63,416 $ 52,214 $ 31,180 $ 17,857 $ 8,111
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.92% 0.93% 0.98% 1.14% 1.99%
Ratio of net expenses to average net assets ........ 0.89%(a) 0.90%(a) 0.92%(a) 1.01%(a) 1.44%(b)
Ratio of net investment income to average net assets 0.35% 0.60% 0.85% 1.27% 1.18%
Portfolio turnover rate ............................ 66% 59% 44% 54% 48%
</TABLE>
(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 investment advisory fee
waivers and/or other operating expense reimbursements by the Adviser.
See accompanying notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 10.16 $ 9.83 $ 9.85 $ 9.68 $ 9.61
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.43 0.44 0.45 0.45 0.44
Net realized and unrealized gains (losses)
on investments ............................... 0.07 0.33 (0.02) 0.17 0.07
--------- --------- --------- --------- ---------
Total from investment operations ................... 0.50 0.77 0.43 0.62 0.51
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.43) (0.44) (0.45) (0.45) (0.44)
Distributions from net realized gains ........... (0.01) -- -- -- --
--------- --------- --------- --------- ---------
Total distributions ................................ (0.44) (0.44) (0.45) (0.45) (0.44)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 10.22 $ 10.16 $ 9.83 $ 9.85 $ 9.68
========= ========= ========= ========= =========
Total return ....................................... 4.92% 8.00% 4.39% 6.51% 5.47%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 25,626 $ 18,213 $ 11,197 $ 8,779 $ 7,712
========= ========= ========= ========= =========
Ratio of net expenses to average net assets (a) .... 0.73% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to average net assets 4.17% 4.40% 4.51% 4.57% 4.64%
Portfolio turnover rate ............................ 31% 33% 24% 14% 97%
</TABLE>
(a) 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% and 1.62% for the years ended March 31, 1998, 1997,
1996 and 1995, respectively.
See accompanying notes to financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
======================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997(A)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period .................... $ 12.61 $ 9.81 $ 10.00
--------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) ........................... 0.05 (0.01) (0.01)
Net realized and unrealized gains (losses)
on investments and foreign currencies ............... 1.04 2.91 (0.14)
--------- --------- ---------
Total from investment operations .......................... 1.09 2.90 (0.15)
--------- --------- ---------
Less distributions:
Dividends from net investment income ................... (0.07) (0.10) (0.04)
--------- --------- ---------
Net asset value at end of period .......................... $ 13.63 $ 12.61 $ 9.81
========= ========= =========
Total return .............................................. 8.67% 29.67% (1.56)%(c)
========= ========= =========
Net assets at end of period (000's) ....................... $ 54,019 $ 42,543 $ 29,290
========= ========= =========
Ratio of net expenses to average net assets (b) ........... 1.51% 1.56% 1.60%(c)
Ratio of net investment income (loss) to average net assets 0.38% (0.05)% (0.15)%(c)
Portfolio turnover rate ................................... 39% 47% 70%(c)
</TABLE>
(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.
12
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund (individually, a Fund,
and, collectively, the Funds) are each 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. The Trust was organized as
a Massachusetts business trust on July 18, 1988.
The Jamestown 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 Jamestown 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 Jamestown 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 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 could be affected by certain Virginia political and economic
developments.
The Jamestown 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 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
(normally 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. It is expected that 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. If a pricing service cannot provide a valuation, securities
will be valued in good faith at value using methods consistent with those
determined by the Board of Trustees. Foreign securities are translated from the
local currency into U.S. dollars using currency exchange rates supplied by a
quotation service.
Repurchase agreements -- The Jamestown Balanced Fund and The Jamestown Equity
Fund 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. At the time the Funds enter 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, 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.
13
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
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.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid quarterly to shareholders of The Jamestown
Balanced Fund, The Jamestown Equity Fund and The Jamestown International Equity
Fund and are declared daily and paid monthly to shareholders of The Jamestown
Tax Exempt Virginia 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.
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 Jamestown Balanced 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 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
investment securities as of March 31, 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Jamestown Jamestown Jamestown Jamestown
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation .. $ 32,112,011 $ 21,868,458 $ 704,888 $ 13,312,879
Gross unrealized depreciation .. (1,314,528) (1,018,725) (41,079) (1,830,518)
------------ ------------ ------------ ------------
Net unrealized appreciation .... $ 30,797,483 $ 20,849,733 $ 663,809 $ 11,482,361
============ ============ ============ ============
Federal income tax cost ........ $ 80,304,140 $ 42,065,376 $ 24,600,110 $ 40,485,195
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------
</TABLE>
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for The Jamestown Balanced Fund and The Jamestown
Equity Fund is due to certain timing differences in the recognition of capital
losses under income tax regulations and generally accepted accounting
principles.
14
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
As of March 31, 1999, The Jamestown Equity Fund had capital loss carryforwards
for federal income tax purposes of $368,885 which expire on March 31, 2007.
These capital loss carryforwards may be utilized in future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
2. INVESTMENT TRANSACTIONS
Investment transactions, other than short-term investments, were as follows for
the year ended March 31, 1999:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Jamestown Jamestown Jamestown Jamestown
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of investment securities .. $78,675,464 $44,346,054 $13,068,282 $24,316,515
=========== =========== =========== ===========
Proceeds from sales and maturities
of investment securities ......... $69,731,979 $34,909,266 $ 6,457,178 $17,425,753
=========== =========== =========== ===========
- -------------------------------------------------------------------------------------------------
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Funds' investments are managed by Lowe, Brockenbrough & Company, Inc. (the
Adviser), under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, The Jamestown Balanced Fund pays the Adviser a
fee, which is computed and accrued daily and paid monthly, at an annual rate of
.65% on its average daily net assets up to $250 million, .60% on the next $250
million of such net assets and .55% on such net assets in excess on $500
million. The Jamestown Equity Fund pays the Adviser a fee at an annual rate of
.65% on its average daily net assets up to $500 million and .50% on such net
assets in excess on $500 million. The Jamestown Tax Exempt Virginia Fund pays
the Adviser a fee at an annual rate of .40% on its average daily net assets up
to $250 million, .35% on the next $250 million of such net assets and .30% on
such net assets in excess of $500 million. The Jamestown International Equity
Fund pays the Adviser a fee at an annual rate of 1.00% on its average daily net
assets. Certain trustees and officers of the Trust are also officers of the
Adviser.
The Adviser retains Oechsle International Advisors, LLC (Oechsle) to provide The
Jamestown International Equity 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.
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 each
of The Jamestown Balanced Fund and The Jamestown Equity Fund at an annual rate
of .20% on its respective 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 with respect to each
Fund. From The Jamestown Tax Exempt Virginia Fund, CFS receives a monthly fee at
an annual rate of .15% on its average daily net assets up to $200 million and
.10% on such net assets in excess of $200 million, subject to a $2,000 minimum
monthly fee. From The Jamestown International Equity Fund, CFS receives a
monthly fee at an annual rate of .25% on its average daily net assets up to $25
million; .225% on the next $25 million of such net assets; and .20% on such net
assets in excess of $50 million, subject to a $4,000 minimum monthly fee. In
addition, each Fund pays CFS 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, or of CW Fund
Distributors, Inc., the exclusive underwriter of each Funds' shares.
15
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. DIRECTED BROKERAGE ARRANGEMENT
In order to reduce the total operating expenses of The Jamestown Balanced Fund
and The Jamestown Equity Fund, each Fund's custodian fees and a portion of other
operating expenses have been paid through an arrangement with a thirdparty
brokerdealer who is compensated through commission trades. Payment of expenses
by the brokerdealer is based on a percentage of commissions earned. Expenses
reimbursed through the directed brokerage arrangement totaled $24,000 and
$17,500 for The Jamestown Balanced Fund and The Jamestown Equity Fund,
respectively, for the year ended March 31, 1999.
5. FOREIGN CURRENCY TRANSLATION
With respect to The Jamestown International Equity Fund, 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.
6. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Jamestown International Equity 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.
16
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
As of March 31, 1999, the Jamestown International Equity Fund had forward
foreign currency exchange contracts outstanding as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Net Unrealized
Settlement To Receive Initial Market Appreciation
Date (To Deliver) Value Value (Depreciation)
- ---------------------------------------------------------------------------------------
Contracts To Sell
<S> <C> <C> <C> <C>
04/01/99 1,440 AUD $ (901) $ (909) $ (8)
04/07/99 36,597 NZD (19,488) (19,514) (26)
04/08/99 78,824 NZD (41,737) (42,030) (293)
04/09/99 81,117 NZD (43,114) (43,252) (138)
06/17/99 292,000,000 JPY (2,498,781) (2,492,507) 6,274
----------- ----------- -------
Total sell contracts (2,604,021) (2,598,212) 5,809
----------- ----------- -------
Contracts To Buy
04/01/99 32,370 AUD 20,490 20,441 (49)
04/06/99 33,723 AUD 21,229 21,293 64
----------- ----------- -------
Total buy contracts 41,719 41,734 15
----------- ----------- -------
Net contracts $(2,562,302) $(2,556,478) $ 5,824
=========== =========== =======
- ---------------------------------------------------------------------------------------
</TABLE>
AUD - Australian Dollar
JPY - Japanese Yen
NZD - New Zealand Dollar
17
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 68.8% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 1.4%
20,000 Interpublic Group of Companies, Inc. ........... $ 1,557,500
------------
COMMERCIAL BANKING -- 5.4%
26,000 BankAmerica Corporation ........................ 1,836,250
32,000 Fannie Mae ..................................... 2,216,000
37,600 First Union Corporation ........................ 2,009,250
------------
6,061,500
------------
COMMUNICATIONS -- 7.2%
10,000 Ascend Communications, Inc.(a) ................. 836,870
56,000 Equifax, Inc. .................................. 1,925,000
17,900 Lucent Technologies, Inc. ...................... 1,928,725
38,000 MCI WorldCom, Inc.(a) .......................... 3,365,375
------------
8,055,970
------------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES -- 11.6%
25,500 Cisco Systems, Inc.(a) ......................... 2,793,844
46,400 Computer Sciences Corporation(a) ............... 2,560,700
16,900 Intel Corporation .............................. 2,013,212
22,000 Microsoft Corporation(a) ....................... 1,971,750
51,000 Oracle Corporation(a) .......................... 1,345,125
35,000 Sundstrand Corporation ......................... 2,432,500
------------
13,117,131
------------
CONSUMER PRODUCTS -- 10.3%
25,000 Avon Products, Inc. ............................ 1,176,562
62,000 Crane Company .................................. 1,499,625
22,000 General Electric Company ....................... 2,433,750
20,000 Gillette Company ............................... 1,188,750
42,000 Kimberly-Clark Corporation ..................... 2,013,375
81,000 Sara Lee Corporation ........................... 2,004,750
50,000 Sysco Corporation .............................. 1,315,625
------------
11,632,437
------------
DRUGS/MEDICAL EQUIPMENT-- 9.2%
35,000 Abbott Laboratories ............................ 1,638,437
35,000 Becton, Dickinson and Company .................. 1,340,920
24,000 Bristol-Myers Squibb Company ................... 1,543,500
18,000 Lilly (Eli) & Company .......................... 1,527,750
24,200 Merck and Company, Inc. ........................ 1,940,538
44,000 Schering-Plough Corporation .................... 2,433,750
------------
10,424,895
------------
ELECTRONICS -- 1.0%
16,000 Hewlett-Packard Company ........................ 1,085,000
------------
FINANCIAL SERVICES -- 1.0%
18,000 Citigroup, Inc. ................................ 1,149,750
------------
18
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 68.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FIRE SYSTEMS -- 2.5%
40,000 Tyco International Ltd. ........................ $ 2,870,000
------------
FOOD SERVICES -- 1.7%
41,000 H.J. Heinz Company ............................. 1,942,375
------------
HEALTH CARE CENTERS -- 2.6%
44,000 McKesson HBOC, Inc. ............................ 2,904,000
------------
INSURANCE -- 4.6%
25,500 American International Group, Inc. ............. 3,075,938
31,500 Jefferson-Pilot Corporation .................... 2,134,125
------------
5,210,063
------------
OIL AND GAS DRILLING -- 5.4%
63,000 Coastal Corporation ............................ 2,079,000
54,000 Halliburton Company ............................ 2,079,000
9,000 Mobil Corporation .............................. 792,000
18,400 Schlumberger, Ltd. ............................. 1,107,450
------------
6,057,450
------------
RETAIL STORES -- 4.9%
65,000 AutoZone, Inc.(a) .............................. 1,974,375
15,000 Circuit City Stores, Inc. ...................... 1,149,375
36,000 Dayton Hudson Corporation ...................... 2,398,500
------------
5,522,250
------------
TOTAL COMMON STOCKS (COST $46,685,568) ......... $ 77,590,321
------------
================================================================================
PAR
VALUE U.S. TREASURY OBLIGATIONS -- 5.8% VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY BONDS -- 1.5%
$ 900,000 6.625%, due 02/15/2027 ......................... $ 992,106
780,000 5.25%, due 02/15/2029 .......................... 737,342
------------
1,729,448
------------
U.S. TREASURY NOTES -- 3.7%
875,000 7.75%, due 11/30/1999 .......................... 891,949
2,040,000 6.50%, due 05/31/2001 .......................... 2,100,241
1,115,000 7.00%, due 07/15/2006 .......................... 1,219,877
------------
4,212,067
U.S. TREASURY INFLATION-PROTECTION NOTES -- 0.6%
399,153 3.625%, due 07/15/2002 ......................... 396,535
212,086 3.375%, due 01/15/2007 ......................... 204,133
------------
600,668
------------
TOTAL U.S. TREASURY OBLIGATIONS (COST $6,645,282) $ 6,542,183
------------
19
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE MORTGAGE-BACKED SECURITIES -- 8.0% VALUE
- --------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.8%
$ 36,627 Pool #G50153, 4.50%, due 05/01/1999 ............ $ 36,125
246,070 Pool #1490-PE, 5.75%, due 07/15/2006 ........... 246,223
475,000 Pool #1471-G, 7.00%, due 03/15/2008 ............ 489,098
175,000 Pool #1655-HB, 6.50%, due 10/15/2008 ........... 178,444
------------
949,890
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.8%
382,836 Pool #73718, 7.23%, due 11/01/2003 ............. 403,548
345,320 Pool #375448, 6.66%, due 10/01/2004 ............ 358,270
216,197 Series #93-63-PE, 6.25%, due 06/25/2005 ........ 216,332
616,402 Pool #375296, 6.92%, due 08/01/2007 ............ 650,305
425,000 Series #93-18-PJ, 6.50%, due 12/25/2007 ........ 430,045
708,406 Pool #380190, 6.325%, due 04/01/2008 ........... 721,512
730,564 Pool #380512, 6.15%, due 08/01/2008 ............ 739,696
145,625 Pool #70, 8.50%, due 01/01/2012 ................ 153,083
120,476 Series #88-29-B, 9.50%, due 12/25/2018 ......... 128,683
188,546 Series #90-35-E, 9.50%, due 04/25/2020 ......... 202,568
500,000 Series #98-M4-B, 6.424%, due 12/01/2023 ........ 500,000
543,164 Pool #252092, 6.00%, due 11/01/2028 ............ 528,021
137,900 Pool #448624, 6.50%, due 11/01/2028 ............ 137,310
421,364 Pool #448629, 6.50%, due 11/01/2028 ............ 419,561
345,744 Pool #448699, 6.00%, due 11/01/2028 ............ 336,105
911,793 Pool #448649, 6.50%, due 12/01/2028 ............ 907,891
866,953 Pool #453624, 6.00%, due 12/01/2028 ............ 842,783
------------
7,675,713
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.4%
382,981 Pool #343536, 7.50%, due 02/15/2023 ............ 395,444
------------
TOTAL MORTGAGE-BACKED SECURITIES (COST $8,986,550) $ 9,021,047
------------
20
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE ASSET-BACKED SECURITIES -- 3.1% VALUE
- --------------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION -- 1.1%
$ 480,103 Series #97-3-A1, 5.604%, adjustable rate,
due 04/25/2006 ............................... $ 478,041
746,444 Series #98-1-A1, 5.212%, adjustable rate,
due 01/25/2007 ............................... 744,549
------------
1,222,590
------------
OTHER ASSET-BACKED SECURITIES -- 2.0%
Advanta Mortgage Loan Trust #92-2-A2,
27,710 7.03%, due 03/25/2011 ........................ 27,641
AFG Receivables Trust #95-A-A,
36,323 6.15%, due 09/15/2000 ........................ 36,323
California Infrastructure Trust #97-1-A3,
700,000 6.17%, due 03/25/2003 ........................ 706,776
Fleetwood Credit Corporation Grantor Trust #95-A-A,
275,202 8.45%, due 11/15/2010 ........................ 284,560
Green Tree Financial Corporation #98-A-A1C,
356,263 6.18%, due 06/15/2019 ........................ 358,366
Nomura Asset Securties Corporation #96-MD5-A1A,
601,559 7.07%, due 04/13/2036 ........................ 621,862
NationsCredit Grantor Trust #96-1-A,
195,475 5.85%, due 09/15/2011 ........................ 194,068
------------
2,229,596
------------
TOTAL ASSET-BACKED SECURITIES (COST $3,447,782) $ 3,452,186
------------
================================================================================
PAR
VALUE CORPORATE BONDS -- 12.8% VALUE
- --------------------------------------------------------------------------------
Associates Corporation, N.A.,
$ 675,000 5.85%, due 01/15/2001 ........................ $ 678,301
Beneficial Corporation Medium Term Notes,
230,000 6.35%, due 12/03/2001 ........................ 232,689
Caterpillar Financial, Inc. Medium Term Notes,
450,000 6.80%, due 06/15/1999 ........................ 451,444
Chrysler Financial Corporation,
1,000,000 5.90%, due 01/26/2001 ........................ 1,008,010
Coca-Cola Enterprises,
385,000 5.75%, due 11/01/2008 ........................ 372,784
Duke Realty L.P. Medium Term Notes,
390,000 6.75%, due 05/30/08 .......................... 385,515
Enron Corporation,
750,000 6.45%, due 11/15/2001 ........................ 758,017
Equity Residential Properties Trust,
875,000 6.65%, due 11/15/2003 ........................ 876,356
Finova Capital Corporation,
1,000,000 6.25%, due 08/15/2000 ........................ 1,007,140
Ford Motor Credit Company Medium Term Notes,
225,000 7.55%, due 07/19/1999 ........................ 226,568
475,000 7.20%, due 06/15/2007 ........................ 501,814
General Motors Acceptance Corporation Medium Term Notes,
525,000 6.65%, due 05/24/2000 ........................ 531,652
International Lease Finance Corporation,
265,000 6.375%, due 08/01/2002 ....................... 269,078
21
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE CORPORATE BONDS -- 12.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
International Lease Finance Corporation Medium Term Notes,
$ 425,000 6.42%, due 09/11/2000 ........................ $ 429,526
425,000 6.55%, due 09/15/2000 ........................ 430,295
International Paper Company,
735,000 8.68%, due 09/14/2001 ........................ 778,924
KeyCorp Medium Term Notes,
675,000 6.75%, due 05/29/2001 ........................ 689,155
Manitoba (Province of) Medium Term Notes,
205,000 5.50%, due 10/01/2008 ........................ 198,352
May Department Stores,
510,000 5.95%, due 11/01/2008 ........................ 503,212
Merrill Lynch & Company Medium Term Notes,
265,000 7.26%, due 03/25/2002 ........................ 262,350
National City Corporation,
575,000 7.20%, due 05/15/2005 ........................ 595,660
Norwest Financial, Inc.,
140,000 6.05%, due 11/19/1999 ........................ 140,676
400,000 5.375%, due 09/30/2003 ....................... 391,860
Pacific Bell,
185,000 6.625%, due 11/01/2009 ....................... 191,997
Pacific Bell Medium Term Notes,
400,000 6.875%, due 08/15/2006 ....................... 419,364
Prologis Trust,
225,000 7.00%, due 10/01/2003 ........................ 225,356
Sears Roebuck Acceptance Corporation,
400,000 6.99%, due 09/30/2002 ........................ 412,908
Suntrust Banks,
310,000 6.125%, due 02/15/2004 ....................... 309,547
TRW, Inc.,
245,000 6.25%, due 01/15/2010 ........................ 232,287
Union Camp Corporation,
425,000 6.50%, due 11/15/2007 ........................ 425,523
U.S. WEST Capital Funding, Inc. Medium Term Notes,
550,000 6.375%, due 07/15/2008 ....................... 559,526
------------
TOTAL CORPORATE BONDS (COST $14,459,095) ....... $ 14,495,886
------------
TOTAL INVESTMENTS AT VALUE
(COST $80,224,277) -- 98.5% .................. $111,101,623
------------
22
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS(B) -- 1.6% VALUE
- --------------------------------------------------------------------------------
Firstar Bank, 3.75%, dated 03/31/1999, due
$ 1,868,000 04/01/1999, repurchase proceeds $1,868,195
(Cost $1,868,000) ............................ $ 1,868,000
------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 100.1% ................ $112,969,623
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1)% (165,818)
------------
NET ASSETS -- 100.0% $112,803,805
============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,565 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $1,935,077.
See accompanying notes to financial statements.
23
<PAGE>
THE JAMESTOWN EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 99.2% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 2.0%
16,000 Interpublic Group of Companies, Inc. ........... $ 1,246,000
------------
COMMERCIAL BANKING -- 7.9%
21,000 BankAmerica Corporation ........................ 1,483,125
27,000 Fannie Mae ..................................... 1,869,750
30,600 First Union Corporation ........................ 1,635,188
------------
4,988,063
------------
COMMUNICATIONS -- 10.6%
13,000 Ascend Communications, Inc. (a) ................ 1,087,937
49,000 Equifax, Inc. .................................. 1,684,375
12,000 Lucent Technologies, Inc. ...................... 1,293,000
30,000 MCI WorldCom, Inc.(a) .......................... 2,656,875
------------
6,722,187
------------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES -- 17.0%
20,250 Cisco Systems, Inc.(a) ......................... 2,218,641
39,500 Computer Sciences Corporation(a) ............... 2,179,906
15,000 Intel Corporation .............................. 1,786,875
19,000 Microsoft Corporation(a) ....................... 1,702,875
45,000 Oracle Corporation(a) .......................... 1,186,875
24,000 Sunstrand Corporation .......................... 1,668,000
------------
10,743,172
------------
CONSUMER PRODUCTS -- 15.8%
21,000 Avon Products, Inc. ............................ 988,312
69,000 Crane Company .................................. 1,668,937
17,000 General Electric Company ....................... 1,880,625
15,000 Gillette Company ............................... 891,562
37,000 Kimberly-Clark Corporation ..................... 1,773,687
70,000 Sara Lee Corporation ........................... 1,732,500
42,000 Sysco Corporation .............................. 1,105,125
------------
10,040,748
------------
DRUGS/MEDICAL EQUIPMENT -- 12.2%
15,000 Abbott Laboratories ............................ 702,187
28,000 Becton, Dickinson and Company .................. 1,072,750
20,000 Bristol-Myers Squibb Company ................... 1,286,250
15,000 Lilly (Eli) & Company .......................... 1,273,125
22,000 Merck and Company, Inc. ........................ 1,764,125
29,000 Schering-Plough Corporation .................... 1,604,063
------------
7,702,500
------------
ELECTRONICS -- 1.6%
15,000 Hewlett-Packard Company ........................ 1,017,188
------------
FINANCIAL SERVICES -- 1.6%
15,500 Citigroup, Inc. ................................ 990,063
------------
24
<PAGE>
THE JAMESTOWN EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 99.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FIRE SYSTEMS -- 3.8%
34,000 Tyco International Ltd. ........................ $ 2,439,500
------------
FOOD SERVICES -- 2.5%
34,000 H.J. Heinz Company ............................. 1,610,750
------------
HEALTH CARE CENTERS -- 3.7%
36,000 McKesson HBOC, Inc. ............................ 2,376,000
------------
INSURANCE -- 6.7%
20,550 American International Group, Inc. ............. 2,478,844
26,500 Jefferson-Pilot Corporation .................... 1,795,375
------------
4,274,219
------------
OIL AND GAS DRILLING -- 7.8%
53,000 Coastal Corporation ............................ 1,749,000
44,000 Halliburton Company ............................ 1,694,000
7,000 Mobil Corporation .............................. 616,000
14,500 Schlumberger Ltd. .............................. 872,719
------------
4,931,719
------------
RETAIL STORES -- 6.0%
56,000 AutoZone, Inc.(a) .............................. 1,701,000
32,000 Dayton Hudson Corporation ...................... 2,132,000
------------
3,833,000
------------
TOTAL COMMON STOCKS (COST $42,050,206) ......... $ 62,915,109
------------
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS(B) -- 1.1% VALUE
- --------------------------------------------------------------------------------
$ 679,000 Firstar Bank, 3.75%, dated 03/31/1999,
due 04/01/1999, repurchase proceeds
$679,071 (Cost $679,000) ..................... $ 679,000
------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 100.3% ................ $ 63,594,109
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.3)% (178,141)
------------
NET ASSETS -- 100.0% ........................... $ 63,415,968
============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,565 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $703,390.
See accompanying notes to financial statements.
25
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
PAR VIRGINIA FIXED RATE REVENUE AND GENERAL
VALUE OBLIGATION (GO) BONDS -- 95.8% VALUE
- --------------------------------------------------------------------------------
Alexandria, Virginia, Industrial
Dev. Authority, Revenue,
$ 900,000 3.00%, adjustable rate, due 07/01/2022 ....... $ 900,000
Arlington Co., Virginia, GO,
300,000 5.60%, due 08/01/2006 ........................ 327,030
1,000,000 5.00%, due 10/01/2013 ........................ 1,030,010
Brunswick Co., Virginia, Industrial
Dev. Authority, Revenue,
300,000 5.45%, due 07/01/2006 ........................ 324,183
Chesterfield Co., Virginia, GO,
350,000 6.25%, due 07/15/2005 ........................ 376,068
750,000 4.00%, due 01/01/2006 ........................ 751,283
Fairfax Co., Virginia, GO,
350,000 5.60%, due 05/01/2003 ........................ 357,196
600,000 5.00%, due 06/01/2014 ........................ 610,560
Fairfax Co., Virginia, Park Authority, Revenue,
300,000 6.25%, due 07/15/2005 ........................ 326,064
Fairfax Co., Virginia, Sewer, Revenue,
350,000 5.625%, due 07/15/2008 ....................... 383,863
Hanover Co., Virginia, Industrial
Dev. Authority, Revenue,
225,000 6.25%, due 10/01/2011 ........................ 241,229
Henrico Co., Virginia, GO,
500,000 4.70%, due 01/15/2002 ........................ 514,820
Henrico Co., Virginia, Water and Sewer, Revenue,
500,000 4.625%, due 05/01/2017 ....................... 475,830
James City Co., Virginia, GO,
500,000 5.25%, due 12/15/2015 ........................ 513,315
Loudoun Co., Virginia, GO,
300,000 5.50%, due 06/01/2009 ........................ 324,855
Lynchburg, Virginia, GO,
500,000 5.30%, due 05/01/2014 ........................ 520,000
Medical College of Virginia Hospitals
Authority, Revenue,
700,000 5.00%, due 07/01/2013 ........................ 703,535
Newport News, Virginia, GO,
400,000 5.40%, due 07/01/2002 ........................ 405,240
400,000 5.15%, due 01/01/2010 ........................ 414,728
Norfolk, Virginia, GO,
300,000 5.75%, due 06/01/2011 ........................ 321,756
500,000 5.00%, due 07/01/2014 ........................ 506,365
Petersburg, Virginia, GO,
500,000 5.125%, due 01/15/2013 ....................... 515,295
Peumansend Creek, Virginia, Regional
Jail Authority, Revenue,
300,000 5.75%, due 06/01/2017 ........................ 320,454
Pittsylvania Co., Virginia, GO,
300,000 5.65%, due 07/01/2006 ........................ 328,833
Portsmouth, Virginia, GO,
800,000 5.00%, due 08/01/2017 ........................ 797,096
Prince William Co., Virginia, GO,
400,000 4.90%, due 08/01/2005 ........................ 420,172
Prince William Co., Virginia, Park Authority, Revenue,
250,000 6.10%, due 10/15/2004 ........................ 273,330
26
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VIRGINIA FIXED RATE REVENUE AND GENERAL
VALUE OBLIGATION (GO) BONDS -- 95.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Prince William Co., Virginia, Service Auth.
Water & Sewer, Revenue,
$ 500,000 5.00%, due 07/01/2003 ........................ $ 523,315
Richmond, Virginia, GO,
400,000 6.25%, due 01/15/2018 ........................ 423,872
Richmond, Virginia, Metropolitan Authority,
Expressway, Revenue,
500,000 6.05%, due 07/15/2005 ........................ 541,815
Richmond, Virginia, Redev. & Housing
Authority, Revenue,
500,000 5.00%, due 03/01/2018 ........................ 493,360
Riverside, Virginia, Regional Jail Authority, Revenue,
300,000 5.30%, due 07/01/2002 ........................ 314,553
Roanoke, Virginia, GO,
700,000 5.00%, due 08/01/2012 ........................ 717,269
300,000 6.40%, due 08/01/2012 ........................ 326,331
Spotsylvania Co., Virginia, GO,
400,000 5.75%, due 07/15/2011 ........................ 430,944
Suffolk, Virginia, GO,
350,000 5.80%, due 06/01/2011 ........................ 381,052
Upper Occoquan, Virginia, Sewer Authority, Revenue,
700,000 5.00% due 07/01/2015 ......................... 703,549
Virginia Beach, Virginia, GO,
325,000 6.20%, due 09/01/2013 ........................ 365,593
Virginia College Building Authority,
Educational Facilities, Revenue,
885,000 3.05%, floating rate, due 11/01/2026 ......... 885,000
Virginia Commonwealth University, Revenue,
250,000 5.75%, due 05/01/2006 ........................ 274,162
Virginia Polytechnic Institute and
State University, Revenue,
625,000 5.45%, due 06/01/2013 ........................ 659,256
Virginia State, GO,
500,000 5.25%, due 07/01/2011 ........................ 526,595
500,000 5.375%, due 06/01/2015 ....................... 519,990
Virginia State Housing Dev. Authority,
Commonwealth Mortgages, Revenue,
150,000 5.60%, due 01/01/2002 ........................ 154,415
Virginia State Housing Dev. Authority,
Multi-Family, Revenue,
150,000 6.60%, due 11/01/2012 ........................ 163,401
150,000 6.30%, due 11/01/2015 ........................ 161,268
Virginia State Public Building Authority, Revenue,
500,000 6.00%, due 08/01/2003 ........................ 529,810
Virginia State Public School Authority, Revenue,
750,000 5.25%, due 08/01/2009 ........................ 804,368
Virginia State Resource Authority,
Solid Waste Disposal System, Revenue,
500,000 5.50%, due 04/01/2015 ........................ 519,995
Virginia State Transportation Board, Revenue,
350,000 6.25%, due 05/15/2012, prerefunded 05/15/2004 389,847
Winchester, Virginia, Industrial Dev.
Authority, Educational Facilities, Revenue,
500,000 5.00% due 10/01/2018 ......................... 493,870
York Co., Virginia, Certificates of
Participation, Revenue,
250,000 6.625%, due 03/01/2012 ....................... 261,542
------------
TOTAL VIRGINIA FIXED RATE REVENUE AND GENERAL
OBLIGATION (GO) BONDS (COST $23,884,473) ..... $ 24,548,282
------------
27
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS -- 2.8% VALUE
- --------------------------------------------------------------------------------
715,637 Firstar Tax-Free Fund (Cost $715,637) .......... $ 715,637
------------
TOTAL INVESTMENTS AT VALUE
(COST $24,600,110) -- 98.6% .................. $ 25,263,919
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.4% .. 361,876
------------
NET ASSETS -- 100.0% ........................... $ 25,625,795
============
See accompanying notes to financial statements.
28
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 96.2% VALUE
- --------------------------------------------------------------------------------
AUSTRALIA -- 2.2%
85,700 Australia and New Zealand Banking Group Ltd. ... $ 619,669
126,126 Coca-Cola Amatil Ltd. .......................... 544,796
------------
1,164,465
------------
BELGIUM -- 1.4%
11,380 Kredietbank NV ................................. 758,651
------------
CANADA -- 2.5%
18,100 BCE, Inc. ...................................... 798,635
11,200 The Seagram Company Ltd. ....................... 560,814
------------
1,359,449
------------
FRANCE -- 8.8%
4,314 Groupe Danone .................................. 1,085,639
8,970 Suez Lyonnaise des Eaux ........................ 1,659,840
11,129 Valeo SA ....................................... 871,078
4,685 Vivendi ........................................ 1,152,701
------------
4,769,258
------------
GERMANY -- 5.1%
7,721 DaimlerChrysler AG ............................. 671,849
17,517 Hoechst AG ..................................... 759,291
10,500 Mannesmann AG .................................. 1,341,025
------------
2,772,165
------------
GREECE -- 0.4%
8,840 Hellenic Telecommunications Organization SA (OTE) 214,366
------------
HONG KONG -- 1.8%
72,000 Cheung Kong (Holdings) Ltd. .................... 548,157
57,000 Hutchison Whampoa Ltd. ......................... 448,668
------------
996,825
------------
INDIA -- 0.3%
4,220 Richter Gedeon Rt. - GDR ....................... 136,871
------------
ITALY -- 9.9%
330,623 Banca Nazionale del Lavoro (BNL)(a) ............ 1,156,488
9,100 Banca Popolare di Bergamo Credito Varesino SpA . 230,872
167,922 Credito Italiano SpA ........................... 906,443
116,200 Mediaset SpA ................................... 1,092,665
186,202 Telecom Italia SpA ............................. 1,978,073
------------
5,364,541
------------
JAPAN -- 18.3%
24,000 Canon, Inc. .................................... 593,768
25,000 Denso Corporation .............................. 490,796
500 Isetan Company ................................. 4,771
11,000 Ito-Yokado Company Ltd. ........................ 707,760
26,000 Kao Corporation ................................ 574,094
33,000 Matsushita Electric Industrial Company Ltd. .... 643,671
29
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
JAPAN -- 18.3% (CONTINUED)
13,000 Murata Manufacturing Company Ltd. .............. $ 691,548
35,000 Nikko Securities Co., Ltd. ..................... 162,543
103 Nippon Telegraph and Telephone Corporation ..... 1,008,866
27,000 Nomura Securities Company Ltd. ................. 282,699
36 NTT Mobile Communication Network, Inc. ......... 1,778,266
7,000 Rohm Company ................................... 836,359
167,000 Sakura Bank, Ltd. .............................. 506,232
660 Shohkoh Fund & Co., Ltd. ....................... 334,375
18,000 Takeda Chemical Industries ..................... 697,627
3,700 Takefugi Corporation ........................... 284,303
42,000 Toshiba Corporation ............................ 286,904
------------
9,884,582
------------
NETHERLANDS -- 9.2%
13,500 Gucci Group NV - ADR ........................... 1,086,750
27,014 KPN NV ......................................... 1,074,705
5,058 Laurus NV ...................................... 122,852
13,310 Royal Dutch Petroleum Company .................. 707,697
22,128 Vendex International NV ........................ 533,928
36,406 VNU NV ......................................... 1,418,871
------------
4,944,803
------------
NEW ZEALAND -- 1.7%
192,383 Telecom Corporation of New Zealand Ltd. ........ 935,692
------------
PHILIPPINES -- 0.4%
540,000 Filinvest Land, Inc.(a) ........................ 44,594
24,192 Metropolitan Bank & Trust Company(a) ........... 191,975
------------
236,569
------------
PORTUGAL -- 1.6%
18,904 Portugal Telecom SA ............................ 846,759
------------
SINGAPORE -- 0.2%
12,000 Development Bank of Singapore Ltd. ............. 90,946
------------
SPAIN -- 3.8%
55,549 Argentaria SA .................................. 1,334,948
16,826 Telefonica de Espana ........................... 713,716
------------
2,048,664
------------
SWEDEN -- 2.4%
15,760 Hennes and Mauritz AB - Class B ................ 1,188,277
7,710 Skandinaviska Enskilda Banken - Class A ........ 94,230
------------
1,282,507
------------
SWITZERLAND -- 4.7%
581 Novartis AG .................................... 942,491
89 Roche Holding AG - Genusschein ................. 1,085,366
796 Schweizerische Lebensversicherungs
-und Rentenanstalt .......................... 507,147
------------
2,535,004
------------
30
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 21.5%
36,943 Allied Zurich PLC .............................. $ 498,261
318,671 ASDA Group PLC ................................. 781,934
202,380 British Aerospace PLC .......................... 1,351,730
89,143 British American Tobacco PLC ................... 741,819
86,375 British Sky Broadcasting Group PLC ............. 745,281
94,155 Diageo PLC ..................................... 1,063,201
47,580 Glaxo Wellcome PLC ............................. 1,592,238
50,079 Imperial Chemical Industries PLC ............... 447,059
41,592 Railtrack Group PLC ............................ 952,073
66,944 Reed International PLC ......................... 609,502
168,537 Somerfield PLC ................................. 863,820
105,931 Vodafone Group PLC ............................. 1,978,521
------------
11,625,439
------------
TOTAL COMMON STOCKS (COST $40,485,195) ......... $ 51,967,556
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.8% 2,051,701
------------
NET ASSETS -- 100.0% $ 54,019,257
============
(a) Non-income producing security.
See accompanying notes to financial statements.
31
<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 Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund (each a series of The
Williamsburg Investment Trust), including the portfolios of investments, as of
March 31, 1999, and the related statements of operations for the year then
ended, and the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of 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 audits 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, 1999 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 positions of
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund as of March 31, 1999,
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 the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 30, 1999
32
<PAGE>
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33
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
34
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
35
<PAGE>
THE JAMESTOWN FUNDS
INVESTMENT ADVISER
Lowe, Brockenbrough & Company, Inc.
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
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
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN
TAX EXEMPT VIRGINIA FUND
August 1, 1999
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
DESCRIPTION OF MUNICIPAL BOND RATINGS..........................................8
INVESTMENT LIMITATIONS.........................................................9
TRUSTEES AND OFFICERS.........................................................10
INVESTMENT ADVISOR............................................................13
ADMINISTRATOR.................................................................14
OTHER SERVICES................................................................15
BROKERAGE.....................................................................15
SPECIAL SHAREHOLDER SERVICES..................................................16
PURCHASE OF SHARES............................................................18
REDEMPTION OF SHARES..........................................................19
NET ASSET VALUE DETERMINATION.................................................19
ALLOCATION OF TRUST EXPENSES..................................................19
ADDITIONAL TAX INFORMATION....................................................20
CAPITAL SHARES AND VOTING.....................................................21
CALCULATION OF PERFORMANCE DATA...............................................22
FINANCIAL STATEMENTS AND REPORTS..............................................24
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, 1999. 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.
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.
-1-
<PAGE>
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:
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.
-2-
<PAGE>
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.
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.
-3-
<PAGE>
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.
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
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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.
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
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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
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<PAGE>
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.
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
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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.
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
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<PAGE>
(10) 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.
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
The Fund is a 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.
Following are the Trustees and executive officers of 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, 1999:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 62) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund 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 45) 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 62) Physician $13,500
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 59) Julian Price Professor Emeritus of $13,000
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)
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<PAGE>
Richard Mitchell (age 50) 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 60) President of $13,500
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 39) President of $13,000
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
Erwin H. Will, Jr. (age 66) Chief Investment Officer of $13,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 63) Senior Vice President and $15,000
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 36) Portfolio Manager of none
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 54) Executive Vice President of none
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
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<PAGE>
Robert L. Bennett (age 57) First Vice President and Chief none
Treasurer, all Funds of the Trust Operating Officer of Countrywide
312 Walnut Street, 21st Floor Fund Services, Inc., (registered transfer
Cincinnati, Ohio 45202 agent and administrator to the Trust)
and of CW Fund Distributors, Inc.
(registered broker-dealer),
Cincinnati, Ohio
Charles M. Caravati III (age 33) Assistant Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 57) Principal of none
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 46) Principal of none
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
Tina D. Hosking (age 30) Assistant Vice President and Associate none
Secretary, all Funds of the Trust General Counsel of Countrywide Fund
312 Walnut Street, 21st Floor Services, Inc. (registered transfer agent
Cincinnati, Ohio 45202 and administrator of the Trust) and
CW Fund Distributors, Inc.,
Cincinnati, Ohio
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<PAGE>
Lee Keiger III (age 44) First Vice President and Chief Financial none
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 58) Principal of none
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Henry C. Spalding, Jr. (age 61) Executive Vice President of none
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Ernest H. Stephenson, Jr. (age 54) Vice President of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
Connie R. Taylor (age 48) Administrator of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 40) Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 53) President and Chief Executive none
Vice President Officer of Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
</TABLE>
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- -----------------------------
**Indicates that Trustee is an Interested Person for purposes of the Investment
Company Act of 1940. 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 12, 1999, Austin
Brockenbrough III owned beneficially (i.e., had voting and/or investment power)
1.95% of the then-outstanding shares of the Fund and Erwin Will owned of record
0.28% of the then-outstanding shares of the Fund. Robert B. Seidensticker, P.O.
Box 3073, Manakin Sabot, Virginia 23103 owned of record 6.70% of the
then-outstanding shares of the Fund and Charles Schwab & Co., Inc., 101
Montgomery Street, San Francisco, California 94104 owned of record 5.34% of the
then-outstanding shares of the Fund.
INVESTMENT ADVISOR
Lowe, Brockenbrough & Company, 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, 2000 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, 1999, 1998 and 1997, the Fund paid the Advisor advisory
fees of $85,055, $56,311 (net of voluntary fee waivers of $4,939) and $27,398
(net of voluntary fee waivers of $14,090) respectively.
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<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 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.
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,
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<PAGE>
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, 1999, 1998 and 1997, the Administrator
received from the Fund fees of $31,931, $25,157 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.
The Custodian of the Fund's assets is Firstar 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
-15-
<PAGE>
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.
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
-16-
<PAGE>
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 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,
-17-
<PAGE>
etc. If you have any questions about transferring shares, call or write the
Fund.
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.
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
-18-
<PAGE>
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.
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.
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.
-19-
<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 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.
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
-20-
<PAGE>
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
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,
-21-
<PAGE>
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, 1999, for the five year period ended March 31, 1999
and for the period since inception (September 1, 1993) to March 31, 1999 are
4.92%, 5.85% and 4.90% 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, 1999 was 3.88%.
The tax-equivalent yield of the Fund is computed by using the tax-exempt yield
figure and dividing by one minus the applicable
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<PAGE>
tax rate. The Fund's tax-equivalent yield for the 30 days ended March 31, 1999,
based on the highest marginal combined federal and Virginia income tax rate, was
6.82%.
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
-23-
<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, 1999, together with the report of the independent
accountants thereon, are included on the following pages.
-24-
<PAGE>
THE
JAMESTOWN
FUNDS
No-Load Funds
ANNUAL REPORT
March 31, 1999
INVESTMENT ADVISER
Lowe, Brockenbrough & Company, Inc.
Richmond, Virginia
<PAGE>
LETTER TO SHAREHOLDERS MAY 18, 1999
================================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the audited annual report of The
Jamestown Funds for the year ended March 31, 1999.
THE JAMESTOWN BALANCED FUND
For the fiscal year ended March 31, 1999, The Jamestown Balanced Fund produced a
total return of 7.6% compared to the Lipper Balanced Index of 8.4%. The equity
market had very narrow leadership during this period, with the technology sector
leading the way by a wide margin. That sector alone was up 62.7%, followed by
the communication services sector up 34.6%, and the health care sector up 28.5%.
The other nine equity sectors failed to keep pace with the 18.5% return of the
Standard & Poor's 500 Index, and four of these sectors actually produced
negative returns. The basic industry sector, which includes metal and chemical
companies, as well as paper and forest product companies, had the poorest
showing with a return of -14.1%.
The Jamestown Balanced Fund returned 16.9% on an annualized basis for the three
years ended March 31, 1999, comparing favorably to the 15.9% return for the
Lipper Balanced Index. For the five-year period, the Fund generated a return of
16.8% versus 15.0% for the comparable Lipper Balanced Index.
Your Fund grew in size to over $112 million in total net assets with 294
shareholders as of March 31, 1999.
THE JAMESTOWN EQUITY FUND
For the year ended March 31, 1999, The Jamestown Equity Fund had a total return
of 8.3%, failing to keep up with the 17.5% return for the Lipper Growth Index
and the 18.5% return for the Standard & Poor's 500 Index. Fueled by the
technology sector in general, and by many of the Internet stocks in particular,
the Lipper Growth Index was difficult for us to match, as we believe a large
number of the Internet stocks are selling at hyper-inflated valuations. Our
risk-averse style has kept us from owning those equities.
The Jamestown Equity Fund returned 21.5% on an annualized basis for the three
years ended March 31, 1999, versus 23.9% for the Lipper Growth Index. For the
five-year period, your Fund has returned 20.9% as compared to 21.8% for the
Index.
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
For the fiscal year ended March 31, 1999, the Jamestown Tax Exempt Virginia Fund
had a total return of 4.9% compared to 5.2% for the Lipper Intermediate
Municipal Fund Index and 6.2% for the Lehman Municipal Bond Index. Yields and
prices on municipal bonds have been extraordinarily stable by historical
standards. Over the past twelve months, Treasury yield volatility has been
roughly three times as great as municipal yield volatility, with a range of 110
basis points on the 30-year Treasury versus a difference of 31 basis points on
the Municipal Revenue Bond Index.
Some key characteristics of The Jamestown Tax Exempt Virginia Fund are as
follows:
Average Effective Maturity ......... 7.6 years
Average Effective Duration ......... 5.9 years
Average Weighted Coupon ............ 5.1%
SEC Yield .......................... 3.9%
Average Credit Quality ............. AA+
1
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
For the year ended March 31, 1999, The Jamestown International Equity Fund had a
total return of 8.7%. This return compares favorably with the 6.0% return
generated by the Morgan Stanley EAFE Index and the -0.6% return generated by the
Lipper International Index. The period was characterized by continued strength
throughout Europe and weakness in Japan and the rest of Asia.
Throughout the year, the Fund benefited from its heavy weighting in European
markets and its low weighting in Asian Pacific markets. European markets
benefited from the convergence of interest rates in preparation for the launch
of the Euro and the massive corporate restructuring programs that supported
stronger earnings growth. Beginning with the devaluation of the Thailand
currency last summer, most Asian Pacific equity markets fell 50% or more in the
second half of 1998.
The global crisis that was born out of the economic and financial turmoil in
Southeast Asia appears to have eased significantly. The Federal Reserve played a
leading role by cutting interest rates in the United States three times last
fall. Oechsle International Advisors used the turmoil to reduce their holdings
in Continental Europe and to reallocate money into the United Kingdom and Japan.
The regional allocations of the portfolio as of March 31, 1999 are shown in the
chart below:
The Jamestown
International Morgan Stanley
Equity Fund EAFE Index
----------- ----------
Continental Europe .................... 45.3% 48.7%
United Kingdom ........................ 21.5% 22.3%
Japan ................................. 18.3% 23.1%
Pacific Basin, ex Japan ............... 5.9% 5.9%
Emerging Markets ...................... 2.7% 0.0%
Cash/North America .................... 6.3% 0.0%
------ ------
100.0% 100.0%
Thank you for your continued confidence in The Jamestown Funds.
Sincerely,
/s/ Austin Brockenbrough, III
Austin Brockenbrough, III
President
Jamestown Tax Exempt Virginia Fund
Jamestown International Equity Fund
/s/ Henry C. Spalding, Jr.
Henry C. Spalding, Jr.
President
Jamestown Balanced Fund
Jamestown Equity Fund
2
<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
3/99
------
The Jamestown Balanced Fund $30,623
Standard & Poor's 500 Index $52,192
Consumer Price Index $13,290
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Balanced Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
7.56% 16.77% 12.17%
-------------------------------------
*Initial public offering of shares was July 3, 1989.
Past performance is not predictive of future performance.
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
3/99
------
The Jamestown Equity Fund $26,560
Standard & Poor's 500 Index $34,375
Consumer Price Index $11,598
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
8.33% 20.88% 16.68%
-------------------------------------
*Initial public offering of shares was December 1, 1992.
Past performance is not predictive of future performance.
3
<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, the Lipper Intermediate Municipal Fund Index and
the Lehman Municipal Bond Index
3/99
------
The Jamestown Tax Exempt Virginia Fund $13,060
Lipper Intermediate Municipal Fund Index $12,653
Lehman Municipal Bond Index $13,993
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Tax Exempt Virginia Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
4.92% 5.85% 4.90%
-------------------------------------
*Initial public offering of shares was September 1, 1993.
Past performance is not predictive of future performance.
The 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
3/99
------
The Jamestown International Equity Fund $13,878
Morgan Stanley EAFE Index $12,402
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown International Equity Fund
Average Annual Total Returns
1 Year Since Inception*
8.67% 11.72%
-------------------------------------
*Initial public offering of shares was April 16, 1996.
Past performance is not predictive of future performance.
4
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999
======================================================================================================================
JAMESTOWN JAMESTOWN
JAMESTOWN JAMESTOWN TAX EXEMPT INTERNATIONAL
BALANCED EQUITY VIRGINIA EQUITY
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C> <C>
At acquisition cost .......................... $ 80,224,277 $ 42,050,206 $ 24,600,110 $ 40,485,195
============ ============ ============ ============
At value (Note 1) ............................ $111,101,623 $ 62,915,109 $ 25,263,919 $ 51,967,556
Investments in repurchase agreements (Note 1) ... 1,868,000 679,000 -- --
Cash ............................................ 218 438 -- 1,837,687
Cash denominated in foreign currency ............ -- -- -- 4,985
Dividends receivable ............................ 72,234 60,380 -- 199,689
Interest receivable ............................. 450,221 71 320,333 4,341
Receivable for securities sold .................. -- 347,139 -- 104,814
Receivable for capital shares sold .............. -- 5,837 100,264 11,979
Net unrealized appreciation on forward foreign
currency exchange contracts (Note 6) ......... -- -- -- 5,824
Other assets .................................... 15,286 24,067 891 13,704
------------ ------------ ------------ ------------
TOTAL ASSETS ................................. 113,507,582 64,032,041 25,685,407 54,150,579
------------ ------------ ------------ ------------
LIABILITIES
Dividends payable ............................... 42,499 5,737 39,003 --
Distributions payable ........................... 79,100 -- -- --
Payable for securities purchased ................ 317,954 526,001 -- 41,737
Payable for capital shares redeemed ............. 165,732 30,916 1,219 --
Accrued investment advisory fees (Note 3) ....... 62,999 35,501 8,423 44,922
Accrued administration fees (Note 3) ............ 15,850 9,600 3,100 10,350
Other accrued expenses and liabilities .......... 19,643 8,318 7,867 34,313
------------ ------------ ------------ ------------
TOTAL LIABILITIES ............................ 703,777 616,073 59,612 131,322
------------ ------------ ------------ ------------
NET ASSETS ......................................... $112,803,805 $ 63,415,968 $ 25,625,795 $ 54,019,257
============ ============ ============ ============
Net assets consist of:
Paid-in capital ................................. $ 82,006,322 $ 42,935,120 $ 24,935,618 $ 41,845,573
Accumulated net realized gains (losses) from
security and foreign currency transactions ... (79,863) (384,055) 26,368 686,231
Net unrealized appreciation on investments ...... 30,877,346 20,864,903 663,809 11,482,361
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies . -- -- -- 5,092
------------ ------------ ------------ ------------
Net assets ......................................... $112,803,805 $ 63,415,968 $ 25,625,795 $ 54,019,257
============ ============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ...... 6,226,192 2,914,908 2,506,203 3,961,839
============ ============ ============ ============
Net asset value, offering price and
redemption price per share (Note 1) ............. $ 18.12 $ 21.76 $ 10.22 $ 13.63
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
=============================================================================================================
JAMESTOWN JAMESTOWN
JAMESTOWN JAMESTOWN TAX EXEMPT INTERNATIONAL
BALANCED EQUITY VIRGINIA EQUITY
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividends .............................. $ 739,421 $ 562,424 $ -- $ 882,162
Foreign withholding taxes on dividends . -- -- -- (91,794)
Interest ............................... 2,204,935 127,509 1,042,494 89,187
------------ ------------ ------------ ------------
TOTAL INVESTMENT INCOME ............. 2,944,356 689,933 1,042,494 879,555
------------ ------------ ------------ ------------
EXPENSES
Investment advisory fees (Note 3) ...... 680,064 361,874 85,055 464,912
Administration fees (Note 3) ........... 175,782 102,461 31,931 110,789
Custodian fees ......................... 14,825 8,047 3,795 72,618
Professional fees ...................... 13,185 8,045 8,045 11,775
Trustees' fees and expenses ............ 8,220 8,220 8,220 8,220
Pricing costs .......................... 9,712 1,015 6,782 8,559
Registration fees ...................... 7,626 6,122 2,202 7,518
Postage and supplies ................... 3,939 3,903 2,441 5,880
Printing of shareholder reports ........ 4,072 4,264 2,043 3,577
Insurance expense ...................... 3,268 2,490 1,401 1,868
Other expenses ......................... 3,083 6,687 3,615 5,339
------------ ------------ ------------ ------------
TOTAL EXPENSES ...................... 923,776 513,128 155,530 701,055
Expenses reimbursed through a directed
brokerage arrangement (Note 4) ...... (24,000) (17,500) -- --
------------ ------------ ------------ ------------
NET EXPENSES ........................ 899,776 495,628 155,530 701,055
------------ ------------ ------------ ------------
NET INVESTMENT INCOME ..................... 2,044,580 194,305 886,964 178,500
------------ ------------ ------------ ------------
REALIZEDAND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCIES (Note 5)
Net realized gains (losses) from:
Security transactions ............... 1,234,403 (369,569) 36,651 2,205,161
Foreign currency transactions ....... -- -- -- (56,520)
Net change in unrealized appreciation/
depreciation on:
Investments ......................... 4,507,324 5,043,678 81,607 1,511,375
Foreign currency translation ........ -- -- -- (120,768)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS
AND FOREIGN CURRENCIES ................. 5,741,727 4,674,109 118,258 3,539,248
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ........................ $ 7,786,307 $ 4,868,414 $ 1,005,222 $ 3,717,748
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
==========================================================================================================================
JAMESTOWN JAMESTOWN
BALANCED FUND EQUITY FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income .............................. $ 2,044,580 $ 1,911,506 $ 194,305 $ 238,229
Net realized gains (losses) from
security transactions ........................... 1,234,403 9,533,601 (369,569) 3,855,317
Net change in unrealized appreciation/
depreciation on investments ..................... 4,507,324 12,603,990 5,043,678 10,606,115
------------ ------------ ------------ ------------
Net increase in net assets from operations ............ 7,786,307 24,049,097 4,868,414 14,699,661
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ......................... (2,047,558) (1,934,092) (198,327) (242,370)
From net realized gains from security transactions . (1,302,068) (10,800,423) -- (4,379,490)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders .................................... (3,349,626) (12,734,515) (198,327) (4,621,860)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .......................... 13,392,101 17,601,307 11,342,221 10,499,561
Net asset value of shares issued in reinvestment
of distributions to shareholders ................ 3,140,088 12,174,707 171,755 4,351,536
Payments for shares redeemed ....................... (9,573,352) (10,335,880) (4,982,200) (3,895,041)
------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ......................... 6,958,837 19,440,134 6,531,776 10,956,056
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS .......................... 11,395,518 30,754,716 11,201,863 21,033,857
NET ASSETS
Beginning of year .................................. 101,408,287 70,653,571 52,214,105 31,180,248
------------ ------------ ------------ ------------
End of year ........................................ $112,803,805 $101,408,287 $ 63,415,968 $ 52,214,105
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Sold ............................................... 766,478 1,041,126 565,307 571,636
Reinvested ......................................... 178,274 735,126 8,737 236,191
Redeemed ........................................... (554,334) (599,080) (248,873) (209,264)
------------ ------------ ------------ ------------
Net increase in shares outstanding ................. 390,418 1,177,172 325,171 598,563
Shares outstanding, beginning of year .............. 5,835,774 4,658,602 2,589,737 1,991,174
------------ ------------ ------------ ------------
Shares outstanding, end of year .................... 6,226,192 5,835,774 2,914,908 2,589,737
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
==============================================================================================================================
JAMESTOWN TAX EXEMPT JAMESTOWN
VIRGINIA FUND INTERNATIONAL EQUITY FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income (loss) ........................... $ 886,964 $ 673,872 $ 178,500 $ (19,285)
Net realized gains (losses) from:
Security transactions ............................... 36,651 57,902 2,205,161 (60,926)
Foreign currency transactions ....................... -- -- (56,520) 190,757
Net change in unrealized appreciation/depreciation on:
Investments ......................................... 81,607 399,917 1,511,375 8,970,013
Foreign currency translation ........................ -- -- (120,768) 126,420
------------ ------------ ------------ ------------
Net increase in net assets from operations ................ 1,005,222 1,131,691 3,717,748 9,206,979
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............................. (886,964) (673,872) (238,226) (325,257)
From net realized gains from security transactions ..... (11,065) -- -- --
------------ ------------ ------------ ------------
Decrease in net assets from
distributions to shareholders .......................... (898,029) (673,872) (238,226) (325,257)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .............................. 8,922,497 8,481,218 9,046,185 4,706,633
Net asset value of shares issued in reinvestment
of distributions to shareholders .................... 487,854 360,594 231,344 321,283
Payments for shares redeemed ........................... (2,104,477) (2,284,029) (1,280,438) (657,411)
------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ............................. 7,305,874 6,557,783 7,997,091 4,370,505
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS .............................. 7,413,067 7,015,602 11,476,613 13,252,227
NET ASSETS
Beginning of year ...................................... 18,212,728 11,197,126 42,542,644 29,290,417
------------ ------------ ------------ ------------
End of year ............................................ $ 25,625,795 $ 18,212,728 $ 54,019,257 $ 42,542,644
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Sold ................................................... 871,702 843,460 673,952 418,420
Reinvested ............................................. 47,603 35,724 17,619 28,068
Redeemed ............................................... (206,362) (225,366) (102,274) (60,156)
------------ ------------ ------------ ------------
Net increase in shares outstanding ..................... 712,943 653,818 589,297 386,332
Shares outstanding, beginning of year .................. 1,793,260 1,139,442 3,372,542 2,986,210
------------ ------------ ------------ ------------
Shares outstanding, end of year ........................ 2,506,203 1,793,260 3,961,839 3,372,542
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN BALANCED FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 17.38 $ 15.17 $ 14.77 $ 12.76 $ 12.15
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.34 0.37 0.35 0.36 0.33
Net realized and unrealized gains
on investments ............................... 0.95 4.31 1.45 2.50 0.90
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.29 4.68 1.80 2.86 1.23
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.34) (0.37) (0.35) (0.36) (0.33)
Distributions from net realized gains ........... (0.21) (2.10) (1.05) (0.49) (0.29)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.55) (2.47) (1.40) (0.85) (0.62)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 18.12 $ 17.38 $ 15.17 $ 14.77 $ 12.76
========= ========= ========= ========= =========
Total return ....................................... 7.56% 32.42% 12.29% 22.79% 10.54%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 112,804 $ 101,408 $ 70,654 $ 61,576 $ 52,062
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.88% 0.90% 0.91% 0.93% 0.99%
Ratio of net expenses to average net assets (a) .... 0.86% 0.87% 0.87% 0.88% 0.96%
Ratio of net investment income to average net assets 1.95% 2.21% 2.31% 2.52% 2.72%
Portfolio turnover rate ............................ 69% 90% 58% 72% 95%
</TABLE>
(a) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement (Note 4).
See accompanying notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN EQUITY FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 20.16 $ 15.66 $ 13.96 $ 11.29 $ 10.19
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.07 0.11 0.13 0.15 0.10
Net realized and unrealized gains
on investments ............................... 1.60 6.47 2.00 2.98 1.15
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.67 6.58 2.13 3.13 1.25
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.07) (0.11) (0.13) (0.15) (0.12)
Distributions from net realized gains ........... -- (1.97) (0.30) (0.31) (0.03)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.07) (2.08) (0.43) (0.46) (0.15)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 21.76 $ 20.16 $ 15.66 $ 13.96 $ 11.29
========= ========= ========= ========= =========
Total return ....................................... 8.33% 43.74% 15.27% 28.00% 12.33%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 63,416 $ 52,214 $ 31,180 $ 17,857 $ 8,111
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.92% 0.93% 0.98% 1.14% 1.99%
Ratio of net expenses to average net assets ........ 0.89%(a) 0.90%(a) 0.92%(a) 1.01%(a) 1.44%(b)
Ratio of net investment income to average net assets 0.35% 0.60% 0.85% 1.27% 1.18%
Portfolio turnover rate ............................ 66% 59% 44% 54% 48%
</TABLE>
(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 investment advisory fee
waivers and/or other operating expense reimbursements by the Adviser.
See accompanying notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 10.16 $ 9.83 $ 9.85 $ 9.68 $ 9.61
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.43 0.44 0.45 0.45 0.44
Net realized and unrealized gains (losses)
on investments ............................... 0.07 0.33 (0.02) 0.17 0.07
--------- --------- --------- --------- ---------
Total from investment operations ................... 0.50 0.77 0.43 0.62 0.51
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.43) (0.44) (0.45) (0.45) (0.44)
Distributions from net realized gains ........... (0.01) -- -- -- --
--------- --------- --------- --------- ---------
Total distributions ................................ (0.44) (0.44) (0.45) (0.45) (0.44)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 10.22 $ 10.16 $ 9.83 $ 9.85 $ 9.68
========= ========= ========= ========= =========
Total return ....................................... 4.92% 8.00% 4.39% 6.51% 5.47%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 25,626 $ 18,213 $ 11,197 $ 8,779 $ 7,712
========= ========= ========= ========= =========
Ratio of net expenses to average net assets (a) .... 0.73% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to average net assets 4.17% 4.40% 4.51% 4.57% 4.64%
Portfolio turnover rate ............................ 31% 33% 24% 14% 97%
</TABLE>
(a) 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% and 1.62% for the years ended March 31, 1998, 1997,
1996 and 1995, respectively.
See accompanying notes to financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
======================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997(A)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period .................... $ 12.61 $ 9.81 $ 10.00
--------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) ........................... 0.05 (0.01) (0.01)
Net realized and unrealized gains (losses)
on investments and foreign currencies ............... 1.04 2.91 (0.14)
--------- --------- ---------
Total from investment operations .......................... 1.09 2.90 (0.15)
--------- --------- ---------
Less distributions:
Dividends from net investment income ................... (0.07) (0.10) (0.04)
--------- --------- ---------
Net asset value at end of period .......................... $ 13.63 $ 12.61 $ 9.81
========= ========= =========
Total return .............................................. 8.67% 29.67% (1.56)%(c)
========= ========= =========
Net assets at end of period (000's) ....................... $ 54,019 $ 42,543 $ 29,290
========= ========= =========
Ratio of net expenses to average net assets (b) ........... 1.51% 1.56% 1.60%(c)
Ratio of net investment income (loss) to average net assets 0.38% (0.05)% (0.15)%(c)
Portfolio turnover rate ................................... 39% 47% 70%(c)
</TABLE>
(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.
12
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund (individually, a Fund,
and, collectively, the Funds) are each 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. The Trust was organized as
a Massachusetts business trust on July 18, 1988.
The Jamestown 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 Jamestown 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 Jamestown 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 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 could be affected by certain Virginia political and economic
developments.
The Jamestown 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 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
(normally 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. It is expected that 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. If a pricing service cannot provide a valuation, securities
will be valued in good faith at value using methods consistent with those
determined by the Board of Trustees. Foreign securities are translated from the
local currency into U.S. dollars using currency exchange rates supplied by a
quotation service.
Repurchase agreements -- The Jamestown Balanced Fund and The Jamestown Equity
Fund 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. At the time the Funds enter 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, 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.
13
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
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.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid quarterly to shareholders of The Jamestown
Balanced Fund, The Jamestown Equity Fund and The Jamestown International Equity
Fund and are declared daily and paid monthly to shareholders of The Jamestown
Tax Exempt Virginia 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.
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 Jamestown Balanced 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 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
investment securities as of March 31, 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Jamestown Jamestown Jamestown Jamestown
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation .. $ 32,112,011 $ 21,868,458 $ 704,888 $ 13,312,879
Gross unrealized depreciation .. (1,314,528) (1,018,725) (41,079) (1,830,518)
------------ ------------ ------------ ------------
Net unrealized appreciation .... $ 30,797,483 $ 20,849,733 $ 663,809 $ 11,482,361
============ ============ ============ ============
Federal income tax cost ........ $ 80,304,140 $ 42,065,376 $ 24,600,110 $ 40,485,195
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------
</TABLE>
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for The Jamestown Balanced Fund and The Jamestown
Equity Fund is due to certain timing differences in the recognition of capital
losses under income tax regulations and generally accepted accounting
principles.
14
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
As of March 31, 1999, The Jamestown Equity Fund had capital loss carryforwards
for federal income tax purposes of $368,885 which expire on March 31, 2007.
These capital loss carryforwards may be utilized in future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
2. INVESTMENT TRANSACTIONS
Investment transactions, other than short-term investments, were as follows for
the year ended March 31, 1999:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Jamestown Jamestown Jamestown Jamestown
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of investment securities .. $78,675,464 $44,346,054 $13,068,282 $24,316,515
=========== =========== =========== ===========
Proceeds from sales and maturities
of investment securities ......... $69,731,979 $34,909,266 $ 6,457,178 $17,425,753
=========== =========== =========== ===========
- -------------------------------------------------------------------------------------------------
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Funds' investments are managed by Lowe, Brockenbrough & Company, Inc. (the
Adviser), under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, The Jamestown Balanced Fund pays the Adviser a
fee, which is computed and accrued daily and paid monthly, at an annual rate of
.65% on its average daily net assets up to $250 million, .60% on the next $250
million of such net assets and .55% on such net assets in excess on $500
million. The Jamestown Equity Fund pays the Adviser a fee at an annual rate of
.65% on its average daily net assets up to $500 million and .50% on such net
assets in excess on $500 million. The Jamestown Tax Exempt Virginia Fund pays
the Adviser a fee at an annual rate of .40% on its average daily net assets up
to $250 million, .35% on the next $250 million of such net assets and .30% on
such net assets in excess of $500 million. The Jamestown International Equity
Fund pays the Adviser a fee at an annual rate of 1.00% on its average daily net
assets. Certain trustees and officers of the Trust are also officers of the
Adviser.
The Adviser retains Oechsle International Advisors, LLC (Oechsle) to provide The
Jamestown International Equity 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.
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 each
of The Jamestown Balanced Fund and The Jamestown Equity Fund at an annual rate
of .20% on its respective 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 with respect to each
Fund. From The Jamestown Tax Exempt Virginia Fund, CFS receives a monthly fee at
an annual rate of .15% on its average daily net assets up to $200 million and
.10% on such net assets in excess of $200 million, subject to a $2,000 minimum
monthly fee. From The Jamestown International Equity Fund, CFS receives a
monthly fee at an annual rate of .25% on its average daily net assets up to $25
million; .225% on the next $25 million of such net assets; and .20% on such net
assets in excess of $50 million, subject to a $4,000 minimum monthly fee. In
addition, each Fund pays CFS 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, or of CW Fund
Distributors, Inc., the exclusive underwriter of each Funds' shares.
15
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. DIRECTED BROKERAGE ARRANGEMENT
In order to reduce the total operating expenses of The Jamestown Balanced Fund
and The Jamestown Equity Fund, each Fund's custodian fees and a portion of other
operating expenses have been paid through an arrangement with a thirdparty
brokerdealer who is compensated through commission trades. Payment of expenses
by the brokerdealer is based on a percentage of commissions earned. Expenses
reimbursed through the directed brokerage arrangement totaled $24,000 and
$17,500 for The Jamestown Balanced Fund and The Jamestown Equity Fund,
respectively, for the year ended March 31, 1999.
5. FOREIGN CURRENCY TRANSLATION
With respect to The Jamestown International Equity Fund, 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.
6. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Jamestown International Equity 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.
16
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
As of March 31, 1999, the Jamestown International Equity Fund had forward
foreign currency exchange contracts outstanding as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Net Unrealized
Settlement To Receive Initial Market Appreciation
Date (To Deliver) Value Value (Depreciation)
- ---------------------------------------------------------------------------------------
Contracts To Sell
<S> <C> <C> <C> <C>
04/01/99 1,440 AUD $ (901) $ (909) $ (8)
04/07/99 36,597 NZD (19,488) (19,514) (26)
04/08/99 78,824 NZD (41,737) (42,030) (293)
04/09/99 81,117 NZD (43,114) (43,252) (138)
06/17/99 292,000,000 JPY (2,498,781) (2,492,507) 6,274
----------- ----------- -------
Total sell contracts (2,604,021) (2,598,212) 5,809
----------- ----------- -------
Contracts To Buy
04/01/99 32,370 AUD 20,490 20,441 (49)
04/06/99 33,723 AUD 21,229 21,293 64
----------- ----------- -------
Total buy contracts 41,719 41,734 15
----------- ----------- -------
Net contracts $(2,562,302) $(2,556,478) $ 5,824
=========== =========== =======
- ---------------------------------------------------------------------------------------
</TABLE>
AUD - Australian Dollar
JPY - Japanese Yen
NZD - New Zealand Dollar
17
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 68.8% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 1.4%
20,000 Interpublic Group of Companies, Inc. ........... $ 1,557,500
------------
COMMERCIAL BANKING -- 5.4%
26,000 BankAmerica Corporation ........................ 1,836,250
32,000 Fannie Mae ..................................... 2,216,000
37,600 First Union Corporation ........................ 2,009,250
------------
6,061,500
------------
COMMUNICATIONS -- 7.2%
10,000 Ascend Communications, Inc.(a) ................. 836,870
56,000 Equifax, Inc. .................................. 1,925,000
17,900 Lucent Technologies, Inc. ...................... 1,928,725
38,000 MCI WorldCom, Inc.(a) .......................... 3,365,375
------------
8,055,970
------------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES -- 11.6%
25,500 Cisco Systems, Inc.(a) ......................... 2,793,844
46,400 Computer Sciences Corporation(a) ............... 2,560,700
16,900 Intel Corporation .............................. 2,013,212
22,000 Microsoft Corporation(a) ....................... 1,971,750
51,000 Oracle Corporation(a) .......................... 1,345,125
35,000 Sundstrand Corporation ......................... 2,432,500
------------
13,117,131
------------
CONSUMER PRODUCTS -- 10.3%
25,000 Avon Products, Inc. ............................ 1,176,562
62,000 Crane Company .................................. 1,499,625
22,000 General Electric Company ....................... 2,433,750
20,000 Gillette Company ............................... 1,188,750
42,000 Kimberly-Clark Corporation ..................... 2,013,375
81,000 Sara Lee Corporation ........................... 2,004,750
50,000 Sysco Corporation .............................. 1,315,625
------------
11,632,437
------------
DRUGS/MEDICAL EQUIPMENT-- 9.2%
35,000 Abbott Laboratories ............................ 1,638,437
35,000 Becton, Dickinson and Company .................. 1,340,920
24,000 Bristol-Myers Squibb Company ................... 1,543,500
18,000 Lilly (Eli) & Company .......................... 1,527,750
24,200 Merck and Company, Inc. ........................ 1,940,538
44,000 Schering-Plough Corporation .................... 2,433,750
------------
10,424,895
------------
ELECTRONICS -- 1.0%
16,000 Hewlett-Packard Company ........................ 1,085,000
------------
FINANCIAL SERVICES -- 1.0%
18,000 Citigroup, Inc. ................................ 1,149,750
------------
18
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 68.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FIRE SYSTEMS -- 2.5%
40,000 Tyco International Ltd. ........................ $ 2,870,000
------------
FOOD SERVICES -- 1.7%
41,000 H.J. Heinz Company ............................. 1,942,375
------------
HEALTH CARE CENTERS -- 2.6%
44,000 McKesson HBOC, Inc. ............................ 2,904,000
------------
INSURANCE -- 4.6%
25,500 American International Group, Inc. ............. 3,075,938
31,500 Jefferson-Pilot Corporation .................... 2,134,125
------------
5,210,063
------------
OIL AND GAS DRILLING -- 5.4%
63,000 Coastal Corporation ............................ 2,079,000
54,000 Halliburton Company ............................ 2,079,000
9,000 Mobil Corporation .............................. 792,000
18,400 Schlumberger, Ltd. ............................. 1,107,450
------------
6,057,450
------------
RETAIL STORES -- 4.9%
65,000 AutoZone, Inc.(a) .............................. 1,974,375
15,000 Circuit City Stores, Inc. ...................... 1,149,375
36,000 Dayton Hudson Corporation ...................... 2,398,500
------------
5,522,250
------------
TOTAL COMMON STOCKS (COST $46,685,568) ......... $ 77,590,321
------------
================================================================================
PAR
VALUE U.S. TREASURY OBLIGATIONS -- 5.8% VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY BONDS -- 1.5%
$ 900,000 6.625%, due 02/15/2027 ......................... $ 992,106
780,000 5.25%, due 02/15/2029 .......................... 737,342
------------
1,729,448
------------
U.S. TREASURY NOTES -- 3.7%
875,000 7.75%, due 11/30/1999 .......................... 891,949
2,040,000 6.50%, due 05/31/2001 .......................... 2,100,241
1,115,000 7.00%, due 07/15/2006 .......................... 1,219,877
------------
4,212,067
U.S. TREASURY INFLATION-PROTECTION NOTES -- 0.6%
399,153 3.625%, due 07/15/2002 ......................... 396,535
212,086 3.375%, due 01/15/2007 ......................... 204,133
------------
600,668
------------
TOTAL U.S. TREASURY OBLIGATIONS (COST $6,645,282) $ 6,542,183
------------
19
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE MORTGAGE-BACKED SECURITIES -- 8.0% VALUE
- --------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.8%
$ 36,627 Pool #G50153, 4.50%, due 05/01/1999 ............ $ 36,125
246,070 Pool #1490-PE, 5.75%, due 07/15/2006 ........... 246,223
475,000 Pool #1471-G, 7.00%, due 03/15/2008 ............ 489,098
175,000 Pool #1655-HB, 6.50%, due 10/15/2008 ........... 178,444
------------
949,890
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.8%
382,836 Pool #73718, 7.23%, due 11/01/2003 ............. 403,548
345,320 Pool #375448, 6.66%, due 10/01/2004 ............ 358,270
216,197 Series #93-63-PE, 6.25%, due 06/25/2005 ........ 216,332
616,402 Pool #375296, 6.92%, due 08/01/2007 ............ 650,305
425,000 Series #93-18-PJ, 6.50%, due 12/25/2007 ........ 430,045
708,406 Pool #380190, 6.325%, due 04/01/2008 ........... 721,512
730,564 Pool #380512, 6.15%, due 08/01/2008 ............ 739,696
145,625 Pool #70, 8.50%, due 01/01/2012 ................ 153,083
120,476 Series #88-29-B, 9.50%, due 12/25/2018 ......... 128,683
188,546 Series #90-35-E, 9.50%, due 04/25/2020 ......... 202,568
500,000 Series #98-M4-B, 6.424%, due 12/01/2023 ........ 500,000
543,164 Pool #252092, 6.00%, due 11/01/2028 ............ 528,021
137,900 Pool #448624, 6.50%, due 11/01/2028 ............ 137,310
421,364 Pool #448629, 6.50%, due 11/01/2028 ............ 419,561
345,744 Pool #448699, 6.00%, due 11/01/2028 ............ 336,105
911,793 Pool #448649, 6.50%, due 12/01/2028 ............ 907,891
866,953 Pool #453624, 6.00%, due 12/01/2028 ............ 842,783
------------
7,675,713
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.4%
382,981 Pool #343536, 7.50%, due 02/15/2023 ............ 395,444
------------
TOTAL MORTGAGE-BACKED SECURITIES (COST $8,986,550) $ 9,021,047
------------
20
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE ASSET-BACKED SECURITIES -- 3.1% VALUE
- --------------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION -- 1.1%
$ 480,103 Series #97-3-A1, 5.604%, adjustable rate,
due 04/25/2006 ............................... $ 478,041
746,444 Series #98-1-A1, 5.212%, adjustable rate,
due 01/25/2007 ............................... 744,549
------------
1,222,590
------------
OTHER ASSET-BACKED SECURITIES -- 2.0%
Advanta Mortgage Loan Trust #92-2-A2,
27,710 7.03%, due 03/25/2011 ........................ 27,641
AFG Receivables Trust #95-A-A,
36,323 6.15%, due 09/15/2000 ........................ 36,323
California Infrastructure Trust #97-1-A3,
700,000 6.17%, due 03/25/2003 ........................ 706,776
Fleetwood Credit Corporation Grantor Trust #95-A-A,
275,202 8.45%, due 11/15/2010 ........................ 284,560
Green Tree Financial Corporation #98-A-A1C,
356,263 6.18%, due 06/15/2019 ........................ 358,366
Nomura Asset Securties Corporation #96-MD5-A1A,
601,559 7.07%, due 04/13/2036 ........................ 621,862
NationsCredit Grantor Trust #96-1-A,
195,475 5.85%, due 09/15/2011 ........................ 194,068
------------
2,229,596
------------
TOTAL ASSET-BACKED SECURITIES (COST $3,447,782) $ 3,452,186
------------
================================================================================
PAR
VALUE CORPORATE BONDS -- 12.8% VALUE
- --------------------------------------------------------------------------------
Associates Corporation, N.A.,
$ 675,000 5.85%, due 01/15/2001 ........................ $ 678,301
Beneficial Corporation Medium Term Notes,
230,000 6.35%, due 12/03/2001 ........................ 232,689
Caterpillar Financial, Inc. Medium Term Notes,
450,000 6.80%, due 06/15/1999 ........................ 451,444
Chrysler Financial Corporation,
1,000,000 5.90%, due 01/26/2001 ........................ 1,008,010
Coca-Cola Enterprises,
385,000 5.75%, due 11/01/2008 ........................ 372,784
Duke Realty L.P. Medium Term Notes,
390,000 6.75%, due 05/30/08 .......................... 385,515
Enron Corporation,
750,000 6.45%, due 11/15/2001 ........................ 758,017
Equity Residential Properties Trust,
875,000 6.65%, due 11/15/2003 ........................ 876,356
Finova Capital Corporation,
1,000,000 6.25%, due 08/15/2000 ........................ 1,007,140
Ford Motor Credit Company Medium Term Notes,
225,000 7.55%, due 07/19/1999 ........................ 226,568
475,000 7.20%, due 06/15/2007 ........................ 501,814
General Motors Acceptance Corporation Medium Term Notes,
525,000 6.65%, due 05/24/2000 ........................ 531,652
International Lease Finance Corporation,
265,000 6.375%, due 08/01/2002 ....................... 269,078
21
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE CORPORATE BONDS -- 12.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
International Lease Finance Corporation Medium Term Notes,
$ 425,000 6.42%, due 09/11/2000 ........................ $ 429,526
425,000 6.55%, due 09/15/2000 ........................ 430,295
International Paper Company,
735,000 8.68%, due 09/14/2001 ........................ 778,924
KeyCorp Medium Term Notes,
675,000 6.75%, due 05/29/2001 ........................ 689,155
Manitoba (Province of) Medium Term Notes,
205,000 5.50%, due 10/01/2008 ........................ 198,352
May Department Stores,
510,000 5.95%, due 11/01/2008 ........................ 503,212
Merrill Lynch & Company Medium Term Notes,
265,000 7.26%, due 03/25/2002 ........................ 262,350
National City Corporation,
575,000 7.20%, due 05/15/2005 ........................ 595,660
Norwest Financial, Inc.,
140,000 6.05%, due 11/19/1999 ........................ 140,676
400,000 5.375%, due 09/30/2003 ....................... 391,860
Pacific Bell,
185,000 6.625%, due 11/01/2009 ....................... 191,997
Pacific Bell Medium Term Notes,
400,000 6.875%, due 08/15/2006 ....................... 419,364
Prologis Trust,
225,000 7.00%, due 10/01/2003 ........................ 225,356
Sears Roebuck Acceptance Corporation,
400,000 6.99%, due 09/30/2002 ........................ 412,908
Suntrust Banks,
310,000 6.125%, due 02/15/2004 ....................... 309,547
TRW, Inc.,
245,000 6.25%, due 01/15/2010 ........................ 232,287
Union Camp Corporation,
425,000 6.50%, due 11/15/2007 ........................ 425,523
U.S. WEST Capital Funding, Inc. Medium Term Notes,
550,000 6.375%, due 07/15/2008 ....................... 559,526
------------
TOTAL CORPORATE BONDS (COST $14,459,095) ....... $ 14,495,886
------------
TOTAL INVESTMENTS AT VALUE
(COST $80,224,277) -- 98.5% .................. $111,101,623
------------
22
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS(B) -- 1.6% VALUE
- --------------------------------------------------------------------------------
Firstar Bank, 3.75%, dated 03/31/1999, due
$ 1,868,000 04/01/1999, repurchase proceeds $1,868,195
(Cost $1,868,000) ............................ $ 1,868,000
------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 100.1% ................ $112,969,623
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1)% (165,818)
------------
NET ASSETS -- 100.0% $112,803,805
============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,565 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $1,935,077.
See accompanying notes to financial statements.
23
<PAGE>
THE JAMESTOWN EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 99.2% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 2.0%
16,000 Interpublic Group of Companies, Inc. ........... $ 1,246,000
------------
COMMERCIAL BANKING -- 7.9%
21,000 BankAmerica Corporation ........................ 1,483,125
27,000 Fannie Mae ..................................... 1,869,750
30,600 First Union Corporation ........................ 1,635,188
------------
4,988,063
------------
COMMUNICATIONS -- 10.6%
13,000 Ascend Communications, Inc. (a) ................ 1,087,937
49,000 Equifax, Inc. .................................. 1,684,375
12,000 Lucent Technologies, Inc. ...................... 1,293,000
30,000 MCI WorldCom, Inc.(a) .......................... 2,656,875
------------
6,722,187
------------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES -- 17.0%
20,250 Cisco Systems, Inc.(a) ......................... 2,218,641
39,500 Computer Sciences Corporation(a) ............... 2,179,906
15,000 Intel Corporation .............................. 1,786,875
19,000 Microsoft Corporation(a) ....................... 1,702,875
45,000 Oracle Corporation(a) .......................... 1,186,875
24,000 Sunstrand Corporation .......................... 1,668,000
------------
10,743,172
------------
CONSUMER PRODUCTS -- 15.8%
21,000 Avon Products, Inc. ............................ 988,312
69,000 Crane Company .................................. 1,668,937
17,000 General Electric Company ....................... 1,880,625
15,000 Gillette Company ............................... 891,562
37,000 Kimberly-Clark Corporation ..................... 1,773,687
70,000 Sara Lee Corporation ........................... 1,732,500
42,000 Sysco Corporation .............................. 1,105,125
------------
10,040,748
------------
DRUGS/MEDICAL EQUIPMENT -- 12.2%
15,000 Abbott Laboratories ............................ 702,187
28,000 Becton, Dickinson and Company .................. 1,072,750
20,000 Bristol-Myers Squibb Company ................... 1,286,250
15,000 Lilly (Eli) & Company .......................... 1,273,125
22,000 Merck and Company, Inc. ........................ 1,764,125
29,000 Schering-Plough Corporation .................... 1,604,063
------------
7,702,500
------------
ELECTRONICS -- 1.6%
15,000 Hewlett-Packard Company ........................ 1,017,188
------------
FINANCIAL SERVICES -- 1.6%
15,500 Citigroup, Inc. ................................ 990,063
------------
24
<PAGE>
THE JAMESTOWN EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 99.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FIRE SYSTEMS -- 3.8%
34,000 Tyco International Ltd. ........................ $ 2,439,500
------------
FOOD SERVICES -- 2.5%
34,000 H.J. Heinz Company ............................. 1,610,750
------------
HEALTH CARE CENTERS -- 3.7%
36,000 McKesson HBOC, Inc. ............................ 2,376,000
------------
INSURANCE -- 6.7%
20,550 American International Group, Inc. ............. 2,478,844
26,500 Jefferson-Pilot Corporation .................... 1,795,375
------------
4,274,219
------------
OIL AND GAS DRILLING -- 7.8%
53,000 Coastal Corporation ............................ 1,749,000
44,000 Halliburton Company ............................ 1,694,000
7,000 Mobil Corporation .............................. 616,000
14,500 Schlumberger Ltd. .............................. 872,719
------------
4,931,719
------------
RETAIL STORES -- 6.0%
56,000 AutoZone, Inc.(a) .............................. 1,701,000
32,000 Dayton Hudson Corporation ...................... 2,132,000
------------
3,833,000
------------
TOTAL COMMON STOCKS (COST $42,050,206) ......... $ 62,915,109
------------
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS(B) -- 1.1% VALUE
- --------------------------------------------------------------------------------
$ 679,000 Firstar Bank, 3.75%, dated 03/31/1999,
due 04/01/1999, repurchase proceeds
$679,071 (Cost $679,000) ..................... $ 679,000
------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 100.3% ................ $ 63,594,109
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.3)% (178,141)
------------
NET ASSETS -- 100.0% ........................... $ 63,415,968
============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,565 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $703,390.
See accompanying notes to financial statements.
25
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
PAR VIRGINIA FIXED RATE REVENUE AND GENERAL
VALUE OBLIGATION (GO) BONDS -- 95.8% VALUE
- --------------------------------------------------------------------------------
Alexandria, Virginia, Industrial
Dev. Authority, Revenue,
$ 900,000 3.00%, adjustable rate, due 07/01/2022 ....... $ 900,000
Arlington Co., Virginia, GO,
300,000 5.60%, due 08/01/2006 ........................ 327,030
1,000,000 5.00%, due 10/01/2013 ........................ 1,030,010
Brunswick Co., Virginia, Industrial
Dev. Authority, Revenue,
300,000 5.45%, due 07/01/2006 ........................ 324,183
Chesterfield Co., Virginia, GO,
350,000 6.25%, due 07/15/2005 ........................ 376,068
750,000 4.00%, due 01/01/2006 ........................ 751,283
Fairfax Co., Virginia, GO,
350,000 5.60%, due 05/01/2003 ........................ 357,196
600,000 5.00%, due 06/01/2014 ........................ 610,560
Fairfax Co., Virginia, Park Authority, Revenue,
300,000 6.25%, due 07/15/2005 ........................ 326,064
Fairfax Co., Virginia, Sewer, Revenue,
350,000 5.625%, due 07/15/2008 ....................... 383,863
Hanover Co., Virginia, Industrial
Dev. Authority, Revenue,
225,000 6.25%, due 10/01/2011 ........................ 241,229
Henrico Co., Virginia, GO,
500,000 4.70%, due 01/15/2002 ........................ 514,820
Henrico Co., Virginia, Water and Sewer, Revenue,
500,000 4.625%, due 05/01/2017 ....................... 475,830
James City Co., Virginia, GO,
500,000 5.25%, due 12/15/2015 ........................ 513,315
Loudoun Co., Virginia, GO,
300,000 5.50%, due 06/01/2009 ........................ 324,855
Lynchburg, Virginia, GO,
500,000 5.30%, due 05/01/2014 ........................ 520,000
Medical College of Virginia Hospitals
Authority, Revenue,
700,000 5.00%, due 07/01/2013 ........................ 703,535
Newport News, Virginia, GO,
400,000 5.40%, due 07/01/2002 ........................ 405,240
400,000 5.15%, due 01/01/2010 ........................ 414,728
Norfolk, Virginia, GO,
300,000 5.75%, due 06/01/2011 ........................ 321,756
500,000 5.00%, due 07/01/2014 ........................ 506,365
Petersburg, Virginia, GO,
500,000 5.125%, due 01/15/2013 ....................... 515,295
Peumansend Creek, Virginia, Regional
Jail Authority, Revenue,
300,000 5.75%, due 06/01/2017 ........................ 320,454
Pittsylvania Co., Virginia, GO,
300,000 5.65%, due 07/01/2006 ........................ 328,833
Portsmouth, Virginia, GO,
800,000 5.00%, due 08/01/2017 ........................ 797,096
Prince William Co., Virginia, GO,
400,000 4.90%, due 08/01/2005 ........................ 420,172
Prince William Co., Virginia, Park Authority, Revenue,
250,000 6.10%, due 10/15/2004 ........................ 273,330
26
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VIRGINIA FIXED RATE REVENUE AND GENERAL
VALUE OBLIGATION (GO) BONDS -- 95.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Prince William Co., Virginia, Service Auth.
Water & Sewer, Revenue,
$ 500,000 5.00%, due 07/01/2003 ........................ $ 523,315
Richmond, Virginia, GO,
400,000 6.25%, due 01/15/2018 ........................ 423,872
Richmond, Virginia, Metropolitan Authority,
Expressway, Revenue,
500,000 6.05%, due 07/15/2005 ........................ 541,815
Richmond, Virginia, Redev. & Housing
Authority, Revenue,
500,000 5.00%, due 03/01/2018 ........................ 493,360
Riverside, Virginia, Regional Jail Authority, Revenue,
300,000 5.30%, due 07/01/2002 ........................ 314,553
Roanoke, Virginia, GO,
700,000 5.00%, due 08/01/2012 ........................ 717,269
300,000 6.40%, due 08/01/2012 ........................ 326,331
Spotsylvania Co., Virginia, GO,
400,000 5.75%, due 07/15/2011 ........................ 430,944
Suffolk, Virginia, GO,
350,000 5.80%, due 06/01/2011 ........................ 381,052
Upper Occoquan, Virginia, Sewer Authority, Revenue,
700,000 5.00% due 07/01/2015 ......................... 703,549
Virginia Beach, Virginia, GO,
325,000 6.20%, due 09/01/2013 ........................ 365,593
Virginia College Building Authority,
Educational Facilities, Revenue,
885,000 3.05%, floating rate, due 11/01/2026 ......... 885,000
Virginia Commonwealth University, Revenue,
250,000 5.75%, due 05/01/2006 ........................ 274,162
Virginia Polytechnic Institute and
State University, Revenue,
625,000 5.45%, due 06/01/2013 ........................ 659,256
Virginia State, GO,
500,000 5.25%, due 07/01/2011 ........................ 526,595
500,000 5.375%, due 06/01/2015 ....................... 519,990
Virginia State Housing Dev. Authority,
Commonwealth Mortgages, Revenue,
150,000 5.60%, due 01/01/2002 ........................ 154,415
Virginia State Housing Dev. Authority,
Multi-Family, Revenue,
150,000 6.60%, due 11/01/2012 ........................ 163,401
150,000 6.30%, due 11/01/2015 ........................ 161,268
Virginia State Public Building Authority, Revenue,
500,000 6.00%, due 08/01/2003 ........................ 529,810
Virginia State Public School Authority, Revenue,
750,000 5.25%, due 08/01/2009 ........................ 804,368
Virginia State Resource Authority,
Solid Waste Disposal System, Revenue,
500,000 5.50%, due 04/01/2015 ........................ 519,995
Virginia State Transportation Board, Revenue,
350,000 6.25%, due 05/15/2012, prerefunded 05/15/2004 389,847
Winchester, Virginia, Industrial Dev.
Authority, Educational Facilities, Revenue,
500,000 5.00% due 10/01/2018 ......................... 493,870
York Co., Virginia, Certificates of
Participation, Revenue,
250,000 6.625%, due 03/01/2012 ....................... 261,542
------------
TOTAL VIRGINIA FIXED RATE REVENUE AND GENERAL
OBLIGATION (GO) BONDS (COST $23,884,473) ..... $ 24,548,282
------------
27
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS -- 2.8% VALUE
- --------------------------------------------------------------------------------
715,637 Firstar Tax-Free Fund (Cost $715,637) .......... $ 715,637
------------
TOTAL INVESTMENTS AT VALUE
(COST $24,600,110) -- 98.6% .................. $ 25,263,919
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.4% .. 361,876
------------
NET ASSETS -- 100.0% ........................... $ 25,625,795
============
See accompanying notes to financial statements.
28
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 96.2% VALUE
- --------------------------------------------------------------------------------
AUSTRALIA -- 2.2%
85,700 Australia and New Zealand Banking Group Ltd. ... $ 619,669
126,126 Coca-Cola Amatil Ltd. .......................... 544,796
------------
1,164,465
------------
BELGIUM -- 1.4%
11,380 Kredietbank NV ................................. 758,651
------------
CANADA -- 2.5%
18,100 BCE, Inc. ...................................... 798,635
11,200 The Seagram Company Ltd. ....................... 560,814
------------
1,359,449
------------
FRANCE -- 8.8%
4,314 Groupe Danone .................................. 1,085,639
8,970 Suez Lyonnaise des Eaux ........................ 1,659,840
11,129 Valeo SA ....................................... 871,078
4,685 Vivendi ........................................ 1,152,701
------------
4,769,258
------------
GERMANY -- 5.1%
7,721 DaimlerChrysler AG ............................. 671,849
17,517 Hoechst AG ..................................... 759,291
10,500 Mannesmann AG .................................. 1,341,025
------------
2,772,165
------------
GREECE -- 0.4%
8,840 Hellenic Telecommunications Organization SA (OTE) 214,366
------------
HONG KONG -- 1.8%
72,000 Cheung Kong (Holdings) Ltd. .................... 548,157
57,000 Hutchison Whampoa Ltd. ......................... 448,668
------------
996,825
------------
INDIA -- 0.3%
4,220 Richter Gedeon Rt. - GDR ....................... 136,871
------------
ITALY -- 9.9%
330,623 Banca Nazionale del Lavoro (BNL)(a) ............ 1,156,488
9,100 Banca Popolare di Bergamo Credito Varesino SpA . 230,872
167,922 Credito Italiano SpA ........................... 906,443
116,200 Mediaset SpA ................................... 1,092,665
186,202 Telecom Italia SpA ............................. 1,978,073
------------
5,364,541
------------
JAPAN -- 18.3%
24,000 Canon, Inc. .................................... 593,768
25,000 Denso Corporation .............................. 490,796
500 Isetan Company ................................. 4,771
11,000 Ito-Yokado Company Ltd. ........................ 707,760
26,000 Kao Corporation ................................ 574,094
33,000 Matsushita Electric Industrial Company Ltd. .... 643,671
29
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
JAPAN -- 18.3% (CONTINUED)
13,000 Murata Manufacturing Company Ltd. .............. $ 691,548
35,000 Nikko Securities Co., Ltd. ..................... 162,543
103 Nippon Telegraph and Telephone Corporation ..... 1,008,866
27,000 Nomura Securities Company Ltd. ................. 282,699
36 NTT Mobile Communication Network, Inc. ......... 1,778,266
7,000 Rohm Company ................................... 836,359
167,000 Sakura Bank, Ltd. .............................. 506,232
660 Shohkoh Fund & Co., Ltd. ....................... 334,375
18,000 Takeda Chemical Industries ..................... 697,627
3,700 Takefugi Corporation ........................... 284,303
42,000 Toshiba Corporation ............................ 286,904
------------
9,884,582
------------
NETHERLANDS -- 9.2%
13,500 Gucci Group NV - ADR ........................... 1,086,750
27,014 KPN NV ......................................... 1,074,705
5,058 Laurus NV ...................................... 122,852
13,310 Royal Dutch Petroleum Company .................. 707,697
22,128 Vendex International NV ........................ 533,928
36,406 VNU NV ......................................... 1,418,871
------------
4,944,803
------------
NEW ZEALAND -- 1.7%
192,383 Telecom Corporation of New Zealand Ltd. ........ 935,692
------------
PHILIPPINES -- 0.4%
540,000 Filinvest Land, Inc.(a) ........................ 44,594
24,192 Metropolitan Bank & Trust Company(a) ........... 191,975
------------
236,569
------------
PORTUGAL -- 1.6%
18,904 Portugal Telecom SA ............................ 846,759
------------
SINGAPORE -- 0.2%
12,000 Development Bank of Singapore Ltd. ............. 90,946
------------
SPAIN -- 3.8%
55,549 Argentaria SA .................................. 1,334,948
16,826 Telefonica de Espana ........................... 713,716
------------
2,048,664
------------
SWEDEN -- 2.4%
15,760 Hennes and Mauritz AB - Class B ................ 1,188,277
7,710 Skandinaviska Enskilda Banken - Class A ........ 94,230
------------
1,282,507
------------
SWITZERLAND -- 4.7%
581 Novartis AG .................................... 942,491
89 Roche Holding AG - Genusschein ................. 1,085,366
796 Schweizerische Lebensversicherungs
-und Rentenanstalt .......................... 507,147
------------
2,535,004
------------
30
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 21.5%
36,943 Allied Zurich PLC .............................. $ 498,261
318,671 ASDA Group PLC ................................. 781,934
202,380 British Aerospace PLC .......................... 1,351,730
89,143 British American Tobacco PLC ................... 741,819
86,375 British Sky Broadcasting Group PLC ............. 745,281
94,155 Diageo PLC ..................................... 1,063,201
47,580 Glaxo Wellcome PLC ............................. 1,592,238
50,079 Imperial Chemical Industries PLC ............... 447,059
41,592 Railtrack Group PLC ............................ 952,073
66,944 Reed International PLC ......................... 609,502
168,537 Somerfield PLC ................................. 863,820
105,931 Vodafone Group PLC ............................. 1,978,521
------------
11,625,439
------------
TOTAL COMMON STOCKS (COST $40,485,195) ......... $ 51,967,556
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.8% 2,051,701
------------
NET ASSETS -- 100.0% $ 54,019,257
============
(a) Non-income producing security.
See accompanying notes to financial statements.
31
<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 Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund (each a series of The
Williamsburg Investment Trust), including the portfolios of investments, as of
March 31, 1999, and the related statements of operations for the year then
ended, and the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of 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 audits 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, 1999 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 positions of
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund as of March 31, 1999,
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 the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 30, 1999
32
<PAGE>
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33
<PAGE>
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34
<PAGE>
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35
<PAGE>
THE JAMESTOWN FUNDS
INVESTMENT ADVISER
Lowe, Brockenbrough & Company, Inc.
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
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
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE JAMESTOWN
INTERNATIONAL EQUITY FUND
August 1, 1999
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.................................................. 10
INVESTMENT LIMITATIONS....................................................... 13
TRUSTEES AND OFFICERS........................................................ 15
INVESTMENT ADVISOR........................................................... 19
SUB-ADVISOR.................................................................. 20
ADMINISTRATOR................................................................ 21
OTHER SERVICES............................................................... 22
BROKERAGE.................................................................... 22
SPECIAL SHAREHOLDER SERVICES................................................. 23
PURCHASE OF SHARES........................................................... 25
REDEMPTION OF SHARES......................................................... 26
NET ASSET VALUE DETERMINATION................................................ 26
ALLOCATION OF TRUST EXPENSES................................................. 27
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, 1999. 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.
HEDGING TECHNIQUES
- ------------------
Unless otherwise indicated, the Fund may invest in the following derivative
securities to seek to hedge all or a portion of its 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.
-1-
<PAGE>
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.
WRITING COVERED CALL OPTIONS. The Fund may write covered call options on equity
securities or futures contracts to earn premium income, to assure a definite
price for a security it has considered selling, or to close out options
previously purchased. A call option gives the holder (buyer) the right to
purchase a security or futures contract at a specified price (the exercise
price) at any time until a certain date (the expiration date). A 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.
-2-
<PAGE>
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.
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 the Sub-Advisor may be incorrect in
its expectation of future prices of the underlying financial instrument. There
is also a risk that a secondary market in the obligations that the Fund holds
may not exist or may not be adequately liquid to permit the Fund to close out
positions when it desires to do so. When buying or selling futures contracts the
Fund will be required to segregate cash and/or liquid high-grade debt
obligations to meet its obligations under these types of financial instruments.
By so doing, the Fund's ability to meet current obligations, to honor
redemptions or to operate in a manner consistent with its investment objective
may be impaired.
FORWARD 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 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.
-3-
<PAGE>
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.
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.
-4-
<PAGE>
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.
OPTIONS AND FUTURES 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.
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
-5-
<PAGE>
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.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities;
however, the aggregate of portfolio securities loaned will not exceed 25% of the
value of the Fund's net assets, measured at the time any such loan is made.
Under applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Fund receives amounts equal to the interest on loaned securities and also
receives one or more of (a) negotiated loan fees, (b) interest on securities
used as collateral, or (c) interest on short-term debt securities purchased with
such collateral; either type of interest may be shared with the borrower. The
Fund may also pay fees to placing brokers as well as custodian and
administrative fees in connection with loans. Fees may only be paid to a placing
broker provided that the Trustees determine that the fee paid to the placing
broker is reasonable and based solely upon services rendered, that the Trustees
separately consider the propriety of any fee shared by the placing broker with
the borrower, and that the fees are not used to compensate the Advisor, the
Sub-Advisor or any affiliated person of the Trust or an affiliated person of the
Advisor, the Sub-Advisor or other affiliated person. The terms of the Fund's
loans must meet applicable tests under the Internal Revenue Code and permit the
Fund to reacquire loaned securities on five days' notice or in time to vote on
any important matter.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities subject
to repurchase agreements. A repurchase transaction occurs when, at the time the
Fund purchases a 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
-6-
<PAGE>
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Fund holds a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Sub-Advisor will carefully consider the creditworthiness during
the term of the repurchase agreement. Repurchase agreements are considered as
loans collateralized by the Repurchase Securities, such agreements being defined
as "loans" under the Investment Company Act of 1940 (the "1940 Act"). The return
on such "collateral" may be more or less than that from the repurchase
agreement. The market value of the resold securities will be monitored so that
the value of the "collateral" is at all times as least equal to the value of the
loan, including the accrued interest earned thereon. All Repurchase Securities
will be held by the Fund's custodian either directly or through a securities
depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt obligations (including those
subject to repurchase agreements) as described herein, provided that they mature
in thirteen months or less from the date of acquisition and are otherwise
eligible for purchase by the Fund. Money market instruments also may include
Bankers' Acceptances and Certificates of Deposit of domestic branches of U.S.
banks, Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank,
are the customary means of effecting payment for merchandise sold in
import-export transactions and are a source of financing used extensively in
international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquires a Bankers' Acceptance, the
bank which "accepted" the time draft is liable 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,
-7-
<PAGE>
acting as administrator thereof. The Sub-Advisor will monitor, on a continuous
basis, the earnings power, cash flow and other liquidity ratios of the issuer of
a Master Note held by the Fund.
U.S. GOVERNMENT SECURITIES. The Fund may invest in debt obligations which are
issued or guaranteed by the U.S. Government, its agencies and instrumentalities
("U.S. Government Securities") as described herein. U.S. Government Securities
include the following securities: (1) U.S. Treasury obligations of various
interest rates, maturities and issue dates, such as U.S. Treasury bills (mature
in one year or less), U.S. Treasury notes (mature in one to seven years), and
U.S. Treasury bonds (mature in more than seven years), the payments of principal
and interest of which are all backed by the full faith and credit of the U.S.
Government; (2) obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, some of which are backed by the full faith and credit of the
U.S. Government, e.g., obligations of the Government National Mortgage
Association ("GNMA"), the Farmers Home Administration and the Export Import
Bank; some of which do not carry the full faith and credit of the U.S.
Government but which are supported by the right of the issuer to borrow from the
U.S. Government, e.g., obligations of the Tennessee Valley Authority, the U.S.
Postal Service, the Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan Mortgage Corporation ("FHLMC"); and some of which are backed
only by the credit of the issuer itself, e.g., obligations of the Student Loan
Marketing Association, the Federal Home Loan Banks and the Federal Farm Credit
Bank; and (3) any of the foregoing purchased subject to repurchase agreements as
described herein. The Fund does not intend to invest in "zero coupon" Treasury
securities. The guarantee of the U.S. Government does not extend to the yield or
value of the Fund's shares.
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.
DEBT SECURITIES. While the Fund intends to invest primarily in equity
securities, up to 20% of the Fund's assets may be invested in convertible bonds
and other debt securities. These debt obligations consist of U.S. and foreign
government securities and corporate debt securities. The Fund will limit its
purchases of debt securities to investment grade obligations. "Investment
-8-
<PAGE>
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.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Sub-Advisor felt such action was appropriate. In such a
case, the Fund could incur a short-term gain or loss.
DESCRIPTION OF BOND RATINGS
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being traded. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Sub-Advisor believes that the quality of fixed-income securities in which the
Fund may invest should be continuously reviewed and that individual analysts
give different weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one NRSRO, each
rating is evaluated independently. Ratings are based on current information
furnished by the issuer or obtained by the NRSROs from other sources that they
consider reliable. Ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of such information, or for other reasons.
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
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<PAGE>
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.
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.
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<PAGE>
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.
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.
-11-
<PAGE>
BBB: Bonds rated BBB have below average protection factors, but are
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund. A "majority" for this purpose, means the lesser of (i) 67%
of the Fund's outstanding shares represented in person or by proxy at a meeting
at which more than 50% of its outstanding shares are represented, or (ii) more
than 50% of its outstanding shares.
Under these limitations, the Fund MAY NOT:
(1) Invest more than 5% of the value of its total assets in the securities of
any one corporate issuer or purchase more than 10% of the outstanding
voting securities or of any class of securities of any one corporate
issuer;
(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);
(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or its Advisor or Sub-Advisor who own beneficially more than
1/2 of 1% of the outstanding securities of such issuer together own more
than 5% of the outstanding securities of such issuer;
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Invest in interests in real estate, real estate mortgage loans, oil, gas or
other mineral exploration or development programs, except that the Fund may
invest in the securities of companies (other than those which are not
readily marketable) which own or deal in such things, and the Fund may
invest in certain mortgage backed securities as described in the Prospectus
under "Investment Objective, Investment Policies and Risk Considerations";
(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);
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<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) Make loans of money or securities, except that the Fund may (a) make loans
of its portfolio securities in amounts not in excess of 25% of its net
assets, and (b) invest in repurchase agreements;
(10) Issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets,
or (b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities if, immediately after such
borrowing, the value of the Fund's assets, including all borrowings then
outstanding, less its liabilities (excluding all borrowings), is equal to
at least 300% of the aggregate amount of borrowings then outstanding, and
may pledge its assets to secure all such borrowings;
(11) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors);
(12) Invest more than 15% of its net assets in illiquid securities, including
repurchase agreements maturing in over seven days, and other securities for
which there is no established market or for which market quotations are not
readily available; or
(13) Purchase or sell puts, calls options, futures, straddles, commodities,
commodities contracts or commodities futures contracts, except as described
in the Prospectus and this Statement of Additional Information.
Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits 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.
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<PAGE>
TRUSTEES AND OFFICERS
The Fund is a 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.
Following are the Trustees and executive officers of 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, 1999:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ ------------------- --------------
<S> <C> <C>
Austin Brockenbrough III (age 62) President and Managing None
Trustee** Director of Lowe, Brockenbrough
President & Company, Inc.,
The Jamestown International Equity Fund 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 45) 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 62) Physician $13,500
Trustee** Dermatology Associates of
5600 Grove Avenue Virginia, P.C.,
Richmond, Virginia 23226 Richmond, Virginia
J. Finley Lee (age 59) Julian Price Professor Emeritus of $13,000
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)
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<PAGE>
Richard Mitchell (age 50) 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 60) President of $13,500
Trustee University of Richmond,
7000 River Road Richmond, Virginia;
Richmond, Virginia 23229 Director of Tredegar
Industries, Inc. (plastics manufacturer)
Harris V. Morrissette (age 39) President of $13,000
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
Erwin H. Will, Jr. (age 66) Chief Investment Officer of $13,500
Trustee Virginia Retirement System,
P.O. Box 2500 Richmond, Virginia
Richmond, Virginia 23218
Samuel B. Witt III (age 63) Senior Vice President and $15,000
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 36) Portfolio Manager of none
Vice President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia.
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Joseph L. Antrim III (age 54) Executive Vice President of none
President Davenport & Company LLC,
The Davenport Equity Fund Richmond, Virginia
One James Center, 901 E. Cary St.
Richmond, Virginia 23219
Robert L. Bennett (age 57) First Vice President and Chief none
Treasurer, all Funds of the Trust Operating Officer of Countrywide
312 Walnut Street, 21st Floor Fund Services, Inc., (registered transfer
Cincinnati, Ohio 45202 agent and administrator to the Trust)
and of CW Fund Distributors, Inc.
(registered broker-dealer),
Cincinnati, Ohio
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<PAGE>
Charles M. Caravati III (age 33) Assistant Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown International Equity Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
John M. Flippin (age 57) Principal of none
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 46) Principal of none
Vice President T. Leavell & Associates, Inc.,
The Alabama Tax Free Bond Fund Mobile, Alabama
150 Government Street
Mobile, Alabama 36602
Tina D. Hosking (age 30) Assistant Vice President and Associate none
Secretary, all Funds of the Trust General Counsel of Countrywide Fund
312 Walnut Street, 21st Floor Services, Inc. (registered transfer agent
Cincinnati, Ohio 45202 and administrator of the Trust) and
CW Fund Distributors, Inc.,
Cincinnati, Ohio
Lee Keiger III (age 44) First Vice President and Chief Financial none
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 58) Principal of none
Vice President Flippin, Bruce & Porter, Inc.,
FBP Contrarian Balanced Fund Lynchburg, Virginia
FBP Contrarian Equity Fund
800 Main Street
Lynchburg, Virginia 24504
Henry C. Spalding, Jr. (age 61) Executive Vice President of none
President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Ernest H. Stephenson, Jr. (age 54) Vice President of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad St.
Suite 300
Richmond, Virginia 23230
-16-
<PAGE>
Connie R. Taylor (age 48) Administrator of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Balanced Fund Richmond, Virginia
The Jamestown Equity Fund
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Beth Ann Walk (age 40) Portfolio Manager of none
Vice President Lowe, Brockenbrough & Company, Inc.,
The Jamestown Tax Exempt Virginia Fund Richmond, Virginia
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
Coleman Wortham III (age 53) President and Chief Executive none
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 Investment
Company Act of 1940. 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 12, 1999, 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, Oechsle International Advisors, L.P. Profit Sharing Trust, One
International Place, Boston, Massachusetts 02110, owned of record 4.3% of the
then-outstanding shares of the Fund and Charles Schwab & Co., Inc., 101
Montgomery Street, San Francisco, California 94104 owned of record 8.7% of the
then-outstanding shares of the Fund.
-17-
<PAGE>
INVESTMENT ADVISOR
Lowe, Brockenbrough & Company, 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, 2000 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, 1999, 1998 and 1997, the
Fund paid the Advisor advisory fees of $464,912, $355,460 and $211,861 (which
was net of voluntary fee waivers of $29,007), 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 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
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.
-18-
<PAGE>
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, 2000 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.
Oechsle Group, LLC is the Member Manager of the Sub-Advisor and owns
approximately a 44% interest (on a fully diluted basis) in the Sub-Advisor. The
following individuals own approximately an 89% interest in Oechsle Group, LLC:
Walter Oechsle, S. Dewey Keesler, Jr., L. Sean Roche, Stephen P. Langer, Steven
H. Schaefer, Warren Walker and Andrew S. Parlin. The management, policies and
control of the Sub-Advisor is, subject to certain limitations, invested
exclusively in Oechsle Group, LLC. Day-to-day management of the Sub-Advisor is
exercised by the Management Committee of Oechsle Group, LLC, which consists of
Messrs. Keesler, Roche, Langer, Walker and Parlin. Fleet Financial Group, Inc.
of Boston, Massachusetts holds approximately a 35% non-voting interest (on a
fully diluted basis) in the Sub-Advisor.
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, 1999, 1998 and 1997 was $232,456, $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.
The Sub-Advisor may determine from time to time that some investment
opportunities are appropriate for certain of its clients and not others,
including the Fund, as the Fund has an investment objective that may vary from
that of other clients.
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For these and other reasons, such as differing time horizons, liquidity needs,
tax consequences and assessments of general market conditions and of individual
securities (including options), Fund investment transactions may or may not vary
from decisions made for others by the Sub-Advisor. It may also occasionally be
necessary to allocate limited investment opportunities among the Fund and other
clients of the Sub-Advisor, on a fair and equitable basis deemed appropriate by
the Sub-Advisor.
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, 1999, 1998 and 1997, the Administrator
received from the Fund fees of $110,789, $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.
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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.
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, 1999, 1998 and 1997, the total amount of
brokerage commissions paid by the Fund was $95,588, $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.
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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, 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
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:
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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.
Due to Internal Revenue Service ("IRS") regulations, applications without social
security or tax identification numbers will not be accepted. If, however, you
have already applied for a social security or tax identification number at the
time of completing your account application, the application should so indicate.
The Fund is required to, and will, withhold taxes on all distributions and
redemption proceeds if the number is not delivered to the Fund within 60 days.
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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.
If your instructions request a redemption by wire, you will be charged a $9
processing fee by the Fund's Custodian. There is currently no charge by the
Administrator for redemptions, including wire redemptions, although the Trustees
could impose a
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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. 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 wire transfers. In the
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
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
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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.
While the above requirements are aimed at qualification of the Fund as regulated
investment companies under Subchapter M of the Code, the Fund also intends to
comply with certain requirements of the Code to avoid liability for federal
income and excise tax. If the Fund remains qualified under Subchapter M, it will
not be subject to federal income tax to the extent it distributes its taxable
net investment income and net realized capital gains. A nondeductible 4% federal
excise tax will be imposed on the Fund to the extent it does not distribute at
least 98% of its ordinary taxable income for a calendar year, plus 98% of its
capital gain net taxable income for the one year period ending each October 31,
plus certain undistributed amounts from prior years. While the Fund intends to
distribute its taxable income and capital gains in a manner so as to avoid
imposition of the federal excise and income taxes, there can be no assurance
that the Fund indeed will make sufficient distributions to avoid entirely
imposition of federal excise or income taxes.
Should additional series, or funds, be created by the Trustees, each fund would
be treated as a separate tax entity for federal income tax purposes.
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.
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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 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
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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 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.
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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, 1999 and for the period since inception (April 16, 1996) to
March 31, 1999 are 8.67% and 11.72%, 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:
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).
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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 Europe,
Australia and Far East Index (the "EAFE Index"), which is generally considered
to be representative of the performance of unmanaged common stocks that are
publicly traded in the securities markets located outside the United States.
Comparative performance may also be expressed by reference to a ranking prepared
by a mutual fund monitoring service, such as Lipper Analytical Services, Inc. or
Morningstar, Inc., or by one or more newspapers, newsletters or financial
periodicals. Performance comparisons may be useful to investors who wish to
compare the Fund's past performance to that of other mutual funds and investment
products. Of course, past performance is not a guarantee of future results.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote 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
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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, 1999, together with the report of the independent
accountants thereon, are included on the following pages.
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<PAGE>
THE
JAMESTOWN
FUNDS
No-Load Funds
ANNUAL REPORT
March 31, 1999
INVESTMENT ADVISER
Lowe, Brockenbrough & Company, Inc.
Richmond, Virginia
<PAGE>
LETTER TO SHAREHOLDERS MAY 18, 1999
================================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the audited annual report of The
Jamestown Funds for the year ended March 31, 1999.
THE JAMESTOWN BALANCED FUND
For the fiscal year ended March 31, 1999, The Jamestown Balanced Fund produced a
total return of 7.6% compared to the Lipper Balanced Index of 8.4%. The equity
market had very narrow leadership during this period, with the technology sector
leading the way by a wide margin. That sector alone was up 62.7%, followed by
the communication services sector up 34.6%, and the health care sector up 28.5%.
The other nine equity sectors failed to keep pace with the 18.5% return of the
Standard & Poor's 500 Index, and four of these sectors actually produced
negative returns. The basic industry sector, which includes metal and chemical
companies, as well as paper and forest product companies, had the poorest
showing with a return of -14.1%.
The Jamestown Balanced Fund returned 16.9% on an annualized basis for the three
years ended March 31, 1999, comparing favorably to the 15.9% return for the
Lipper Balanced Index. For the five-year period, the Fund generated a return of
16.8% versus 15.0% for the comparable Lipper Balanced Index.
Your Fund grew in size to over $112 million in total net assets with 294
shareholders as of March 31, 1999.
THE JAMESTOWN EQUITY FUND
For the year ended March 31, 1999, The Jamestown Equity Fund had a total return
of 8.3%, failing to keep up with the 17.5% return for the Lipper Growth Index
and the 18.5% return for the Standard & Poor's 500 Index. Fueled by the
technology sector in general, and by many of the Internet stocks in particular,
the Lipper Growth Index was difficult for us to match, as we believe a large
number of the Internet stocks are selling at hyper-inflated valuations. Our
risk-averse style has kept us from owning those equities.
The Jamestown Equity Fund returned 21.5% on an annualized basis for the three
years ended March 31, 1999, versus 23.9% for the Lipper Growth Index. For the
five-year period, your Fund has returned 20.9% as compared to 21.8% for the
Index.
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
For the fiscal year ended March 31, 1999, the Jamestown Tax Exempt Virginia Fund
had a total return of 4.9% compared to 5.2% for the Lipper Intermediate
Municipal Fund Index and 6.2% for the Lehman Municipal Bond Index. Yields and
prices on municipal bonds have been extraordinarily stable by historical
standards. Over the past twelve months, Treasury yield volatility has been
roughly three times as great as municipal yield volatility, with a range of 110
basis points on the 30-year Treasury versus a difference of 31 basis points on
the Municipal Revenue Bond Index.
Some key characteristics of The Jamestown Tax Exempt Virginia Fund are as
follows:
Average Effective Maturity ......... 7.6 years
Average Effective Duration ......... 5.9 years
Average Weighted Coupon ............ 5.1%
SEC Yield .......................... 3.9%
Average Credit Quality ............. AA+
1
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
For the year ended March 31, 1999, The Jamestown International Equity Fund had a
total return of 8.7%. This return compares favorably with the 6.0% return
generated by the Morgan Stanley EAFE Index and the -0.6% return generated by the
Lipper International Index. The period was characterized by continued strength
throughout Europe and weakness in Japan and the rest of Asia.
Throughout the year, the Fund benefited from its heavy weighting in European
markets and its low weighting in Asian Pacific markets. European markets
benefited from the convergence of interest rates in preparation for the launch
of the Euro and the massive corporate restructuring programs that supported
stronger earnings growth. Beginning with the devaluation of the Thailand
currency last summer, most Asian Pacific equity markets fell 50% or more in the
second half of 1998.
The global crisis that was born out of the economic and financial turmoil in
Southeast Asia appears to have eased significantly. The Federal Reserve played a
leading role by cutting interest rates in the United States three times last
fall. Oechsle International Advisors used the turmoil to reduce their holdings
in Continental Europe and to reallocate money into the United Kingdom and Japan.
The regional allocations of the portfolio as of March 31, 1999 are shown in the
chart below:
The Jamestown
International Morgan Stanley
Equity Fund EAFE Index
----------- ----------
Continental Europe .................... 45.3% 48.7%
United Kingdom ........................ 21.5% 22.3%
Japan ................................. 18.3% 23.1%
Pacific Basin, ex Japan ............... 5.9% 5.9%
Emerging Markets ...................... 2.7% 0.0%
Cash/North America .................... 6.3% 0.0%
------ ------
100.0% 100.0%
Thank you for your continued confidence in The Jamestown Funds.
Sincerely,
/s/ Austin Brockenbrough, III
Austin Brockenbrough, III
President
Jamestown Tax Exempt Virginia Fund
Jamestown International Equity Fund
/s/ Henry C. Spalding, Jr.
Henry C. Spalding, Jr.
President
Jamestown Balanced Fund
Jamestown Equity Fund
2
<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
3/99
------
The Jamestown Balanced Fund $30,623
Standard & Poor's 500 Index $52,192
Consumer Price Index $13,290
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Balanced Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
7.56% 16.77% 12.17%
-------------------------------------
*Initial public offering of shares was July 3, 1989.
Past performance is not predictive of future performance.
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
3/99
------
The Jamestown Equity Fund $26,560
Standard & Poor's 500 Index $34,375
Consumer Price Index $11,598
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
8.33% 20.88% 16.68%
-------------------------------------
*Initial public offering of shares was December 1, 1992.
Past performance is not predictive of future performance.
3
<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, the Lipper Intermediate Municipal Fund Index and
the Lehman Municipal Bond Index
3/99
------
The Jamestown Tax Exempt Virginia Fund $13,060
Lipper Intermediate Municipal Fund Index $12,653
Lehman Municipal Bond Index $13,993
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown Tax Exempt Virginia Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
4.92% 5.85% 4.90%
-------------------------------------
*Initial public offering of shares was September 1, 1993.
Past performance is not predictive of future performance.
The 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
3/99
------
The Jamestown International Equity Fund $13,878
Morgan Stanley EAFE Index $12,402
- --------------------------------------------------------------------------------
-------------------------------------
The Jamestown International Equity Fund
Average Annual Total Returns
1 Year Since Inception*
8.67% 11.72%
-------------------------------------
*Initial public offering of shares was April 16, 1996.
Past performance is not predictive of future performance.
4
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1999
======================================================================================================================
JAMESTOWN JAMESTOWN
JAMESTOWN JAMESTOWN TAX EXEMPT INTERNATIONAL
BALANCED EQUITY VIRGINIA EQUITY
FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C> <C>
At acquisition cost .......................... $ 80,224,277 $ 42,050,206 $ 24,600,110 $ 40,485,195
============ ============ ============ ============
At value (Note 1) ............................ $111,101,623 $ 62,915,109 $ 25,263,919 $ 51,967,556
Investments in repurchase agreements (Note 1) ... 1,868,000 679,000 -- --
Cash ............................................ 218 438 -- 1,837,687
Cash denominated in foreign currency ............ -- -- -- 4,985
Dividends receivable ............................ 72,234 60,380 -- 199,689
Interest receivable ............................. 450,221 71 320,333 4,341
Receivable for securities sold .................. -- 347,139 -- 104,814
Receivable for capital shares sold .............. -- 5,837 100,264 11,979
Net unrealized appreciation on forward foreign
currency exchange contracts (Note 6) ......... -- -- -- 5,824
Other assets .................................... 15,286 24,067 891 13,704
------------ ------------ ------------ ------------
TOTAL ASSETS ................................. 113,507,582 64,032,041 25,685,407 54,150,579
------------ ------------ ------------ ------------
LIABILITIES
Dividends payable ............................... 42,499 5,737 39,003 --
Distributions payable ........................... 79,100 -- -- --
Payable for securities purchased ................ 317,954 526,001 -- 41,737
Payable for capital shares redeemed ............. 165,732 30,916 1,219 --
Accrued investment advisory fees (Note 3) ....... 62,999 35,501 8,423 44,922
Accrued administration fees (Note 3) ............ 15,850 9,600 3,100 10,350
Other accrued expenses and liabilities .......... 19,643 8,318 7,867 34,313
------------ ------------ ------------ ------------
TOTAL LIABILITIES ............................ 703,777 616,073 59,612 131,322
------------ ------------ ------------ ------------
NET ASSETS ......................................... $112,803,805 $ 63,415,968 $ 25,625,795 $ 54,019,257
============ ============ ============ ============
Net assets consist of:
Paid-in capital ................................. $ 82,006,322 $ 42,935,120 $ 24,935,618 $ 41,845,573
Accumulated net realized gains (losses) from
security and foreign currency transactions ... (79,863) (384,055) 26,368 686,231
Net unrealized appreciation on investments ...... 30,877,346 20,864,903 663,809 11,482,361
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies . -- -- -- 5,092
------------ ------------ ------------ ------------
Net assets ......................................... $112,803,805 $ 63,415,968 $ 25,625,795 $ 54,019,257
============ ============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ...... 6,226,192 2,914,908 2,506,203 3,961,839
============ ============ ============ ============
Net asset value, offering price and
redemption price per share (Note 1) ............. $ 18.12 $ 21.76 $ 10.22 $ 13.63
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
=============================================================================================================
JAMESTOWN JAMESTOWN
JAMESTOWN JAMESTOWN TAX EXEMPT INTERNATIONAL
BALANCED EQUITY VIRGINIA EQUITY
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividends .............................. $ 739,421 $ 562,424 $ -- $ 882,162
Foreign withholding taxes on dividends . -- -- -- (91,794)
Interest ............................... 2,204,935 127,509 1,042,494 89,187
------------ ------------ ------------ ------------
TOTAL INVESTMENT INCOME ............. 2,944,356 689,933 1,042,494 879,555
------------ ------------ ------------ ------------
EXPENSES
Investment advisory fees (Note 3) ...... 680,064 361,874 85,055 464,912
Administration fees (Note 3) ........... 175,782 102,461 31,931 110,789
Custodian fees ......................... 14,825 8,047 3,795 72,618
Professional fees ...................... 13,185 8,045 8,045 11,775
Trustees' fees and expenses ............ 8,220 8,220 8,220 8,220
Pricing costs .......................... 9,712 1,015 6,782 8,559
Registration fees ...................... 7,626 6,122 2,202 7,518
Postage and supplies ................... 3,939 3,903 2,441 5,880
Printing of shareholder reports ........ 4,072 4,264 2,043 3,577
Insurance expense ...................... 3,268 2,490 1,401 1,868
Other expenses ......................... 3,083 6,687 3,615 5,339
------------ ------------ ------------ ------------
TOTAL EXPENSES ...................... 923,776 513,128 155,530 701,055
Expenses reimbursed through a directed
brokerage arrangement (Note 4) ...... (24,000) (17,500) -- --
------------ ------------ ------------ ------------
NET EXPENSES ........................ 899,776 495,628 155,530 701,055
------------ ------------ ------------ ------------
NET INVESTMENT INCOME ..................... 2,044,580 194,305 886,964 178,500
------------ ------------ ------------ ------------
REALIZEDAND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCIES (Note 5)
Net realized gains (losses) from:
Security transactions ............... 1,234,403 (369,569) 36,651 2,205,161
Foreign currency transactions ....... -- -- -- (56,520)
Net change in unrealized appreciation/
depreciation on:
Investments ......................... 4,507,324 5,043,678 81,607 1,511,375
Foreign currency translation ........ -- -- -- (120,768)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS
AND FOREIGN CURRENCIES ................. 5,741,727 4,674,109 118,258 3,539,248
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ........................ $ 7,786,307 $ 4,868,414 $ 1,005,222 $ 3,717,748
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
==========================================================================================================================
JAMESTOWN JAMESTOWN
BALANCED FUND EQUITY FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income .............................. $ 2,044,580 $ 1,911,506 $ 194,305 $ 238,229
Net realized gains (losses) from
security transactions ........................... 1,234,403 9,533,601 (369,569) 3,855,317
Net change in unrealized appreciation/
depreciation on investments ..................... 4,507,324 12,603,990 5,043,678 10,606,115
------------ ------------ ------------ ------------
Net increase in net assets from operations ............ 7,786,307 24,049,097 4,868,414 14,699,661
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ......................... (2,047,558) (1,934,092) (198,327) (242,370)
From net realized gains from security transactions . (1,302,068) (10,800,423) -- (4,379,490)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders .................................... (3,349,626) (12,734,515) (198,327) (4,621,860)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .......................... 13,392,101 17,601,307 11,342,221 10,499,561
Net asset value of shares issued in reinvestment
of distributions to shareholders ................ 3,140,088 12,174,707 171,755 4,351,536
Payments for shares redeemed ....................... (9,573,352) (10,335,880) (4,982,200) (3,895,041)
------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ......................... 6,958,837 19,440,134 6,531,776 10,956,056
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS .......................... 11,395,518 30,754,716 11,201,863 21,033,857
NET ASSETS
Beginning of year .................................. 101,408,287 70,653,571 52,214,105 31,180,248
------------ ------------ ------------ ------------
End of year ........................................ $112,803,805 $101,408,287 $ 63,415,968 $ 52,214,105
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Sold ............................................... 766,478 1,041,126 565,307 571,636
Reinvested ......................................... 178,274 735,126 8,737 236,191
Redeemed ........................................... (554,334) (599,080) (248,873) (209,264)
------------ ------------ ------------ ------------
Net increase in shares outstanding ................. 390,418 1,177,172 325,171 598,563
Shares outstanding, beginning of year .............. 5,835,774 4,658,602 2,589,737 1,991,174
------------ ------------ ------------ ------------
Shares outstanding, end of year .................... 6,226,192 5,835,774 2,914,908 2,589,737
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
==============================================================================================================================
JAMESTOWN TAX EXEMPT JAMESTOWN
VIRGINIA FUND INTERNATIONAL EQUITY FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income (loss) ........................... $ 886,964 $ 673,872 $ 178,500 $ (19,285)
Net realized gains (losses) from:
Security transactions ............................... 36,651 57,902 2,205,161 (60,926)
Foreign currency transactions ....................... -- -- (56,520) 190,757
Net change in unrealized appreciation/depreciation on:
Investments ......................................... 81,607 399,917 1,511,375 8,970,013
Foreign currency translation ........................ -- -- (120,768) 126,420
------------ ------------ ------------ ------------
Net increase in net assets from operations ................ 1,005,222 1,131,691 3,717,748 9,206,979
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............................. (886,964) (673,872) (238,226) (325,257)
From net realized gains from security transactions ..... (11,065) -- -- --
------------ ------------ ------------ ------------
Decrease in net assets from
distributions to shareholders .......................... (898,029) (673,872) (238,226) (325,257)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .............................. 8,922,497 8,481,218 9,046,185 4,706,633
Net asset value of shares issued in reinvestment
of distributions to shareholders .................... 487,854 360,594 231,344 321,283
Payments for shares redeemed ........................... (2,104,477) (2,284,029) (1,280,438) (657,411)
------------ ------------ ------------ ------------
Net increase in net assets from
capital share transactions ............................. 7,305,874 6,557,783 7,997,091 4,370,505
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS .............................. 7,413,067 7,015,602 11,476,613 13,252,227
NET ASSETS
Beginning of year ...................................... 18,212,728 11,197,126 42,542,644 29,290,417
------------ ------------ ------------ ------------
End of year ............................................ $ 25,625,795 $ 18,212,728 $ 54,019,257 $ 42,542,644
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Sold ................................................... 871,702 843,460 673,952 418,420
Reinvested ............................................. 47,603 35,724 17,619 28,068
Redeemed ............................................... (206,362) (225,366) (102,274) (60,156)
------------ ------------ ------------ ------------
Net increase in shares outstanding ..................... 712,943 653,818 589,297 386,332
Shares outstanding, beginning of year .................. 1,793,260 1,139,442 3,372,542 2,986,210
------------ ------------ ------------ ------------
Shares outstanding, end of year ........................ 2,506,203 1,793,260 3,961,839 3,372,542
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN BALANCED FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 17.38 $ 15.17 $ 14.77 $ 12.76 $ 12.15
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.34 0.37 0.35 0.36 0.33
Net realized and unrealized gains
on investments ............................... 0.95 4.31 1.45 2.50 0.90
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.29 4.68 1.80 2.86 1.23
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.34) (0.37) (0.35) (0.36) (0.33)
Distributions from net realized gains ........... (0.21) (2.10) (1.05) (0.49) (0.29)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.55) (2.47) (1.40) (0.85) (0.62)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 18.12 $ 17.38 $ 15.17 $ 14.77 $ 12.76
========= ========= ========= ========= =========
Total return ....................................... 7.56% 32.42% 12.29% 22.79% 10.54%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 112,804 $ 101,408 $ 70,654 $ 61,576 $ 52,062
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.88% 0.90% 0.91% 0.93% 0.99%
Ratio of net expenses to average net assets (a) .... 0.86% 0.87% 0.87% 0.88% 0.96%
Ratio of net investment income to average net assets 1.95% 2.21% 2.31% 2.52% 2.72%
Portfolio turnover rate ............................ 69% 90% 58% 72% 95%
</TABLE>
(a) Ratios were determined based on net expenses after expense reimbursements
through a directed brokerage arrangement (Note 4).
See accompanying notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN EQUITY FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 20.16 $ 15.66 $ 13.96 $ 11.29 $ 10.19
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.07 0.11 0.13 0.15 0.10
Net realized and unrealized gains
on investments ............................... 1.60 6.47 2.00 2.98 1.15
--------- --------- --------- --------- ---------
Total from investment operations ................... 1.67 6.58 2.13 3.13 1.25
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.07) (0.11) (0.13) (0.15) (0.12)
Distributions from net realized gains ........... -- (1.97) (0.30) (0.31) (0.03)
--------- --------- --------- --------- ---------
Total distributions ................................ (0.07) (2.08) (0.43) (0.46) (0.15)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 21.76 $ 20.16 $ 15.66 $ 13.96 $ 11.29
========= ========= ========= ========= =========
Total return ....................................... 8.33% 43.74% 15.27% 28.00% 12.33%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 63,416 $ 52,214 $ 31,180 $ 17,857 $ 8,111
========= ========= ========= ========= =========
Ratio of gross expenses to average net assets ...... 0.92% 0.93% 0.98% 1.14% 1.99%
Ratio of net expenses to average net assets ........ 0.89%(a) 0.90%(a) 0.92%(a) 1.01%(a) 1.44%(b)
Ratio of net investment income to average net assets 0.35% 0.60% 0.85% 1.27% 1.18%
Portfolio turnover rate ............................ 66% 59% 44% 54% 48%
</TABLE>
(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 investment advisory fee
waivers and/or other operating expense reimbursements by the Adviser.
See accompanying notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
FINANCIAL HIGHLIGHTS
=============================================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ............... $ 10.16 $ 9.83 $ 9.85 $ 9.68 $ 9.61
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income ........................... 0.43 0.44 0.45 0.45 0.44
Net realized and unrealized gains (losses)
on investments ............................... 0.07 0.33 (0.02) 0.17 0.07
--------- --------- --------- --------- ---------
Total from investment operations ................... 0.50 0.77 0.43 0.62 0.51
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income ............ (0.43) (0.44) (0.45) (0.45) (0.44)
Distributions from net realized gains ........... (0.01) -- -- -- --
--------- --------- --------- --------- ---------
Total distributions ................................ (0.44) (0.44) (0.45) (0.45) (0.44)
--------- --------- --------- --------- ---------
Net asset value at end of year ..................... $ 10.22 $ 10.16 $ 9.83 $ 9.85 $ 9.68
========= ========= ========= ========= =========
Total return ....................................... 4.92% 8.00% 4.39% 6.51% 5.47%
========= ========= ========= ========= =========
Net assets at end of year (000's) .................. $ 25,626 $ 18,213 $ 11,197 $ 8,779 $ 7,712
========= ========= ========= ========= =========
Ratio of net expenses to average net assets (a) .... 0.73% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to average net assets 4.17% 4.40% 4.51% 4.57% 4.64%
Portfolio turnover rate ............................ 31% 33% 24% 14% 97%
</TABLE>
(a) 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% and 1.62% for the years ended March 31, 1998, 1997,
1996 and 1995, respectively.
See accompanying notes to financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
======================================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997(A)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period .................... $ 12.61 $ 9.81 $ 10.00
--------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) ........................... 0.05 (0.01) (0.01)
Net realized and unrealized gains (losses)
on investments and foreign currencies ............... 1.04 2.91 (0.14)
--------- --------- ---------
Total from investment operations .......................... 1.09 2.90 (0.15)
--------- --------- ---------
Less distributions:
Dividends from net investment income ................... (0.07) (0.10) (0.04)
--------- --------- ---------
Net asset value at end of period .......................... $ 13.63 $ 12.61 $ 9.81
========= ========= =========
Total return .............................................. 8.67% 29.67% (1.56)%(c)
========= ========= =========
Net assets at end of period (000's) ....................... $ 54,019 $ 42,543 $ 29,290
========= ========= =========
Ratio of net expenses to average net assets (b) ........... 1.51% 1.56% 1.60%(c)
Ratio of net investment income (loss) to average net assets 0.38% (0.05)% (0.15)%(c)
Portfolio turnover rate ................................... 39% 47% 70%(c)
</TABLE>
(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.
12
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund (individually, a Fund,
and, collectively, the Funds) are each 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. The Trust was organized as
a Massachusetts business trust on July 18, 1988.
The Jamestown 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 Jamestown 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 Jamestown 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 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 could be affected by certain Virginia political and economic
developments.
The Jamestown 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 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
(normally 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. It is expected that 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. If a pricing service cannot provide a valuation, securities
will be valued in good faith at value using methods consistent with those
determined by the Board of Trustees. Foreign securities are translated from the
local currency into U.S. dollars using currency exchange rates supplied by a
quotation service.
Repurchase agreements -- The Jamestown Balanced Fund and The Jamestown Equity
Fund 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. At the time the Funds enter 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, 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.
13
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
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.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid quarterly to shareholders of The Jamestown
Balanced Fund, The Jamestown Equity Fund and The Jamestown International Equity
Fund and are declared daily and paid monthly to shareholders of The Jamestown
Tax Exempt Virginia 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.
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 Jamestown Balanced 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 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
investment securities as of March 31, 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Jamestown Jamestown Jamestown Jamestown
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation .. $ 32,112,011 $ 21,868,458 $ 704,888 $ 13,312,879
Gross unrealized depreciation .. (1,314,528) (1,018,725) (41,079) (1,830,518)
------------ ------------ ------------ ------------
Net unrealized appreciation .... $ 30,797,483 $ 20,849,733 $ 663,809 $ 11,482,361
============ ============ ============ ============
Federal income tax cost ........ $ 80,304,140 $ 42,065,376 $ 24,600,110 $ 40,485,195
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------
</TABLE>
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for The Jamestown Balanced Fund and The Jamestown
Equity Fund is due to certain timing differences in the recognition of capital
losses under income tax regulations and generally accepted accounting
principles.
14
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
As of March 31, 1999, The Jamestown Equity Fund had capital loss carryforwards
for federal income tax purposes of $368,885 which expire on March 31, 2007.
These capital loss carryforwards may be utilized in future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
2. INVESTMENT TRANSACTIONS
Investment transactions, other than short-term investments, were as follows for
the year ended March 31, 1999:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Jamestown Jamestown Jamestown Jamestown
Balanced Equity Tax Exempt International
Fund Fund Virginia Fund Equity Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of investment securities .. $78,675,464 $44,346,054 $13,068,282 $24,316,515
=========== =========== =========== ===========
Proceeds from sales and maturities
of investment securities ......... $69,731,979 $34,909,266 $ 6,457,178 $17,425,753
=========== =========== =========== ===========
- -------------------------------------------------------------------------------------------------
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Funds' investments are managed by Lowe, Brockenbrough & Company, Inc. (the
Adviser), under the terms of an Investment Advisory Agreement. Under the
Investment Advisory Agreement, The Jamestown Balanced Fund pays the Adviser a
fee, which is computed and accrued daily and paid monthly, at an annual rate of
.65% on its average daily net assets up to $250 million, .60% on the next $250
million of such net assets and .55% on such net assets in excess on $500
million. The Jamestown Equity Fund pays the Adviser a fee at an annual rate of
.65% on its average daily net assets up to $500 million and .50% on such net
assets in excess on $500 million. The Jamestown Tax Exempt Virginia Fund pays
the Adviser a fee at an annual rate of .40% on its average daily net assets up
to $250 million, .35% on the next $250 million of such net assets and .30% on
such net assets in excess of $500 million. The Jamestown International Equity
Fund pays the Adviser a fee at an annual rate of 1.00% on its average daily net
assets. Certain trustees and officers of the Trust are also officers of the
Adviser.
The Adviser retains Oechsle International Advisors, LLC (Oechsle) to provide The
Jamestown International Equity 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.
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 each
of The Jamestown Balanced Fund and The Jamestown Equity Fund at an annual rate
of .20% on its respective 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 with respect to each
Fund. From The Jamestown Tax Exempt Virginia Fund, CFS receives a monthly fee at
an annual rate of .15% on its average daily net assets up to $200 million and
.10% on such net assets in excess of $200 million, subject to a $2,000 minimum
monthly fee. From The Jamestown International Equity Fund, CFS receives a
monthly fee at an annual rate of .25% on its average daily net assets up to $25
million; .225% on the next $25 million of such net assets; and .20% on such net
assets in excess of $50 million, subject to a $4,000 minimum monthly fee. In
addition, each Fund pays CFS 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, or of CW Fund
Distributors, Inc., the exclusive underwriter of each Funds' shares.
15
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. DIRECTED BROKERAGE ARRANGEMENT
In order to reduce the total operating expenses of The Jamestown Balanced Fund
and The Jamestown Equity Fund, each Fund's custodian fees and a portion of other
operating expenses have been paid through an arrangement with a thirdparty
brokerdealer who is compensated through commission trades. Payment of expenses
by the brokerdealer is based on a percentage of commissions earned. Expenses
reimbursed through the directed brokerage arrangement totaled $24,000 and
$17,500 for The Jamestown Balanced Fund and The Jamestown Equity Fund,
respectively, for the year ended March 31, 1999.
5. FOREIGN CURRENCY TRANSLATION
With respect to The Jamestown International Equity Fund, 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.
6. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Jamestown International Equity 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.
16
<PAGE>
THE JAMESTOWN FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
As of March 31, 1999, the Jamestown International Equity Fund had forward
foreign currency exchange contracts outstanding as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Net Unrealized
Settlement To Receive Initial Market Appreciation
Date (To Deliver) Value Value (Depreciation)
- ---------------------------------------------------------------------------------------
Contracts To Sell
<S> <C> <C> <C> <C>
04/01/99 1,440 AUD $ (901) $ (909) $ (8)
04/07/99 36,597 NZD (19,488) (19,514) (26)
04/08/99 78,824 NZD (41,737) (42,030) (293)
04/09/99 81,117 NZD (43,114) (43,252) (138)
06/17/99 292,000,000 JPY (2,498,781) (2,492,507) 6,274
----------- ----------- -------
Total sell contracts (2,604,021) (2,598,212) 5,809
----------- ----------- -------
Contracts To Buy
04/01/99 32,370 AUD 20,490 20,441 (49)
04/06/99 33,723 AUD 21,229 21,293 64
----------- ----------- -------
Total buy contracts 41,719 41,734 15
----------- ----------- -------
Net contracts $(2,562,302) $(2,556,478) $ 5,824
=========== =========== =======
- ---------------------------------------------------------------------------------------
</TABLE>
AUD - Australian Dollar
JPY - Japanese Yen
NZD - New Zealand Dollar
17
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 68.8% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 1.4%
20,000 Interpublic Group of Companies, Inc. ........... $ 1,557,500
------------
COMMERCIAL BANKING -- 5.4%
26,000 BankAmerica Corporation ........................ 1,836,250
32,000 Fannie Mae ..................................... 2,216,000
37,600 First Union Corporation ........................ 2,009,250
------------
6,061,500
------------
COMMUNICATIONS -- 7.2%
10,000 Ascend Communications, Inc.(a) ................. 836,870
56,000 Equifax, Inc. .................................. 1,925,000
17,900 Lucent Technologies, Inc. ...................... 1,928,725
38,000 MCI WorldCom, Inc.(a) .......................... 3,365,375
------------
8,055,970
------------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES -- 11.6%
25,500 Cisco Systems, Inc.(a) ......................... 2,793,844
46,400 Computer Sciences Corporation(a) ............... 2,560,700
16,900 Intel Corporation .............................. 2,013,212
22,000 Microsoft Corporation(a) ....................... 1,971,750
51,000 Oracle Corporation(a) .......................... 1,345,125
35,000 Sundstrand Corporation ......................... 2,432,500
------------
13,117,131
------------
CONSUMER PRODUCTS -- 10.3%
25,000 Avon Products, Inc. ............................ 1,176,562
62,000 Crane Company .................................. 1,499,625
22,000 General Electric Company ....................... 2,433,750
20,000 Gillette Company ............................... 1,188,750
42,000 Kimberly-Clark Corporation ..................... 2,013,375
81,000 Sara Lee Corporation ........................... 2,004,750
50,000 Sysco Corporation .............................. 1,315,625
------------
11,632,437
------------
DRUGS/MEDICAL EQUIPMENT-- 9.2%
35,000 Abbott Laboratories ............................ 1,638,437
35,000 Becton, Dickinson and Company .................. 1,340,920
24,000 Bristol-Myers Squibb Company ................... 1,543,500
18,000 Lilly (Eli) & Company .......................... 1,527,750
24,200 Merck and Company, Inc. ........................ 1,940,538
44,000 Schering-Plough Corporation .................... 2,433,750
------------
10,424,895
------------
ELECTRONICS -- 1.0%
16,000 Hewlett-Packard Company ........................ 1,085,000
------------
FINANCIAL SERVICES -- 1.0%
18,000 Citigroup, Inc. ................................ 1,149,750
------------
18
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 68.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FIRE SYSTEMS -- 2.5%
40,000 Tyco International Ltd. ........................ $ 2,870,000
------------
FOOD SERVICES -- 1.7%
41,000 H.J. Heinz Company ............................. 1,942,375
------------
HEALTH CARE CENTERS -- 2.6%
44,000 McKesson HBOC, Inc. ............................ 2,904,000
------------
INSURANCE -- 4.6%
25,500 American International Group, Inc. ............. 3,075,938
31,500 Jefferson-Pilot Corporation .................... 2,134,125
------------
5,210,063
------------
OIL AND GAS DRILLING -- 5.4%
63,000 Coastal Corporation ............................ 2,079,000
54,000 Halliburton Company ............................ 2,079,000
9,000 Mobil Corporation .............................. 792,000
18,400 Schlumberger, Ltd. ............................. 1,107,450
------------
6,057,450
------------
RETAIL STORES -- 4.9%
65,000 AutoZone, Inc.(a) .............................. 1,974,375
15,000 Circuit City Stores, Inc. ...................... 1,149,375
36,000 Dayton Hudson Corporation ...................... 2,398,500
------------
5,522,250
------------
TOTAL COMMON STOCKS (COST $46,685,568) ......... $ 77,590,321
------------
================================================================================
PAR
VALUE U.S. TREASURY OBLIGATIONS -- 5.8% VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY BONDS -- 1.5%
$ 900,000 6.625%, due 02/15/2027 ......................... $ 992,106
780,000 5.25%, due 02/15/2029 .......................... 737,342
------------
1,729,448
------------
U.S. TREASURY NOTES -- 3.7%
875,000 7.75%, due 11/30/1999 .......................... 891,949
2,040,000 6.50%, due 05/31/2001 .......................... 2,100,241
1,115,000 7.00%, due 07/15/2006 .......................... 1,219,877
------------
4,212,067
U.S. TREASURY INFLATION-PROTECTION NOTES -- 0.6%
399,153 3.625%, due 07/15/2002 ......................... 396,535
212,086 3.375%, due 01/15/2007 ......................... 204,133
------------
600,668
------------
TOTAL U.S. TREASURY OBLIGATIONS (COST $6,645,282) $ 6,542,183
------------
19
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE MORTGAGE-BACKED SECURITIES -- 8.0% VALUE
- --------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.8%
$ 36,627 Pool #G50153, 4.50%, due 05/01/1999 ............ $ 36,125
246,070 Pool #1490-PE, 5.75%, due 07/15/2006 ........... 246,223
475,000 Pool #1471-G, 7.00%, due 03/15/2008 ............ 489,098
175,000 Pool #1655-HB, 6.50%, due 10/15/2008 ........... 178,444
------------
949,890
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.8%
382,836 Pool #73718, 7.23%, due 11/01/2003 ............. 403,548
345,320 Pool #375448, 6.66%, due 10/01/2004 ............ 358,270
216,197 Series #93-63-PE, 6.25%, due 06/25/2005 ........ 216,332
616,402 Pool #375296, 6.92%, due 08/01/2007 ............ 650,305
425,000 Series #93-18-PJ, 6.50%, due 12/25/2007 ........ 430,045
708,406 Pool #380190, 6.325%, due 04/01/2008 ........... 721,512
730,564 Pool #380512, 6.15%, due 08/01/2008 ............ 739,696
145,625 Pool #70, 8.50%, due 01/01/2012 ................ 153,083
120,476 Series #88-29-B, 9.50%, due 12/25/2018 ......... 128,683
188,546 Series #90-35-E, 9.50%, due 04/25/2020 ......... 202,568
500,000 Series #98-M4-B, 6.424%, due 12/01/2023 ........ 500,000
543,164 Pool #252092, 6.00%, due 11/01/2028 ............ 528,021
137,900 Pool #448624, 6.50%, due 11/01/2028 ............ 137,310
421,364 Pool #448629, 6.50%, due 11/01/2028 ............ 419,561
345,744 Pool #448699, 6.00%, due 11/01/2028 ............ 336,105
911,793 Pool #448649, 6.50%, due 12/01/2028 ............ 907,891
866,953 Pool #453624, 6.00%, due 12/01/2028 ............ 842,783
------------
7,675,713
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.4%
382,981 Pool #343536, 7.50%, due 02/15/2023 ............ 395,444
------------
TOTAL MORTGAGE-BACKED SECURITIES (COST $8,986,550) $ 9,021,047
------------
20
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE ASSET-BACKED SECURITIES -- 3.1% VALUE
- --------------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION -- 1.1%
$ 480,103 Series #97-3-A1, 5.604%, adjustable rate,
due 04/25/2006 ............................... $ 478,041
746,444 Series #98-1-A1, 5.212%, adjustable rate,
due 01/25/2007 ............................... 744,549
------------
1,222,590
------------
OTHER ASSET-BACKED SECURITIES -- 2.0%
Advanta Mortgage Loan Trust #92-2-A2,
27,710 7.03%, due 03/25/2011 ........................ 27,641
AFG Receivables Trust #95-A-A,
36,323 6.15%, due 09/15/2000 ........................ 36,323
California Infrastructure Trust #97-1-A3,
700,000 6.17%, due 03/25/2003 ........................ 706,776
Fleetwood Credit Corporation Grantor Trust #95-A-A,
275,202 8.45%, due 11/15/2010 ........................ 284,560
Green Tree Financial Corporation #98-A-A1C,
356,263 6.18%, due 06/15/2019 ........................ 358,366
Nomura Asset Securties Corporation #96-MD5-A1A,
601,559 7.07%, due 04/13/2036 ........................ 621,862
NationsCredit Grantor Trust #96-1-A,
195,475 5.85%, due 09/15/2011 ........................ 194,068
------------
2,229,596
------------
TOTAL ASSET-BACKED SECURITIES (COST $3,447,782) $ 3,452,186
------------
================================================================================
PAR
VALUE CORPORATE BONDS -- 12.8% VALUE
- --------------------------------------------------------------------------------
Associates Corporation, N.A.,
$ 675,000 5.85%, due 01/15/2001 ........................ $ 678,301
Beneficial Corporation Medium Term Notes,
230,000 6.35%, due 12/03/2001 ........................ 232,689
Caterpillar Financial, Inc. Medium Term Notes,
450,000 6.80%, due 06/15/1999 ........................ 451,444
Chrysler Financial Corporation,
1,000,000 5.90%, due 01/26/2001 ........................ 1,008,010
Coca-Cola Enterprises,
385,000 5.75%, due 11/01/2008 ........................ 372,784
Duke Realty L.P. Medium Term Notes,
390,000 6.75%, due 05/30/08 .......................... 385,515
Enron Corporation,
750,000 6.45%, due 11/15/2001 ........................ 758,017
Equity Residential Properties Trust,
875,000 6.65%, due 11/15/2003 ........................ 876,356
Finova Capital Corporation,
1,000,000 6.25%, due 08/15/2000 ........................ 1,007,140
Ford Motor Credit Company Medium Term Notes,
225,000 7.55%, due 07/19/1999 ........................ 226,568
475,000 7.20%, due 06/15/2007 ........................ 501,814
General Motors Acceptance Corporation Medium Term Notes,
525,000 6.65%, due 05/24/2000 ........................ 531,652
International Lease Finance Corporation,
265,000 6.375%, due 08/01/2002 ....................... 269,078
21
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR
VALUE CORPORATE BONDS -- 12.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
International Lease Finance Corporation Medium Term Notes,
$ 425,000 6.42%, due 09/11/2000 ........................ $ 429,526
425,000 6.55%, due 09/15/2000 ........................ 430,295
International Paper Company,
735,000 8.68%, due 09/14/2001 ........................ 778,924
KeyCorp Medium Term Notes,
675,000 6.75%, due 05/29/2001 ........................ 689,155
Manitoba (Province of) Medium Term Notes,
205,000 5.50%, due 10/01/2008 ........................ 198,352
May Department Stores,
510,000 5.95%, due 11/01/2008 ........................ 503,212
Merrill Lynch & Company Medium Term Notes,
265,000 7.26%, due 03/25/2002 ........................ 262,350
National City Corporation,
575,000 7.20%, due 05/15/2005 ........................ 595,660
Norwest Financial, Inc.,
140,000 6.05%, due 11/19/1999 ........................ 140,676
400,000 5.375%, due 09/30/2003 ....................... 391,860
Pacific Bell,
185,000 6.625%, due 11/01/2009 ....................... 191,997
Pacific Bell Medium Term Notes,
400,000 6.875%, due 08/15/2006 ....................... 419,364
Prologis Trust,
225,000 7.00%, due 10/01/2003 ........................ 225,356
Sears Roebuck Acceptance Corporation,
400,000 6.99%, due 09/30/2002 ........................ 412,908
Suntrust Banks,
310,000 6.125%, due 02/15/2004 ....................... 309,547
TRW, Inc.,
245,000 6.25%, due 01/15/2010 ........................ 232,287
Union Camp Corporation,
425,000 6.50%, due 11/15/2007 ........................ 425,523
U.S. WEST Capital Funding, Inc. Medium Term Notes,
550,000 6.375%, due 07/15/2008 ....................... 559,526
------------
TOTAL CORPORATE BONDS (COST $14,459,095) ....... $ 14,495,886
------------
TOTAL INVESTMENTS AT VALUE
(COST $80,224,277) -- 98.5% .................. $111,101,623
------------
22
<PAGE>
THE JAMESTOWN BALANCED FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS(B) -- 1.6% VALUE
- --------------------------------------------------------------------------------
Firstar Bank, 3.75%, dated 03/31/1999, due
$ 1,868,000 04/01/1999, repurchase proceeds $1,868,195
(Cost $1,868,000) ............................ $ 1,868,000
------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 100.1% ................ $112,969,623
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1)% (165,818)
------------
NET ASSETS -- 100.0% $112,803,805
============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,565 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $1,935,077.
See accompanying notes to financial statements.
23
<PAGE>
THE JAMESTOWN EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 99.2% VALUE
- --------------------------------------------------------------------------------
ADVERTISING -- 2.0%
16,000 Interpublic Group of Companies, Inc. ........... $ 1,246,000
------------
COMMERCIAL BANKING -- 7.9%
21,000 BankAmerica Corporation ........................ 1,483,125
27,000 Fannie Mae ..................................... 1,869,750
30,600 First Union Corporation ........................ 1,635,188
------------
4,988,063
------------
COMMUNICATIONS -- 10.6%
13,000 Ascend Communications, Inc. (a) ................ 1,087,937
49,000 Equifax, Inc. .................................. 1,684,375
12,000 Lucent Technologies, Inc. ...................... 1,293,000
30,000 MCI WorldCom, Inc.(a) .......................... 2,656,875
------------
6,722,187
------------
COMPUTERS/COMPUTER TECHNOLOGY SERVICES -- 17.0%
20,250 Cisco Systems, Inc.(a) ......................... 2,218,641
39,500 Computer Sciences Corporation(a) ............... 2,179,906
15,000 Intel Corporation .............................. 1,786,875
19,000 Microsoft Corporation(a) ....................... 1,702,875
45,000 Oracle Corporation(a) .......................... 1,186,875
24,000 Sunstrand Corporation .......................... 1,668,000
------------
10,743,172
------------
CONSUMER PRODUCTS -- 15.8%
21,000 Avon Products, Inc. ............................ 988,312
69,000 Crane Company .................................. 1,668,937
17,000 General Electric Company ....................... 1,880,625
15,000 Gillette Company ............................... 891,562
37,000 Kimberly-Clark Corporation ..................... 1,773,687
70,000 Sara Lee Corporation ........................... 1,732,500
42,000 Sysco Corporation .............................. 1,105,125
------------
10,040,748
------------
DRUGS/MEDICAL EQUIPMENT -- 12.2%
15,000 Abbott Laboratories ............................ 702,187
28,000 Becton, Dickinson and Company .................. 1,072,750
20,000 Bristol-Myers Squibb Company ................... 1,286,250
15,000 Lilly (Eli) & Company .......................... 1,273,125
22,000 Merck and Company, Inc. ........................ 1,764,125
29,000 Schering-Plough Corporation .................... 1,604,063
------------
7,702,500
------------
ELECTRONICS -- 1.6%
15,000 Hewlett-Packard Company ........................ 1,017,188
------------
FINANCIAL SERVICES -- 1.6%
15,500 Citigroup, Inc. ................................ 990,063
------------
24
<PAGE>
THE JAMESTOWN EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 99.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FIRE SYSTEMS -- 3.8%
34,000 Tyco International Ltd. ........................ $ 2,439,500
------------
FOOD SERVICES -- 2.5%
34,000 H.J. Heinz Company ............................. 1,610,750
------------
HEALTH CARE CENTERS -- 3.7%
36,000 McKesson HBOC, Inc. ............................ 2,376,000
------------
INSURANCE -- 6.7%
20,550 American International Group, Inc. ............. 2,478,844
26,500 Jefferson-Pilot Corporation .................... 1,795,375
------------
4,274,219
------------
OIL AND GAS DRILLING -- 7.8%
53,000 Coastal Corporation ............................ 1,749,000
44,000 Halliburton Company ............................ 1,694,000
7,000 Mobil Corporation .............................. 616,000
14,500 Schlumberger Ltd. .............................. 872,719
------------
4,931,719
------------
RETAIL STORES -- 6.0%
56,000 AutoZone, Inc.(a) .............................. 1,701,000
32,000 Dayton Hudson Corporation ...................... 2,132,000
------------
3,833,000
------------
TOTAL COMMON STOCKS (COST $42,050,206) ......... $ 62,915,109
------------
================================================================================
FACE
AMOUNT REPURCHASE AGREEMENTS(B) -- 1.1% VALUE
- --------------------------------------------------------------------------------
$ 679,000 Firstar Bank, 3.75%, dated 03/31/1999,
due 04/01/1999, repurchase proceeds
$679,071 (Cost $679,000) ..................... $ 679,000
------------
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE -- 100.3% ................ $ 63,594,109
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.3)% (178,141)
------------
NET ASSETS -- 100.0% ........................... $ 63,415,968
============
(a) Non-income producing security.
(b) Joint repurchase agreement is fully collateralized by $28,093,565 U.S.
Treasury Note, 5.625%, due 02/28/2001. The aggregate market value of the
collateral at March 31, 1999 was $28,533,385. The Fund's pro-rata interest
in the collateral at March 31, 1999 was $703,390.
See accompanying notes to financial statements.
25
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
PAR VIRGINIA FIXED RATE REVENUE AND GENERAL
VALUE OBLIGATION (GO) BONDS -- 95.8% VALUE
- --------------------------------------------------------------------------------
Alexandria, Virginia, Industrial
Dev. Authority, Revenue,
$ 900,000 3.00%, adjustable rate, due 07/01/2022 ....... $ 900,000
Arlington Co., Virginia, GO,
300,000 5.60%, due 08/01/2006 ........................ 327,030
1,000,000 5.00%, due 10/01/2013 ........................ 1,030,010
Brunswick Co., Virginia, Industrial
Dev. Authority, Revenue,
300,000 5.45%, due 07/01/2006 ........................ 324,183
Chesterfield Co., Virginia, GO,
350,000 6.25%, due 07/15/2005 ........................ 376,068
750,000 4.00%, due 01/01/2006 ........................ 751,283
Fairfax Co., Virginia, GO,
350,000 5.60%, due 05/01/2003 ........................ 357,196
600,000 5.00%, due 06/01/2014 ........................ 610,560
Fairfax Co., Virginia, Park Authority, Revenue,
300,000 6.25%, due 07/15/2005 ........................ 326,064
Fairfax Co., Virginia, Sewer, Revenue,
350,000 5.625%, due 07/15/2008 ....................... 383,863
Hanover Co., Virginia, Industrial
Dev. Authority, Revenue,
225,000 6.25%, due 10/01/2011 ........................ 241,229
Henrico Co., Virginia, GO,
500,000 4.70%, due 01/15/2002 ........................ 514,820
Henrico Co., Virginia, Water and Sewer, Revenue,
500,000 4.625%, due 05/01/2017 ....................... 475,830
James City Co., Virginia, GO,
500,000 5.25%, due 12/15/2015 ........................ 513,315
Loudoun Co., Virginia, GO,
300,000 5.50%, due 06/01/2009 ........................ 324,855
Lynchburg, Virginia, GO,
500,000 5.30%, due 05/01/2014 ........................ 520,000
Medical College of Virginia Hospitals
Authority, Revenue,
700,000 5.00%, due 07/01/2013 ........................ 703,535
Newport News, Virginia, GO,
400,000 5.40%, due 07/01/2002 ........................ 405,240
400,000 5.15%, due 01/01/2010 ........................ 414,728
Norfolk, Virginia, GO,
300,000 5.75%, due 06/01/2011 ........................ 321,756
500,000 5.00%, due 07/01/2014 ........................ 506,365
Petersburg, Virginia, GO,
500,000 5.125%, due 01/15/2013 ....................... 515,295
Peumansend Creek, Virginia, Regional
Jail Authority, Revenue,
300,000 5.75%, due 06/01/2017 ........................ 320,454
Pittsylvania Co., Virginia, GO,
300,000 5.65%, due 07/01/2006 ........................ 328,833
Portsmouth, Virginia, GO,
800,000 5.00%, due 08/01/2017 ........................ 797,096
Prince William Co., Virginia, GO,
400,000 4.90%, due 08/01/2005 ........................ 420,172
Prince William Co., Virginia, Park Authority, Revenue,
250,000 6.10%, due 10/15/2004 ........................ 273,330
26
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
PAR VIRGINIA FIXED RATE REVENUE AND GENERAL
VALUE OBLIGATION (GO) BONDS -- 95.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
Prince William Co., Virginia, Service Auth.
Water & Sewer, Revenue,
$ 500,000 5.00%, due 07/01/2003 ........................ $ 523,315
Richmond, Virginia, GO,
400,000 6.25%, due 01/15/2018 ........................ 423,872
Richmond, Virginia, Metropolitan Authority,
Expressway, Revenue,
500,000 6.05%, due 07/15/2005 ........................ 541,815
Richmond, Virginia, Redev. & Housing
Authority, Revenue,
500,000 5.00%, due 03/01/2018 ........................ 493,360
Riverside, Virginia, Regional Jail Authority, Revenue,
300,000 5.30%, due 07/01/2002 ........................ 314,553
Roanoke, Virginia, GO,
700,000 5.00%, due 08/01/2012 ........................ 717,269
300,000 6.40%, due 08/01/2012 ........................ 326,331
Spotsylvania Co., Virginia, GO,
400,000 5.75%, due 07/15/2011 ........................ 430,944
Suffolk, Virginia, GO,
350,000 5.80%, due 06/01/2011 ........................ 381,052
Upper Occoquan, Virginia, Sewer Authority, Revenue,
700,000 5.00% due 07/01/2015 ......................... 703,549
Virginia Beach, Virginia, GO,
325,000 6.20%, due 09/01/2013 ........................ 365,593
Virginia College Building Authority,
Educational Facilities, Revenue,
885,000 3.05%, floating rate, due 11/01/2026 ......... 885,000
Virginia Commonwealth University, Revenue,
250,000 5.75%, due 05/01/2006 ........................ 274,162
Virginia Polytechnic Institute and
State University, Revenue,
625,000 5.45%, due 06/01/2013 ........................ 659,256
Virginia State, GO,
500,000 5.25%, due 07/01/2011 ........................ 526,595
500,000 5.375%, due 06/01/2015 ....................... 519,990
Virginia State Housing Dev. Authority,
Commonwealth Mortgages, Revenue,
150,000 5.60%, due 01/01/2002 ........................ 154,415
Virginia State Housing Dev. Authority,
Multi-Family, Revenue,
150,000 6.60%, due 11/01/2012 ........................ 163,401
150,000 6.30%, due 11/01/2015 ........................ 161,268
Virginia State Public Building Authority, Revenue,
500,000 6.00%, due 08/01/2003 ........................ 529,810
Virginia State Public School Authority, Revenue,
750,000 5.25%, due 08/01/2009 ........................ 804,368
Virginia State Resource Authority,
Solid Waste Disposal System, Revenue,
500,000 5.50%, due 04/01/2015 ........................ 519,995
Virginia State Transportation Board, Revenue,
350,000 6.25%, due 05/15/2012, prerefunded 05/15/2004 389,847
Winchester, Virginia, Industrial Dev.
Authority, Educational Facilities, Revenue,
500,000 5.00% due 10/01/2018 ......................... 493,870
York Co., Virginia, Certificates of
Participation, Revenue,
250,000 6.625%, due 03/01/2012 ....................... 261,542
------------
TOTAL VIRGINIA FIXED RATE REVENUE AND GENERAL
OBLIGATION (GO) BONDS (COST $23,884,473) ..... $ 24,548,282
------------
27
<PAGE>
THE JAMESTOWN TAX EXEMPT VIRGINIA FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES MONEY MARKETS -- 2.8% VALUE
- --------------------------------------------------------------------------------
715,637 Firstar Tax-Free Fund (Cost $715,637) .......... $ 715,637
------------
TOTAL INVESTMENTS AT VALUE
(COST $24,600,110) -- 98.6% .................. $ 25,263,919
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.4% .. 361,876
------------
NET ASSETS -- 100.0% ........................... $ 25,625,795
============
See accompanying notes to financial statements.
28
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
================================================================================
SHARES COMMON STOCKS -- 96.2% VALUE
- --------------------------------------------------------------------------------
AUSTRALIA -- 2.2%
85,700 Australia and New Zealand Banking Group Ltd. ... $ 619,669
126,126 Coca-Cola Amatil Ltd. .......................... 544,796
------------
1,164,465
------------
BELGIUM -- 1.4%
11,380 Kredietbank NV ................................. 758,651
------------
CANADA -- 2.5%
18,100 BCE, Inc. ...................................... 798,635
11,200 The Seagram Company Ltd. ....................... 560,814
------------
1,359,449
------------
FRANCE -- 8.8%
4,314 Groupe Danone .................................. 1,085,639
8,970 Suez Lyonnaise des Eaux ........................ 1,659,840
11,129 Valeo SA ....................................... 871,078
4,685 Vivendi ........................................ 1,152,701
------------
4,769,258
------------
GERMANY -- 5.1%
7,721 DaimlerChrysler AG ............................. 671,849
17,517 Hoechst AG ..................................... 759,291
10,500 Mannesmann AG .................................. 1,341,025
------------
2,772,165
------------
GREECE -- 0.4%
8,840 Hellenic Telecommunications Organization SA (OTE) 214,366
------------
HONG KONG -- 1.8%
72,000 Cheung Kong (Holdings) Ltd. .................... 548,157
57,000 Hutchison Whampoa Ltd. ......................... 448,668
------------
996,825
------------
INDIA -- 0.3%
4,220 Richter Gedeon Rt. - GDR ....................... 136,871
------------
ITALY -- 9.9%
330,623 Banca Nazionale del Lavoro (BNL)(a) ............ 1,156,488
9,100 Banca Popolare di Bergamo Credito Varesino SpA . 230,872
167,922 Credito Italiano SpA ........................... 906,443
116,200 Mediaset SpA ................................... 1,092,665
186,202 Telecom Italia SpA ............................. 1,978,073
------------
5,364,541
------------
JAPAN -- 18.3%
24,000 Canon, Inc. .................................... 593,768
25,000 Denso Corporation .............................. 490,796
500 Isetan Company ................................. 4,771
11,000 Ito-Yokado Company Ltd. ........................ 707,760
26,000 Kao Corporation ................................ 574,094
33,000 Matsushita Electric Industrial Company Ltd. .... 643,671
29
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
JAPAN -- 18.3% (CONTINUED)
13,000 Murata Manufacturing Company Ltd. .............. $ 691,548
35,000 Nikko Securities Co., Ltd. ..................... 162,543
103 Nippon Telegraph and Telephone Corporation ..... 1,008,866
27,000 Nomura Securities Company Ltd. ................. 282,699
36 NTT Mobile Communication Network, Inc. ......... 1,778,266
7,000 Rohm Company ................................... 836,359
167,000 Sakura Bank, Ltd. .............................. 506,232
660 Shohkoh Fund & Co., Ltd. ....................... 334,375
18,000 Takeda Chemical Industries ..................... 697,627
3,700 Takefugi Corporation ........................... 284,303
42,000 Toshiba Corporation ............................ 286,904
------------
9,884,582
------------
NETHERLANDS -- 9.2%
13,500 Gucci Group NV - ADR ........................... 1,086,750
27,014 KPN NV ......................................... 1,074,705
5,058 Laurus NV ...................................... 122,852
13,310 Royal Dutch Petroleum Company .................. 707,697
22,128 Vendex International NV ........................ 533,928
36,406 VNU NV ......................................... 1,418,871
------------
4,944,803
------------
NEW ZEALAND -- 1.7%
192,383 Telecom Corporation of New Zealand Ltd. ........ 935,692
------------
PHILIPPINES -- 0.4%
540,000 Filinvest Land, Inc.(a) ........................ 44,594
24,192 Metropolitan Bank & Trust Company(a) ........... 191,975
------------
236,569
------------
PORTUGAL -- 1.6%
18,904 Portugal Telecom SA ............................ 846,759
------------
SINGAPORE -- 0.2%
12,000 Development Bank of Singapore Ltd. ............. 90,946
------------
SPAIN -- 3.8%
55,549 Argentaria SA .................................. 1,334,948
16,826 Telefonica de Espana ........................... 713,716
------------
2,048,664
------------
SWEDEN -- 2.4%
15,760 Hennes and Mauritz AB - Class B ................ 1,188,277
7,710 Skandinaviska Enskilda Banken - Class A ........ 94,230
------------
1,282,507
------------
SWITZERLAND -- 4.7%
581 Novartis AG .................................... 942,491
89 Roche Holding AG - Genusschein ................. 1,085,366
796 Schweizerische Lebensversicherungs
-und Rentenanstalt .......................... 507,147
------------
2,535,004
------------
30
<PAGE>
THE JAMESTOWN INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.2% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 21.5%
36,943 Allied Zurich PLC .............................. $ 498,261
318,671 ASDA Group PLC ................................. 781,934
202,380 British Aerospace PLC .......................... 1,351,730
89,143 British American Tobacco PLC ................... 741,819
86,375 British Sky Broadcasting Group PLC ............. 745,281
94,155 Diageo PLC ..................................... 1,063,201
47,580 Glaxo Wellcome PLC ............................. 1,592,238
50,079 Imperial Chemical Industries PLC ............... 447,059
41,592 Railtrack Group PLC ............................ 952,073
66,944 Reed International PLC ......................... 609,502
168,537 Somerfield PLC ................................. 863,820
105,931 Vodafone Group PLC ............................. 1,978,521
------------
11,625,439
------------
TOTAL COMMON STOCKS (COST $40,485,195) ......... $ 51,967,556
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.8% 2,051,701
------------
NET ASSETS -- 100.0% $ 54,019,257
============
(a) Non-income producing security.
See accompanying notes to financial statements.
31
<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 Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund (each a series of The
Williamsburg Investment Trust), including the portfolios of investments, as of
March 31, 1999, and the related statements of operations for the year then
ended, and the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of 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 audits 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, 1999 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 positions of
The Jamestown Balanced Fund, The Jamestown Equity Fund, The Jamestown Tax Exempt
Virginia Fund and The Jamestown International Equity Fund as of March 31, 1999,
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 the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
April 30, 1999
32
<PAGE>
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33
<PAGE>
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34
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
35
<PAGE>
THE JAMESTOWN FUNDS
INVESTMENT ADVISER
Lowe, Brockenbrough & Company, Inc.
6620 West Broad Street
Suite 300
Richmond, Virginia 23230
ADMINISTRATOR
Countrywide Fund Services, Inc.
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
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits:
---------
a. Declaration of Trust*
b. Bylaws*
c. Not Applicable
d. (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 FBP Contrarian
Balanced Fund and the FBP Contrarian Equity Fund*
(viii) Investment Advisory Agreements for The Government Street
Equity Fund, The Government Street Bond Fund and The
Alabama Tax Free Bond Fund*
(ix) Investment Advisory Agreement for The Davenport Equity
Fund*
e. Underwriting Agreement between Williamsburg Investment Trust and
CW Fund Distributors*
f. Not Applicable
g. (i) Custodian Agreement with The Northern Trust Company*
(ii) Custodian Agreement with Firstar Bank, N.A.*
<PAGE>
h. Administration, Accounting and Transfer Agency Agreement*
i. Opinion and Consent of Counsel*
j. Consent of Independent Certified Public Accountants
k. Not Applicable
l. Not Applicable
m. Plan of Distribution Pursuant to Rule 12b-1*
n. Not Applicable
o. Rule 18f-3 Plan Adopted With Respect to the Multiple Class
Distribution System*
- ---------------
* Previously filed as Exhibit to Registration Statement on Form N-1A
Item 24. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
No person is directly or indirectly controlled by or under common
control with the Registrant.
Item 25. 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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 26. Business and Other Connections of Investment Advisor
----------------------------------------------------
Lowe, Brockenbrough & Company, Inc. ("LB&C") 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&C 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&C, 6620 West Broad
Street, Suite 300, Richmond, Virginia 23230.
(1) Austin Brockenbrough III - Managing Director of LB&C.
(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. - Managing Director of LB&C.
(a) President of The Jamestown Balanced Fund and The Jamestown
Equity Fund.
(3) William F. Shumadine, Jr. - Senior Vice President of LB&C.
(4) Ernest H. Stephensen, Jr. - Vice President of LB&C.
(a) Vice President of The Jamestown Balanced Fund and The
Jamestown Equity Fund.
<PAGE>
(5) Charles M. Caravati III - Assistant Portfolio Manager of LB&C.
(a) Vice Present of The Jamestown International Equity 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.
(a) Vice President of FBP Contrarian
<PAGE>
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
Williamsburg Investment Trust, The Davenport Equity Fund. Davenport
also provides investment advice to corporations, trusts, pension and
profit sharing plans, other businesses and
<PAGE>
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 27. Principal Underwriter
---------------------
(a) CW Fund Distributors, Inc. (the "Distributor") also acts as
principal underwriter for other open-end investment companies:
Brundage, Story and Rose Investment Trust, The Caldwell & Orkin
Funds, Inc., Profit Funds Investment Trust, Firsthand Funds, the
Lake Shore Family of Funds, UC Investment Trust, The Winter
Harbor Fund and The James Advantage Funds.
(b) The following list sets forth the directors and executive
officers of the Distributor. Unless otherwise noted with an
asterisk(*), the address of the persons named below is 312 Walnut
Street, Cincinnati, Ohio 45202.
<PAGE>
*The address is 4500 Park Granada Boulevard, Calabasas,
California 91302.
Position Position
with with
Name Distributor Registrant
---- ----------- ----------
*Angelo R. Mozilo Chairman of None
the Board/
Director
*Andrew S. Bielanski Director None
*Thomas H. Boone Director None
*Marshall M. Gates Director None
Robert H. Leshner President/ None
Vice Chairman/
Chief Executive
Officer/Director
Maryellen Peretzky Vice President, None
Secretary
Robert L. Bennett Vice President, Treasurer
Chief Operations
Officer
Terrie A. Wiedenheft Vice President, None
Chief Financial
Officer, Treasurer
(c) Inapplicable
Item 28. 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 29. Management Services
-------------------
Not Applicable
Item 30. Undertakings
------------
Not Applicable
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it 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 28th day of July, 1999.
WILLIAMSBURG INVESTMENT TRUST
By: /s/ Tina D. Hosking
--------------------------
Tina D. Hosking,
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.
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 28, 1999
John T. Bruce (principal executive
officer)
/s/ Robert L. Bennett
- -------------------------- Treasurer (principal July 28, 1999
Robert L. Bennett 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/ Tina D. Hosking
----------------------
Tina D. Hosking
Attorney-in-Fact
July 28, 1999
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
a. Declaration of Trust*
b. Bylaws*
c. Not Applicable
d.(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 FBP Contrarian Balanced Fund
and the FBP Contrarian Equity Fund*
(viii) Investment Advisory Agreements for The Government Street Equity Fund,
The Government Street Bond Fund and The Alabama Tax Free Bond Fund*
(ix) Investment Advisory Agreement for The Davenport Equity Fund*
e. Underwriting Agreement for the FBP Contrarian Equity Fund and the FBP
Contrarian Balanced Fund*
f. Not Applicable
g.(i) Custodian Agreement with The Northern Trust Company*
(ii) Custodian Agreement with Firstar Bank, N.A.*
<PAGE>
h. Administration, Accounting and Transfer Agency Agreement*
i. Opinion and Consent of Counsel*
j. Consent of Independent Certified Public Accountants
k. Not Applicable
l. Not Applicable
m. Plan of Distribution Pursuant to Rule 12b-1*
n. Not Applicable
o. Rule 18f-3 Plan Adopted With Respect to the Multiple Class
Distribution System*
- ------------------
* Previously filed as Exhibit to Registration Statement on Form N-1A
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 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 30, 1999 on the financial
statements and financial highlights. Such financial statements and financial
highlights appear in each series' respective 1999 Annual Report to Shareholders
which accompanies the Statement of Additional Information.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 28, 1999
