CAPITAL MANAGEMENT INVESTMENT TRUST, 497, 1999-01-15

CAPITAL MANAGEMENT INVESTMENT TRUST
497, 1999-01-15

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Cusip Number 140296302

________________________________________________________________________________

CAPITAL MANAGEMENT ENERGY FUND
A series of the
Capital Management Investment Trust

INSTITUTIONAL SHARES
________________________________________________________________________________

Prospectus
January 12, 1999

The Capital Management Energy Fund seeks long-term capital appreciation. Current
income is a secondary consideration in selecting portfolio investments.

Advisor
-------

Capital Management Associates, Inc.
140 Broadway
New York, New York 10005

1-888 626-3863

Neither the Securities and Exchange Commission nor any other regulatory body has
approved the securities being offered by this prospectus or determined whether
this prospectus is accurate and complete. It is unlawful for anyone to make any
representation to the contrary.
<PAGE>

TABLE OF CONTENTS

Page
----

THE FUND.......................................................................2
- --------
Investment Objective.....................................................2
Principal Investment Strategies..........................................2
Principal Risks Of Investing In The Fund.................................3
Fees And Expenses Of The Fund............................................4

MANAGEMENT OF THE FUND.........................................................5
- ----------------------
The Investment Advisor...................................................5
The Administrator........................................................6
The Transfer Agent.......................................................6
The Distributor..........................................................7

INVESTING IN THE FUND..........................................................7
- ---------------------
Minimum Investment.......................................................7
Purchase And Redemption Price............................................7
Purchasing Shares........................................................8
Redeeming Your Shares...................................................10

OTHER IMPORTANT INVESTMENT INFORMATION........................................12
- --------------------------------------
Dividends, Distributions And Taxes......................................12
Year 2000...............................................................12
Additional Information..........................................Back Cover

<PAGE>

THE FUND
--------

INVESTMENT OBJECTIVE

The investment objective of the Capital Management Energy Fund (the "Fund") is
to seek long-term capital appreciation. Current income is a secondary
consideration in selecting portfolio investments.

PRINCIPAL INVESTMENT STRATEGIES

The Fund pursues its investment objective by investing primarily in the
securities of large-, mid-, and small-cap companies involved in the energy field
("energy-related companies"), including companies whose business focuses on or
involves oil, gas, electricity, coal and all new or emerging sources of energy.
These energy-related companies are generally engaged in the discovery,
development, production or distribution of energy or other natural resources,
the development of technologies for the production or efficient use of energy
and other natural resources, or the furnishing of related supplies or services.
Energy-related companies may:

o participate in the discovery and development of natural resources;
o own or produce natural resources;
o provide natural resources transportation, distribution or processing
services;
o contribute new technologies for the production or efficient use of natural
resources;
o own or control oil, gas, or other mineral leases (which may or may not
produce recoverable energy or resources), rights or royalty interests; or
o provide services or supplies related to natural resources, such as drilling,
well servicing, chemicals, parts and equipment.

The Fund's investment in securities of energy-related companies will be
primarily in equity securities of such companies. Equity-related securities
include common and preferred stocks and securities convertible into common
stocks. Under normal market conditions, at least 90% of the Fund's total assets
will be invested in equity securities, and at least 80% of the Fund's total
assets will be invested in equity securities of energy-related companies.

In selecting securities of energy-related companies, the Fund's Advisor, Capital
Management Associates, Inc. (the "Advisor"), uses its basic, value-oriented
investment philosophy. This approach involves the Advisor developing an economic
forecast for each of over 500 energy-related companies. This process usually
includes visits with company management and contacts with industry experts and
suppliers.
<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE FUND

Small-Cap Stocks. Many U.S. corporations that are involved in the energy and
natural resources industries; however, currently smaller and less seasoned
companies. In this regard, while the Fund's portfolio will normally include
securities of established suppliers of traditional products and services, the
fund may also invest in smaller companies that may benefit from the development
of new products and services. These smaller companies may present greater
opportunities for capital appreciation, but may also involve greater risks.

Investing in the securities of small-cap companies generally involves greater
risk than investing in larger, more established companies. This greater risk is,
in part, attributable to the fact that the securities of small-cap companies
usually have more limited marketability and therefore, may be more volatile than
securities of larger, more established companies or the market averages in
general. Because small-cap companies normally have fewer shares outstanding than
larger companies, it may be more difficult to buy or sell significant amounts of
such shares without an unfavorable impact on prevailing prices. Another risk
factor is that small-cap companies often have limited product lines, markets or
financial resources and may lack management depth. Additionally, small-cap
companies are typically subject to greater changes in earnings and business
prospects than are larger, more established companies and there typically is
less publicly available information concerning small-cap companies than for
larger, more established companies.

Concentration. Another area of risk involves the concentration of the Fund's
assets in securities of energy related companies. Because the Fund's investments
are concentrated in the energy and natural resources industries, the value of
its shares is especially sensitive to factors relating to those industries and
may fluctuate more widely than the value of shares of a fund which invests in a
broader range of industries. For example, changes in crude oil prices may affect
both those industries which produce, refine and distribute petroleum products
and industries which supply alternate sources of energy. Thus, the Fund's
investments in energy related companies affected by the crude oil prices would
be substantially affected. Whereas, a fund with only limited exposure to this
particular area would not be as significantly affected.

Some of energy related industries are subject to greater government regulation
than many other industries. Therefore, changes in regulatory policies may have a
material effect on the business of companies in these industries.

Finally, investing in securities of companies in the energy industry is subject
to particular economic risks. Generally, capital expenditures necessary to
compete in the energy sector are significant. In this regard, the ability or
inability of energy related companies to obtain financial resources to fund
their operations may significantly affect any investment in these companies.
<PAGE>

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:

Shareholder Fees For Institutional Shares
(fees paid directly from your investment)
-----------------------------------------

Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) .................None
Redemption fee ...........................................None

Annual Fund Operating Expenses For Institutional Shares
(expenses that are deducted from Fund assets)
---------------------------------------------

Management Fees....................................1.00%
Distribution and/or Service (12b-1) Fees...........None
Other Expenses.....................................1.92%^1
----
Total Annual Fund Operating Expenses.................2.92%
Fee Waiver and/or Expense Reimbursement.............(1.42%)
----
Net Expenses.........................................1.50%
====

1. Since the Fund commenced operations on January 12,1999, Other
Expenses are based on amounts estimated for the current fiscal
year. The Advisor has entered into an Expense Limitation Agreement
with the Fund under which it has agreed to waive or reduce its
fees and to assume other expenses of the Fund, if necessary, in an
amount that limits Total Fund Operating Expenses (exclusive of
interest, taxes, brokerage fees and commissions, extraordinary
expenses, and payments, if any, under a Rule 12b-1 plan) to not
more than 1.50% of the Institutional Shares average daily net
assets. If the agreement were not in effect, the Total Annual
Operating Expenses for the year ending November 30, 1999 are
estimated to be 2.92% of the Institutional Shares daily net
assets. See "Expense Limitation Agreement" for more detailed
information.

Example: This Example shows you the expenses you may pay over time by investing
in the Fund. Since all funds use the same hypothetical conditions, it should
help you compare the costs of investing in the Fund versus other funds. The
Example assumes the following conditions:

(1) You invest $10,000 in the Fund for the periods shown;
(2) You reinvest all dividends and distributions;
(3) You redeem all of your shares at the end of those periods;
(4) You earn a 5% total return; and
(5) The Fund's expenses remain the same.
<PAGE>

Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above as well as those upon
redemption.

--------------------- ------------------ ------------------
Period Invested 1 year 3 years
--------------------- ------------------ ------------------
Your Costs $153 $474
--------------------- ------------------ ------------------

MANAGEMENT OF THE FUND
----------------------

THE INVESTMENT ADVISOR

The Fund's Advisor is Capital Management Associates, Inc., 140 Broadway, New
York, New York 10005. The Advisor serves in that capacity pursuant to an
advisory contract with the Trust on behalf of the Fund. Subject to the authority
of the Trustees, the Advisor provides guidance and policy direction in
connection with its daily management of the Fund's assets. The Advisor manages
the investment and reinvestment of the Fund's assets. The Advisor is also
responsible for the selection of broker-dealers through which the Fund executes
portfolio transactions, subject to the brokerage policies established by the
Trustees, and it provides certain executive personnel to the Fund.

The Advisor, organized as a New York corporation in 1982, is controlled by its
officers and directors, with the principal shareholders being J.V. Shields, Jr.;
David V. Shields; C. Lennis Koontz, II, CFA; and Joseph A. Zock. Mr. Zock and
seven full-time analysts serve as the Portfolio Management Team that selects the
investments for the Fund. The Shields brothers and Mr. Zock have been affiliated
with the Advisor since 1982. Mr. Koontz has been affiliated with the Advisor
since 1992. The Advisor has been managing the Fund since its inception and has
been providing investment advice to investment companies, individuals,
corporations, pension and profit sharing plans, endowments, and other business
and private accounts since 1982. The Advisor currently has approximately $1
billion in assets under management.

The Advisor's Compensation. As full compensation for the investment advisory
services provided to the Fund, the Fund pays the Advisor monthly compensation
based on the Fund's daily average net assets at the annual rate of 1.00% of the
first $100 million of the Fund's net assets, 0.90% of the next $150 million,
0.85% of the next $250 million and 0.80% of all assets over $500 million.

Expense Limitation Agreement. In the interest of limiting expenses of the Fund,
the Advisor has entered into an expense limitation agreement with the Trust,
with respect to the Fund ("Expense Limitation Agreement"), pursuant to which the
Advisor has agreed to waive or limit its fees and to assume other expenses so
that the total annual operating expenses of the Fund (other than interest,
taxes, brokerage commissions, other expenditures which are capitalized in
accordance with generally accepted accounting principles, other extraordinary
expenses not incurred in the ordinary course of the Fund's business, and
amounts, if any, payable pursuant to a Rule 12b-1 Plan) are limited to 1.50% of
the average daily assets of the Fund.
<PAGE>

The Fund may at a later date reimburse the Advisor the management fees waived or
limited and other expenses assumed and paid by the Advisor pursuant to the
Expense Limitation Agreement, provided the Fund has reached a sufficient asset
size to permit such reimbursement to be made without causing the total annual
expense ratio of the Fund to exceed the percentage limits stated above.
Consequently, no reimbursement by the Fund will be made unless: (i) the Fund's
assets exceed $10 million; (ii) the Fund's total annual expense ratio is less
than the percentage stated above; and (iii) the payment of such reimbursement
has been approved by the Trust's Board of Trustees on a quarterly basis.

The Investment Company Act of 1940, as amended ("1940 Act") generally prohibits
the Fund from engaging in principal securities transactions with an affiliate of
the Advisor. Thus, the Fund does not engage in principal transactions with any
affiliate of the Advisor. The Fund has adopted procedures, under Rule 17e-1
under the 1940 Act, that are reasonably designed to provide that any brokerage
commission the Fund pays to an affiliate of the Advisor does not exceed the
usual and customary broker's commission. In addition, the Fund will adhere to
Section 11(a) of the 1934 Act and any applicable rules thereunder governing
floor trading.

THE ADMINISTRATOR

The Nottingham Company, Inc. (the "Administrator") assists the Trust in the
performance of its administrative responsibilities to the Fund, coordinates the
services of each vendor of services to the Fund, and provides the Fund with
other necessary administrative, fund accounting and compliance services. In
addition, the Administrator makes available the office space, equipment,
personnel and facilities required to provide such services to the Fund.

THE TRANSFER AGENT

NC Shareholder Services, LLC ("NCSS") serves as the transfer agent and dividend
disbursing agent of the Fund. As indicated later in the section of this
Prospectus, "Investing in the Fund," NCSS will handle your orders to purchase
and redeem shares of the Fund, and will disburse dividends paid by the Fund.
<PAGE>

THE DISTRIBUTOR
---------------

Shields & Company is the principal underwriter and distributor of the Fund's
shares and serves as the Fund's exclusive agent for the distribution of Fund
shares. Shields & Company may sell the Fund's shares to or through qualified
securities dealers or others.

Other Expenses. In addition to the management fees and Rule 12b-1 fees for the
Investor Class shares, the Fund pays all expenses not assumed by the Fund's
Advisor, including, without limitation: the fees and expenses of its independent
accountants and of its legal counsel; the costs of printing and mailing to
shareholders annual and semi-annual reports, proxy statements, prospectuses,
statements of additional information and supplements thereto; the costs of
printing registration statements; bank transaction charges and custodian's fees;
any proxy solicitors' fees and expenses; filing fees; any federal, state or
local income or other taxes; any interest; any membership fees of the Investment
Company Institute and similar organizations; fidelity bond and Trustees'
liability insurance premiums; and any extraordinary expenses, such as
indemnification payments or damages awarded in litigation or settlements made.
All general Trust expenses are allocated among and charged to the assets of each
separate series of the Trust, such as the Fund, on a basis that the Trustees
deem fair and equitable, which may be on the basis of relative net assets of
each series or the nature of the services performed and relative applicability
to each series.

INVESTING IN THE FUND
---------------------

MINIMUM INVESTMENT

Institutional Class shares are sold and redeemed at net asset value. Shares may
be purchased by any account managed by the Advisor and any other institutional
investor or any broker-dealer authorized to sell shares in the Fund. The minimum
initial investment is $250,000 and the minimum additional investment is $500.
The Fund may, in the Advisor's sole discretion, accept certain accounts with
less than the minimum investment.

PURCHASE AND REDEMPTION PRICE

Determining the Fund's Net Asset Value. The price at which you purchase or
redeem shares is based on the next calculation of net asset value after an order
is accepted in good form. The Fund's net asset value per share is calculated by
dividing the value of the Fund's total assets, less liabilities (including Fund
expenses, which are accrued daily), by the total number of outstanding shares of
that Fund. The net asset value per share of the Fund is normally determined at
the time regular trading closes on the New York Stock Exchange (currently 4:00
p.m. Eastern time, Monday through Friday), except on business holidays when the
New York Stock Exchange is closed. In valuing the Fund's total assets, portfolio
securities are generally valued at their market value. Instruments with
maturities of 60 days or less are valued at amortized cost, which approximates
market value. Securities and assets for which representative market quotations
are not readily available are valued at fair value as determined in good faith
under policies approved by the Board of Trustees.
<PAGE>

Other Matters. Purchases and redemptions of shares of the same class by the same
shareholder on the same day will be netted for the Fund. All redemption requests
will be processed and payment with respect thereto will normally be made within
seven days after tenders. The Fund may suspend redemption, if permitted by the
1940 Act, for any period during which the New York Stock Exchange is closed or
during which trading is restricted by the Securities Exchange Commission ("SEC")
or if the SEC declares that an emergency exists. Redemptions may also be
suspended during other periods permitted by the SEC for the protection of the
Fund's shareholders. Additionally, during drastic economic and market changes,
telephone redemption privileges may be difficult to implement. Also, if the
Trustees determine that it would be detrimental to the best interest of the
Fund's remaining shareholders to make payment in cash, the Fund may pay
redemption proceeds in whole or in part by a distribution-in-kind of readily
marketable securities.

PURCHASING SHARES

Regular Mail Orders. Payment for shares must be made by check or money order
from a U.S. bank and payable in U.S. dollars. If checks are returned due to
insufficient funds or other reasons, the Fund will charge a $20 fee or may
redeem shares of the Fund already owned by the purchaser to recover any such
loss. For regular mail orders, please complete the attached Fund Shares
Application and mail it, along with your check made payable to the "Capital
Management Energy Fund," to:

Capital Management Energy Fund
Institutional Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

The application must contain your social security number and Taxpayer
Identification Number ("TIN"). If you have applied for a social security number
or TIN at the time of completing your account application but do not have such
number yet, please indicate this on the application. Taxes are not withheld from
distributions to U.S. investors if certain IRS requirements regarding the TIN
are met.

Bank Wire Orders. Purchases may also be made through bank wire orders. To
establish a new account or add to an existing account by wire, please call the
Fund at 1-888-626-3863, before wiring funds, to advise the Fund of the
investment, dollar amount, and the account identification number. Additionally,
please have your bank use the following wire instructions:
<PAGE>

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the Capital Management Energy Fund - Institutional Class Shares
Acct. # 2000001292954
For further credit to (shareholder's name and SS# or TIN#)

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
fund 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 21st day of the month. The shareholder may change
the amount of the investment or discontinue the plan at any time by writing to
the Fund.

Exchange Feature. You may exchange shares of the Fund for shares of any other
series of the Trust offered for sale in the state in which you reside. Shares
may be exchanged for shares of any other series of the Trust at the net asset
value plus the percentage difference between that series' sales charge and any
sales charge, if any, previously paid in connection with the shares being
exchanged. Prior to making an investment decision or giving us your instructions
to exchange shares, please read the prospectus for the series in which you wish
to invest.

A pattern of frequent purchase and redemption transactions is considered by the
Advisor to not be in the best interest of the shareholders of the Fund. Such a
pattern may, at the discretion of the Advisor, be limited by the Fund's refusal
to accept further purchase and/or exchange orders form an investor, after
providing the investor with 60 days prior notice.

The Board of Trustees reserves the right to suspend or terminate, or amend the
terms of, the exchange privilege upon 60 days written notice to the
shareholders.

Stock Certificates. You do not have the option of receiving stock certificates
for your shares. Evidence of ownership will be given by issuance of periodic
account statements that will show the number of shares owned.
<PAGE>

REDEEMING YOUR SHARES

Regular Mail Redemptions. Regular mail redemption request should be addressed
to:

Capital Management Energy Fund
Institutional Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Regular mail redemption request should include:

1) Your letter of instruction specifying the account number and number of
shares, or the 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" below); 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 normally will be sent to you within 7 days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days from
the date of purchase) may be reduced or avoided if the purchase is made by
certified check or wire transfer. In all cases, the net asset value next
determined after receipt of the request for redemption will be used in
processing the redemption request.

Telephone and Bank Wire Redemptions. You may also redeem shares by telephone and
bank wire under certain limited conditions. The Fund will redeem shares in this
manner when so requested by the shareholder only if the shareholder confirms
redemption instructions in writing.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:

1) Designation of Class (Institutional or Investor),
2) Shareholder name and account number,
3) Number of shares or dollar amount to be redeemed,
4) Instructions for transmittal of redemption funds to the shareholder, and
5) Shareholder signature as it appears on the application then on file with
the Fund.
<PAGE>

Redemption proceeds will not be distributed until written confirmation of the
redemption request is received, per the instructions above. 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. You can change your redemption
instructions anytime you wish by filing a letter including your new redemption
instructions with the Fund. See "Signature Guarantees" below.

The Fund in its discretion may choose to pass through to redeeming shareholders
any charges imposed by the Custodian for wire redemptions. The Custodian
currently charges the Fund $10.00 per transaction for wiring redemption
proceeds. If this cost is passed through to redeeming shareholders by the Fund,
the charge will be deducted automatically from your account by redemption of
shares in your account. Your bank or brokerage firm may also impose a charge for
processing the wire. If wire transfer of funds is impossible or impractical, the
redemption proceeds will be sent by mail to the designated account.

You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-888-626-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.

Small Accounts. All shares are purchased and redeemed in accordance with the
Fund's Amended and Restated Declaration of Trust and By-Laws. The Board of
Trustees reserves the right to redeem involuntarily any account having a net
asset value of less than $250,000 (due to redemptions, exchanges, or transfers,
and not due to market action) upon 60-days written notice. If the shareholder
brings his account net asset value up to at least $250,000 during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to federal income tax withholding.

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 to change exchange privileges or telephone and bank wire redemption
service other than through your initial account application, and (3) redemption
requests in excess of $50,000. Signature guarantees are acceptable from a member
bank of the Federal Reserve System, a savings and loan institution, credit union
(if authorized under state law), registered broker-dealer, securities exchange,
or association clearing agency and must appear on the written request for change
of registration, establishment or change in exchange privileges, or redemption
request.
<PAGE>

Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$250,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter, as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested in shares of the Fund or paid in cash. Call or
write the Fund for an application form.

OTHER IMPORTANT INVESTOR INFORMATION
------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

Under current federal income tax law, the Fund believes that it is entitled, and
the Fund intends that it shall be treated as a regulated investment company
("RIC") under Subchapter M of the Code. As a RIC, a Fund will not be subject to
federal tax on its net investment income and net realized capital gains to the
extent such income and gains are timely distributed to its shareholders.
Accordingly, the Fund intends to distribute all of its net investment income and
net realized capital gains to its shareholders. Unless otherwise instructed by
shareholders, all dividend distributions will be reinvested in full and
fractional shares of the Fund to which they relate.

Although the Fund intends that it will be operated so that there will be no
federal income or excise tax liability, if any such liability is incurred as a
result of failing to qualify as a RIC, the investment performance will be
adversely affected by the tax liability incurred and paid. In addition,
investing in foreign securities and currencies may be subject to foreign taxes
which could reduce the investment performance of the Fund.

Certain additional tax information appears in the Statement of Additional
Information.

YEAR 2000

Like other mutual funds, the Fund and the service providers for the Fund rely
heavily on the reasonably consistent operation of their computer systems. Many
software programs and certain computer hardware in use today, cannot properly
process information after December 31, 1999, because of the method by which
dates are encoded and calculated in such programs and hardware. This problem,
commonly referred to as the "Year 2000 Issue," could, among other things,
negatively impact the processing of trades, the distribution of securities, the
pricing of securities and other investment-related and settlement activities.
The Trust is currently obtaining and assessing information with respect to the
actions that have been taken and the actions that are planned to be taken by
each of its service providers to prepare their computer systems for the Year
2000. While the Trust expects that each of the Trust's service providers will
have adapted their computer systems to address the Year 2000 Issue, there can be
no assurance that this will be the case or that the steps taken by the Trust
will be sufficient to avoid any adverse impact to the Trust and each of its
funds.
<PAGE>

ADDITIONAL INFORMATION

________________________________________________________________________________

CAPITAL MANAGEMENT ENERGY FUND

INSTITUTIONAL SHARES
________________________________________________________________________________

Additional information about the Fund is available in the Fund's Statement of
Additional Information. The Fund's Annual and Semi-annual Reports include a
discussion of market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year.

These reports are available free of charge upon request by contacting us:

By telephone: 1-888-626-3863

By mail: Capital Management Energy Fund
Institutional Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365

By e-mail: [email protected]

On the Internet: www.ncfunds.com
---------------

Information about the Fund can also be reviewed and copied at the Securities
Exchange Commission's ("Commission") Public Reference Room in Washington, D.C.
Inquiries on the operations of the public reference room may be made by calling
the Commission at 1-800-SEC-0330. Reports and other information about the Fund
are available on the Commission's Internet sit at http://www.sec.gov and copies
of this information may be obtained, upon payment of a duplicating fee, by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-6009.

Investment Company Act file number 811-08822.
<PAGE>

Cusip Number 140296401

________________________________________________________________________________

CAPITAL MANAGEMENT ENERGY FUND
A series of the
Capital Management Investment Trust

INVESTOR SHARES
________________________________________________________________________________

Prospectus
January 12, 1999

The Capital Management Energy Fund seeks long-term capital appreciation. Current
income is a secondary consideration in selecting portfolio investments.

Advisor
-------

Capital Management Associates, Inc.
140 Broadway
New York, New York 10005

1-888 626-3863

TABLE OF CONTENTS

Page
----

INVESTING IN THE FUND..........................................................8
- ---------------------
Minimum Investment.......................................................8
Purchase And RedemptionPrice.............................................8
Purchasing Shares........................................................9
Redeeming Your Shares...................................................11

OTHER IMPORTANT INVESTMENT INFORMATION........................................13
- --------------------------------------
Dividends, Distributions And Taxes......................................13
Year 2000...............................................................14
Additional Information..........................................Back cover

<PAGE>

THE FUND
--------

INVESTMENT OBJECTIVE

The investment objective of the Capital Management Energy Fund (the "Fund") is
to seek long-term capital appreciation. Current income is a secondary
consideration in selecting portfolio investments.

PRINCIPAL INVESTMENT STRATEGIES

PRINCIPAL RISKS OF INVESTING IN THE FUND

Small-Cap Stocks. Many U.S. corporations that are involved in the energy and
natural resources industries are; however, currently smaller and less seasoned
companies. In this regard, while the Fund's portfolio will normally include
securities of established suppliers of traditional products and services, the
fund may also invest in smaller companies that may benefit from the development
of new products and services. These smaller companies may present greater
opportunities for capital appreciation, but may also involve greater risks.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:

Shareholder Fees For Investor Shares
(fees paid directly from your investment)
-----------------------------------------

Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) .......................3.00%
Redemption fee ...........................................None

Annual Fund Operating Expenses For Investor Shares
(expenses that are deducted from Fund assets)
---------------------------------------------

Management Fees....................................1.00%
Distribution and/or Service (12b-1) Fees...........0.75%
Other Expenses.....................................1.96%^1
----
Total Annual Fund Operating Expenses.................3.71%
Fee Waiver and/or Expense Reimbursement.............(1.46%)
----
Net Expenses.........................................2.25%
====

1. Since the Fund commenced operations on January 12,1999, Other
Expenses are based on amounts estimated for the current fiscal
year. The Advisor has entered into an Expense Limitation Agreement
with the Fund under which it has agreed to waive or reduce its
fees and to assume other expenses of the Fund, if necessary, in an
amount that limits Total Fund Operating Expenses (exclusive of
interest, taxes, brokerage fees and commissions, extraordinary
expenses, and payments, if any, under a Rule 12b-1 plan) to not
more than 1.50% of the Investor Shares average daily net assets.
If the agreement were not in effect, the Total Annual Operating
Expenses for the year ending November 30, 1999 are estimated to be
3.71% of the Investor Shares daily net assets. See "Expense
Limitation Agreement" for more detailed information.

Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above as well as those upon
redemption.

--------------------- ------------------ ------------------
Period Invested 1 year 3 years
--------------------- ------------------ ------------------
Your Costs $521 $982
--------------------- ------------------ ------------------

MANAGEMENT OF THE FUND
----------------------

THE INVESTMENT ADVISOR

The Advisor, organized as a New York corporation in 1982, is controlled by its
officers and directors, with the principal shareholders being J.V. Shields, Jr.;
David V. Shields; C. Lennis Koontz, II, CFA; and Joseph A. Zock. Mr. Zock and
seven full-time analysts serve as the Portfolio Management Team that selects the
investments for the Fund. The Shields brothers and Mr. Zock have been affiliated
with the Advisor since 1982. Mr. Koontz has been with the Advisor since 1992.
The Advisor has been managing the Fund since its inception and has been
providing investment advice to investment companies, individuals, corporations,
pension and profit sharing plans, endowments, and other business and private
accounts since 1982. The Advisor currently has approximately $1 billion in
assets under management.

Brokerage Practices. In selecting brokers and dealers to execute portfolio
transactions, the Advisor may consider research and brokerage services furnished
to the Advisor or its affiliates. Subject to seeking the most favorable net
price and execution available, the Advisor may also consider sales of shares of
the Fund as a factor in the selection of brokers and dealers. Certain securities
trades will be cleared through Shields & Company, a registered broker-dealer
affiliate of the Advisor and Distributor of the Fund. The Investment Company Act
of 1940 as amended ("1940 Act"), generally prohibits the Fund from engaging in
principal securities transactions with an affiliate of the Advisor. Thus, the
Fund does not engage in principal transactions with any affiliate of the
Advisor. The Fund has adopted procedures, under Rule 17e-1 under the 1940 Act,
that are reasonably designed to provide that any brokerage commission the Fund
pays to an affiliate of the Advisor does not exceed the usual and customary
broker's commission. In addition, the Fund will adhere to Section 11(a) of the
1934 Act and any applicable rules thereunder governing floor trading.

THE ADMINISTRATOR

THE TRANSFER AGENT

THE DISTRIBUTOR

Distribution of the Fund's Shares. For the Investor Class shares of the Fund,
the Fund has adopted a Distribution Plan in accordance with Rule 12b-1 (the
"Distribution Plan") under the 1940 Act. Pursuant to the Distribution Plan, the
Fund compensates its distributor, Shields & Company (the "Distributor"), for
services rendered and expenses borne in connection with activities primarily
intended to result in the sale of the Fund's Investor Class shares (this
compensation is commonly referred to as "12b-1 fees"). It is anticipated that a
portion of the 12b-1 fees received by the Distributor will be used to defray
various costs incurred or paid by the Distributor in connection with the
printing and mailing to potential investors of Fund prospectuses, statements of
additional information, any supplements thereto, and shareholder reports, and
holding seminars and sales meetings with wholesale and retail sales personnel
designed to promote the sale of Investor Class shares. The Distributor may also
use a portion of the 12b-1 fees received to provide compensation to financial
intermediaries and third-party broker-dealers for their services in connection
with the sale of Investor Class shares. Because the 12b-1 fees are paid out of
the Fund's assets on an on-going basis, these fees, over time, will increase the
cost of your investment and may cost you more than paying other types of sales
loads. The Distribution Plan provides that the Fund may pay annually up to 0.75%
of the average daily net assets of the Fund's Investor Class shares for
activities primarily intended to result in the sale of those shares, including
to reimburse entities for providing distribution and shareholder servicing with
respect to the Fund's Investor Class shares.

The Distribution Plan is known as a "compensation" plan because payments are
made for services rendered to the Fund with respect to Investor Class shares
regardless of the level of expenditures made by the Distributor. The Board of
Trustees of the Trust will, however, take into account such expenditures for
purposes of reviewing operations under the Distribution Plan and concerning
their annual consideration of the Plan's renewal. The Distributor has indicated
that it expects its expenditures to include, without limitation: (a) the
printing and mailing to prospective investors of Fund prospectuses, statements
of additional information, any supplements thereto and shareholder reports with
respect to the Investor Class shares of the Fund; (b) those relating to the
development, preparation, printing and mailing of advertisements, sales
literature and other promotional materials describing and/or relating to the
Investor Class shares of the Fund; (c) holding seminars and sales meetings
designed to promote the distribution of the Fund's Investor Class shares; (d)
obtaining information and providing explanations to wholesale and retail
distributors of the Fund's investment objectives and policies and other
information about the Fund; (e) training sales personnel regarding the Investor
Class shares of the Fund; and (f) financing any other activity that the
Distributor determines is primarily intended to result in the sale of Investor
Class shares.
<PAGE>

Other Expenses. In addition to the management fees and Rule 12b-1 fees for the
Investor Class shares, the Fund pays all expenses not assumed by the Fund's
Advisor, including, without limitation: the fees and expenses of its independent
accountants and of its legal counsel; the costs of printing and mailing to
shareholders annual and semi-annual report, proxy statements, prospectuses,
statements of additional information and supplements thereto; the costs of
printing registration statements; bank transaction charges and custodian's fees;
any proxy solicitors' fees and expenses; filing fees; any federal, state or
local income or other taxes; any interest; any membership fees of the Investment
Company Institute and similar organizations; fidelity bond and Trustees'
liability insurance premiums; and any extraordinary expenses, such as
indemnification payments or damages awarded in litigation or settlements made.
All general Trust expenses are allocated among and charged to the assets of each
separate series of the Trust, such as the Fund, on a basis that the Trustees
deem fair and equitable, which may be on the basis of relative net assets of
each series or the nature of the services performed and relative applicability
to each series.

INVESTING IN THE FUND
---------------------

MINIMUM INVESTMENT

Investor Class shares are sold subject to a sales charge of 3.00%, so that the
term "offering price" includes the front-end sales load. Shares are redeemed at
net asset value. Shares may be purchased by any account managed by the Advisor
and any broker-dealer authorized to sell Fund shares.

The minimum initial investment is $2,500 ($1,000 for Individual Retirement
Accounts ("IRAs"), Keogh Plans, 401(k) Plans, or purchases under the Uniform
Transfer to Minors Act). The minimum additional investment is $500. The Fund
may, in the Advisor's sole discretion, waive such minimum investment amounts.

PURCHASE AND REDEMPTION PRICE

In valuing the Fund's total assets, portfolio securities are generally valued at
their market value. Instruments with maturities of 60 days or less are valued at
amortized cost, which approximates market value. Securities and assets for which
representative market quotations are not readily available are valued at fair
value as determined in good faith under policies approved by the Board of
Trustees.
<PAGE>

PURCHASING SHARES

Capital Management Energy Fund
Investor Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

The application must contain your social security number and Taxpayer
Identification Number ("TIN"). If you have applied for a social security number
or TIN at the time of completing your account application but do not have such
number yet, please indicate this on the application. Taxes are not withheld from
distributions to U.S.
investors if certain IRS requirements regarding the TIN are met.

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the Capital Management Energy Fund - Investor Class Shares
Acct. # 2000001292954
For further credit to (shareholder's name and SS# or TIN#)

A pattern of frequent purchase and redemption transactions is considered by the
Advisor to not be in the best interests of the shareholders of the Fund. Such a
pattern may, at the discretion of the Advisor, be limited by the Fund's refusal
to accept further purchase and/or exchange orders form an investor, after
providing the investor with 60 days prior notice.

The Board of Trustees reserves the right to suspend or terminate, or amend the
terms of, the exchange privilege upon 60 days written notice to the
shareholders.

Rights of Accumulation. The sales charge applicable to a current purchase of
shares of the Fund by a person listed above is determined by adding the purchase
price of shares to be purchased to the aggregate value (at current offering
price) of shares of the Funds previously purchased and then owned, provided the
Distributor is notified by such person or his or her broker-dealer each time a
purchase is made which would so qualify. For example, a person who is purchasing
Energy Fund shares with an aggregate value of $50,000 and who currently owns
shares of the Funds with a value of $200,000 would pay a sales charge of 2.50%
of the offering price on the new investment.
<PAGE>

Letter of Intent. Sales charges may also be reduced through an agreement to
purchase a specified quantity of shares over a designated thirteen-month period
by completing the "Letter of Intent" section of the Account Application.
Information about the "Letter of Intent" procedure, including its terms, is
contained on the back of the Account Application.

Group Plans. Shares of the Funds may be sold at a reduced or eliminated sales
charge to certain Group Plans under which a sponsoring organization makes
recommendations to, permits group solicitation of, or otherwise facilitates
purchases by, its employees, members or participants. Information about such
arrangements is available from the Distributor.

REDEEMING YOUR SHARES

Regular Mail Redemptions. Regular mail redemption request should be addressed
to:

Capital Management Energy Fund
Investor Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Regular mail redemption request should include:

2) Any required signature guarantees (see "Signature Guarantees" below); 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.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:

Small Accounts. All shares are purchased and redeemed in accordance with the
Fund's Amended and Restated Declaration of Trust and By-Laws. The Trustees
reserve the right to redeem involuntarily any account having a net asset value
of less than $1,000 (due to redemptions, exchanges, or transfers, and not due to
market action) upon 60-days written notice. If the shareholder brings his
account net asset value up to at least $1,000 during the notice period, the
account will not be redeemed. Redemptions from retirement plans may be subject
to federal income tax withholding.

Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$10,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter, as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The shareholder may establish this service whether dividends and
distributions are reinvested in shares of the Fund or paid in cash. Call or
write the Fund for an application form.

OTHER IMPORTANT INVESTMENT INFORMATION
--------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

Certain additional tax information appears in the Statement of Additional
Information.

YEAR 2000

ADDITIONAL INFORMATION

________________________________________________________________________________

CAPITAL MANAGEMENT ENERGY FUND

INVESTOR SHARES
________________________________________________________________________________

These reports are available free of charge upon request by contacting us:

By telephone: 1-888-626-3863

By mail: Capital Management Energy Fund
Investor Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365

By e-mail: [email protected]

On the Internet: www.ncfunds.com
---------------

Investment Company Act file number 811-08822.
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

CAPITAL MANAGEMENT ENERGY FUND

January 12, 1999

A series of the
CAPITAL MANAGEMENT INVESTMENT TRUST

Capital Management Associates, Inc.
140 Broadway
New York, New York 10005
Telephone 1-888-626-3863

TABLE OF CONTENTS
-----------------
Page
----

INVESTMENT OBJECTIVE AND POLICIES..........................................B-1

INVESTMENT LIMITATIONS.....................................................B-2

MANAGEMENT AND SERVICE PROVIDERS...........................................B-4

ADDITIONAL INFORMATION ON PERFORMANCE......................................B-7

PORTFOLIO TRANSACTIONS.....................................................B-9

SPECIAL SHAREHOLDER SERVICES..............................................B-10

PURCHASE OF SHARES........................................................B-11

REDEMPTION OF SHARES......................................................B-14

NET ASSET VALUE...........................................................B-14

ADDITIONAL TAX INFORMATION................................................B-15

CAPITAL SHARES AND VOTING.................................................B-16

APPENDIX A................................................................B-18

This Statement of Additional Information (the "SAI") is meant to be read in
conjunction with the Prospectuses of the Capital Management Energy Fund (the
"Fund"), dated January 12, 1999, relating to the Fund's Institutional Shares and
Investor Shares and hereby incorporates by reference the Prospectus in its
entirety. Because this SAI is not itself a prospectus, no investment in shares
of the Fund should be made solely upon the information contained herein. Copies
of the Prospectus for Investor Class and Institutional Class Shares of the Fund
and Annual Reports may be obtained at no charge by writing or calling the Fund
at the address or phone number shown above. Capitalized terms used but not
defined herein have the same meanings as in each Prospectus.
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Capital Management Energy Fund (the "Fund") is a diversified series of the
Capital Management Investment Trust (the "Trust"), a registered open-end
management company. The Trust was organized on October 18, 1994, as a
Massachusetts business trust. The primary investment strategies and risks of the
Fund are described in the Prospectus for each Class of shares of the Fund. In
addition to the principal investment strategies discussed in the Fund's
Prospectus, the Fund may also employ the use of the financial instruments
described below in order to achieve its objective. The strategies set forth
below are not principle strategies of the Fund.

Repurchase Agreements. The Fund may acquire U.S. Government obligations or
corporate debt securities subject to repurchase agreements. A repurchase
agreement involves the purchase by the Fund of a security (normally a U.S.
Treasury obligation) and an agreement to resell the security at the same price,
plus specified interest to the counter-party (normally a member bank of the
Federal Reserve or a registered Government Securities dealer). Repurchase
agreements are considered "loans" under the Investment Company Act of 1940, as
amended (the "1940 Act"), collateralized by the underlying security. The Trust
will implement procedures to monitor on a continuous basis the value of the
collateral serving as security for repurchase obligations. Additionally, the
Advisor to the Fund, Capital Management Associates, Inc., will consider the
creditworthiness of the counter-parties with which it transacts these repurchase
agreements. If the counter-party fails to pay the agreed upon resale price on
the delivery date, the Fund will retain or attempt to dispose of the collateral.
The Fund's risk is that such default may include any decline in value of the
collateral to an amount which is less than 100% of the repurchase price, any
costs of disposing of such collateral, and any loss resulting from any delay in
foreclosing on the collateral. The Fund will not enter into any repurchase
agreement that will cause more than 15% of its net assets to be invested in
repurchase agreements extending beyond seven days, to the extent such agreements
are deemed illiquid securities.

Money Market Instruments. Money market instruments may include U.S. Government
obligations or corporate debt obligations (including those subject to repurchase
agreements), 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 Banker's Acceptances and Certificates of Deposit of
domestic branches of U.S. banks, Commercial Paper, and Variable Amount Demand
Master Notes ("Master Notes"). Banker's Acceptances are time drafts drawn on and
"accepted" by a bank. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquires a Banker's Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Banker's Acceptance carries the full faith and credit of
such bank. A Certificate of Deposit ("CD") is an unsecured, interest bearing
debt obligation of a bank. 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 one of the top two rating categories by
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("S&P"), Fitch Investors Service, Inc. ("Fitch"), or Duff & Phelps ("D&P"), or
if not rated, of equivalent quality in the Advisor's opinion. 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 bank, 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.

Illiquid Investments. The Fund may invest up to 15% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments, and through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). If through a change in values, net assets, or other
circumstances, the Fund were in a position where more than 15% of its net assets
were invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.

The investments in illiquid securities may involve a high degree of business and
financial risk and may result in substantial losses. Because of the illiquid
nature of these securities, the Fund may take longer to liquidate these
positions than would be the case for other more liquid securities. The Fund's
investment in these illiquid securities is subject to the risk that should the
Fund desire to sell any of these securities when a ready buyer is not available
at a price that is deemed to be representative of their fair market value, the
value of the Fund's net assets could be adversely affected.

Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the 1933 Act, securities which are otherwise not readily
marketable and repurchase agreements having a maturity of longer than seven
days. Securities which have not been registered under the 1933 Act are referred
to as private placements or restricted securities and are purchased directly
from the issuer or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid securities because of
the potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

In recent years, however, a large institutional market has developed for certain
securities that are not registered under the 1933 Act including repurchase
agreements, commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an efficient
institutional market in which the unregistered security can be readily resold or
on an issuer's ability to honor a demand for repayment. The fact that there are
contractual or legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments.

Rule 144A Securities will be considered illiquid and therefore subject to a
Portfolio's limit on the purchase of illiquid securities unless the Board or its
delegates determines that the Rule 144A Securities are liquid. In reaching
liquidity decisions, the Board of Trustees and its delegates may consider, inter
alia, the following factors: (i) the unregistered nature of the security; (ii)
the frequency of trades and quotes for the security; (iii) the number of dealers
wishing to purchase or sell the security and the number of other potential
purchasers; (iv) dealer undertakings to make a market in the security; and (v)
the nature of the security and the nature of the marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer).

Forward Commitment & 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.

INVESTMENT LIMITATIONS

The Fund has adopted the following fundamental 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. Unless otherwise indicated,
percentage limitations apply at the time of purchase.

As a matter of fundamental policy, the Fund may not:

1. Issue senior securities, borrow money, or pledge its assets, except
that it may borrow from banks as a temporary measure (a) for
extraordinary or emergency purposes, in amounts not exceeding 5% of its
total assets or (b) to meet redemption requests in amounts not
exceeding 33 1/3% of its total assets. The Fund will not make any
investments if borrowing exceeds 5% of its total assets until such time
as total borrowing represents less than 5% of Fund assets;

2. With respect to 75% of its total assets, 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 of any
class of securities of any one issuer (except that securities of the
U.S. government, its agencies, and instrumentalities are not subject to
this limitation);

3. Invest for the purpose of exercising control or management of another
issuer;

4. Purchase or sell commodities or commodities contracts; real estate
(including limited partnership interests, but excluding readily
marketable interests in real estate investment trusts or other
securities secured by real estate or interests therein or readily
marketable securities issued by companies that invest in real estate or
interests therein);

5. Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or
from an underwriter for an issuer, may be deemed to be an underwriting
under the federal securities laws;

6. Participate on a joint or joint and several basis in any trading
account in securities;

7. Invest its assets in the securities of one or more investment companies
except to the extent permitted by the 1940 Act; or

8. Make loans of money or securities, except that the Fund may invest in
repurchase agreements, money market instruments, and other debt
securities.

The following investment limitations are not fundamental and may be changed
without shareholder approval. As a matter of non-fundamental policy, the Fund
may not:

1. Invest in securities of issuers which have a record of less than three
years of 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;

2. Invest more than 15% of its net assets in illiquid securities. For this
purpose, illiquid securities include, among others, (a) securities for
which no readily available market exists or which have legal or
contractual restrictions on resale, (b) fixed-time deposits that are
subject to withdrawal penalties and have maturities of more than seven
days, and (c) repurchase agreements not terminable within seven days;

3. Invest in the securities of any issuer if those officers or Trustees of
the Trust and those officers and directors of the Advisor who
individually own more than 1/2 of 1% of the outstanding securities of
such issuer together own more than 5% of such issuer's securities;

4. 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.)
While the Fund has reserved the right to make short sales "against the
box," the Advisor has no present intention of engaging in such
transactions at this time or during the coming year;

5. Purchase foreign securities other than those traded on domestic U.S.
exchanges;

6. Write, purchase, or sell puts, calls, straddles, spreads, or
combinations thereof or futures contracts or related options, except to
the extent permitted by the Fund's prospectus or Statement of
Additional Information, as may be amended from time to time; or

7. Purchase or sell interests in oil, gas, or other mineral exploration or
development programs or leases (although it may invest in readily
marketable securities of issuers that invest in or sponsor such
programs or leases), except to the extent permitted by the Fund's
prospectus or Statement of Additional Information, as may be amended
from time to time.

MANAGEMENT AND SERVICE PROVIDERS

The Trust's Board of Trustees (the "Trustees") are responsible for the
management and supervision of the Fund. The Trustees approve all significant
agreements between the Trust, on behalf of the Fund, and those companies that
furnish services to the Fund. This section of the Statement of Additional
Information provides the persons who serve as Trustees and Officers to the Trust
and Fund, respectively, as well as the entities that provide services to the
Fund.

Trustees and Officers. Following are the Trustees and Officers of the Trust,
their age, their present position with the Trust or the Fund, and their
principal occupation during the past five years. Those Trustees who are
"interested persons" (as defined in the 1940 Act) by virtue of their affiliation
with either the Trust or the Advisor, are noted by an asterisk (*). Messrs.
David V. Shields and Joseph V. Shields, Jr. are brothers.

- --------------------------------------------------- ----------------------- ---------------------------------------------------
Anthony J. Walton, 55 Trustee Chief Executive Officer
230 Park Avenue Armstrong Holdings Corporation
Suite 1440 (investment and corporate finance advisory firm)
New York, New York 10169 New York, New York, since 1995;
Vice Chairman
Petsec Energy, Inc.
(exploration and production company), Sydney,
Australia, and Lafayette, Louisiana, since
1995; previously
Chief Executive Officer
Llama Company
Fayetteville, Arkansas
- --------------------------------------------------- ----------------------- ---------------------------------------------------
C. Frank Watson, III, 28 Secretary Vice President
105 North Washington Street The Nottingham Company
Rocky Mount, North Carolina 27802 (Administrator to the Fund)
Rocky Mount, North Carolina
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Julian G. Winters, 30 Treasurer Legal and Compliance Director
105 North Washington Street The Nottingham Company
Rocky Mount, North Carolina 27802 (Administrator to the Fund)
Rocky Mount, North Carolina since 1996; previously
Operations Manager, Tar Heel
Medical, Nashville, North Carolina
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Joseph A. Zock, 45 Vice-President Senior Vice President
140 Broadway Capital Management Associates, Inc.
New York, New York 10005 (Advisor to the Fund)
New York, New York
- --------------------------------------------------- ----------------------- ---------------------------------------------------
</TABLE>

Compensation. Trustees and Officers of the Trust who are interested persons of
the Trust or the Advisor will receive no salary or fees from the Trust. Other
Trustees will receive $2,000 each year plus $250 per Fund per meeting attended
in person and $100 per Fund per meeting attended by telephone. The Trust will
also reimburse each Trustee for his or her travel and other expenses relating to
attendance at such meetings.
<TABLE>
<S> <C> <C> <C> <C>

- ------------------------------- -------------------- ------------------------ ---------------------- ---------------------------
Name of Person Aggregate Pension or Retirement Estimated Annual Total Compensation From
Compensation Benefits Benefits Upon Fund and Fund Complex
Retirement Paid to Directors
- ------------------------------- -------------------- ------------------------ ---------------------- ---------------------------
Lucius E. Burch, III $2,450 None None $2,450
- ------------------------------- -------------------- ------------------------ ---------------------- ---------------------------
Thomas A. Saunders, III $2,600 None None $2,600
- ------------------------------- -------------------- ------------------------ ---------------------- ---------------------------
David V. Shields None None None None
- ------------------------------- -------------------- ------------------------ ---------------------- ---------------------------
Joseph V. Shields, Jr. None None None None
- ------------------------------- -------------------- ------------------------ ---------------------- ---------------------------
Anthony J. Walton $2,700 None None $2,700
- ------------------------------- -------------------- ------------------------ ---------------------- ---------------------------
</TABLE>

Principal Holders of Voting Securities. As of October 26, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of each Class of
the Fund. On the same date, there were no shareholders who owned more than 5% of
the outstanding shares of beneficial interest of the Fund.

Investment Advisor. Information about Capital Management Associates, Inc. (the
"Advisor"), 140 Broadway, New York, New York 10005 and its duties and
compensation as Advisor is contained in the Prospectus. The Advisor supervises
the Fund's investments pursuant to an Investment Advisory Agreement (the
"Advisory Agreement"). The Advisory Agreement is effective for a one-year period
and will be renewed thereafter 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 parties to the
Advisory Agreement or interested persons of any such party. The Advisory
Agreement is terminable without penalty on 60-days' notice by the Board of
Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund. The Advisory Agreement provides that it will terminate
automatically in the event of its assignment.

As compensation for its services to the Fund, the Advisor will receive a monthly
management fee based on the Fund's daily net assets at the annual rate of 1.00%
of the first $100 million of the Fund's net assets, 0.90% of the next $150
million, 0.85% of the next $250 million and 0.80% of all assets over 500
million.

Under the Advisory Agreement, the Advisor is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of such Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services; or a
loss resulting from willful misfeasance, bad faith, or gross negligence on the
part of the Advisor in the performance of its duties; or from its reckless
disregard of its duties and obligations under the Agreement.

The employees of the Advisor control the Advisor. Affiliates of the Advisor also
control the Distributor.

Administrator. The Trust has entered into a Fund Accounting and Compliance
Administration Agreement with The Nottingham Company (the "Administrator"), 105
North Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069, pursuant to which the Administrator receives a fee at the following
annual rates: on the first $50 million of the Fund's net assets, 0.20%; on the
next $50 million, 0.175%; on all assets over $100 million, 0.15%. In addition,
the Administrator currently receives a monthly fee of $2,000 for the first class
of the Fund and $750 for each additional class of the Fund for accounting and
recordkeeping services for the Fund. The Administrator also charges the Fund for
certain costs involved with the daily valuation of investment securities and is
reimbursed for out-of-pocket expenses. The Administrator charges a minimum fee
of $3,000 per month for all of its fees taken in the aggregate, analyzed
monthly.

The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones, and
other communications facilities and personnel competent to perform
administrative and clerical functions for the Fund; (4) supervise the
maintenance by third parties of such books and records of the Fund as may be
required by applicable federal or state law; (5) prepare or supervise the
preparation by third parties of all federal, state, and local tax returns and
reports of the Fund required by applicable law; (6) prepare and, after approval
by the Trust, file and arrange for the distribution of proxy materials and
periodic reports to shareholders of the Fund as required by applicable law; (7)
prepare and, after approval by the Trust, arrange for the filing of such
registration statements and other documents with the Securities and Exchange
Commission and other federal and state regulatory authorities as may be required
by applicable law; (8) review and submit to the officers of the Trust for their
approval invoices or other requests for payment of Fund expenses and instruct
the Custodian to issue checks in payment thereof; and (9) take such other action
with respect to the Fund as may be necessary in the opinion of the Administrator
to perform its duties under the agreement. The Administrator also provides
certain accounting and pricing services for the Fund.

Transfer Agent. The Trust has entered into a Dividend Disbursing and Transfer
Agent Agreement with NC Shareholder Services, LLC (the "Transfer Agent"), a
North Carolina limited liability company, to serve as transfer, dividend paying,
and shareholder servicing agent for the Fund. The Transfer Agent is compensated
for its services based upon a $15.00 fee per shareholder per year, subject to a
minimum fee of $750 per month. The address of the Transfer Agent is 107 North
Washington Street, Post Office Box 4365, Rocky Mount, North Carolina 27803-0365.

Distributor. Shields & Company (the "Distributor") is the principal underwriter
and distributor of Fund shares pursuant to a Distribution Agreement with the
Trust. The Distributor, which is affiliated with the Advisor, serves as
exclusive agent for the distribution of the shares of the Fund. The Distributor
may sell such shares to or through qualified securities dealers or others. The
Distributor receives commissions consisting of that portion of the sales charge
for Investor Shares remaining after the discounts which it allows to dealers.

J.V. Shields, Jr. and David V. Shields, affiliated persons of the Fund, are also
affiliated persons of the Advisor and the Distributor.

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 of
the 1940 Act for the Investor Shares (see "Management of the Fund - Distribution
Plan" in the Prospectus for the Investor Shares). As required by Rule 12b-1, the
Plan (together with the Distribution Agreement) has been approved by the Board
of Trustees and separately by a majority of the Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest in
the operation of the Plan and the Distribution Agreement.

Potential benefits of the Plan to the Fund include improved shareholder
services, savings to the Fund in transfer agency costs, savings to the Fund in
advisory fees and other expenses, benefits to the investment process through
growth and stability of assets, and maintenance of a financially healthy
management organization. The continuation of the Plan must be considered by the
Board of Trustees annually.

Under the Plan the Fund may expend up to 0.75% of the Investor Shares' average
daily net assets annually to finance any activity primarily intended to result
in the sale of Investor Shares and the servicing of shareholder accounts,
provided the Trust's Board of Trustees has approved the category of expenses for
which payment is being made. Such expenditures paid as service fees to any
person who sells Investor Shares may not exceed 0.25% of the Investor Shares'
average annual net asset value.

The Distribution Plan is of a type known as a "compensation" plan because
payments are made for services rendered to the Fund with respect to Investor
Class shares regardless of the level of expenditures by the Distributors. The
Trustees will, however, take into account such expenditures for purposes of
reviewing operations under the Distribution Plan and in connection with their
annual consideration of the Plan's renewal. The Distributors have indicated that
they expect their expenditures to include, without limitation: (a) the printing
and mailing of Fund prospectuses, statements of additional information, any
supplements thereto and shareholder reports for prospective Contract owners with
respect to the Investor Class shares of the Fund; (b) those relating to the
development, preparation, printing and mailing of advertisements, sales
literature and other promotional materials describing and/or relating to the
Investor Class shares of the Fund; (c) holding seminars and sales meetings
designed to promote the distribution of Fund Investor Class shares; (d)
obtaining information and providing explanations to wholesale and retail
distributors of Contracts regarding Fund investment objectives and policies and
other information about the Fund and its Funds, including the performance of the
Funds; (e) training sales personnel regarding the Investor Class shares of the
Fund; and (f) financing any other activity that the Distributors determine is
primarily intended to result in the sale of Investor Class shares.

Custodian. First Union National Bank of North Carolina (the "Custodian"), Two
First Union Center, Charlotte, North Carolina 28288-1151, serves as custodian
for the Fund's assets. The Custodian acts as the depository for the Fund,
safekeeps its portfolio securities, collects all income and other payments with
respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties as Custodian. For its services
as Custodian, the Custodian is entitled to receive from the Fund an annual fee
based on the average net assets of the Fund held by the Custodian.

Independent Auditors. The Board of Trustees of the Trust has selected the firm
of Deloitte & Touche LLP, 2500 One PPG Place, Pittsburgh, Pennsylvania
15222-5401, to serve as independent auditors for the Fund for the current fiscal
year and to audit the annual financial statements of the Fund, prepare the
Fund's federal and state tax returns, and consult with the Fund on matters of
accounting and federal and state income taxation.

Independent auditors audit the financial statements of the Fund at least once
each year. Shareholders will receive annual audited and semi-annual (unaudited)
reports when published and written confirmation of all transactions in their
account. A copy of the most recent Annual Report will accompany the Statement of
Additional Information whenever a shareholder or a prospective investor requests
it.

Legal Counsel. Dechert Price & Rhoads serves as legal counsel to the Capital
Management Investment Trust and the Fund.

ADDITIONAL INFORMATION ON PERFORMANCE

From time to time, the total return of the Fund may be quoted in advertisements,
sales literature, shareholder reports, or other communications to shareholders.
The Fund computes the "average annual total return" of the Fund by determining
the average annual compounded rates of return during specified periods that
equate the initial amount invested to the ending redeemable value of such
investment. This is done by determining the ending redeemable value of a
hypothetical $1,000 initial payment. This calculation is as follows:

P(1+T)^n = ERV

Where: T = average annual total return.
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000 from which
the maximum sales load is deducted.
n = period covered by the computation, expressed in terms
of years.

The Fund may also compute the aggregate total return of the Fund, which is
calculated in a similar manner, except that the results are not annualized.

The calculation of average annual total return and aggregate total return assume
an initial $1,000 investment and that there is a reinvestment of all dividends
and capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.

These performance quotations should not be considered as representative of the
Fund's performance for any specified period in the future.

The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, 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. The Fund may also measure its performance against the
Lipper Growth Fund Index, which ranks the performance of mutual funds that have
an objective of growth of capital. Comparative performance may also be expressed
by reference to a ranking prepared by a mutual fund monitoring service or by one
or more newspapers, newsletters, or financial periodicals. The Fund may also
occasionally cite statistics to reflect its volatility and risk. The Fund may
also compare its performance to other published reports of the performance of
unmanaged portfolios of companies. The performance of such unmanaged portfolios
generally does not reflect the effects of dividends or dividend reinvestment.
The Fund may also compare its performance to other reports of the performance of
managed accounts of the Advisor, such as the Capital Management Mid-Cap Fund,
another series of the Trust. Of course, there can be no assurance the Fund will
experience the same results. 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.

The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.

As indicated, from time to time the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:

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 to 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 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.

PORTFOLIO TRANSACTIONS

Subject to the general supervision of the Trust's Board of Trustees, the Advisor
is responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for the Fund.

The annualized portfolio turnover rate for the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period. The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less. Portfolio
turnover of the Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making Fund
decisions, and the Fund may engage in short-term trading to achieve its
investment objectives.

Purchases of money market instruments by the Fund are made from dealers,
underwriters, and issuers. The Fund currently does not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased directly from or sold directly to an issuer, no
commissions or discounts are paid.

Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument.

The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.

In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for the Fund. In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. The sale of Fund shares may
be considered when determining the firms that are to execute brokerage
transactions for the Fund. In addition, the Advisor is authorized to cause the
Fund to pay a broker-dealer which furnishes brokerage and research services a
higher commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities of the
Advisor to the Fund. Such brokerage and research services might consist of
reports and statistics relating to specific companies or industries; general
summaries of groups of stocks or bonds and their comparative earnings and
yields; or broad overviews of the stock, bond, and government securities
markets; and the economy.

Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review any
commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits inuring to the Fund. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which the Advisor exercises
investment discretion. Conversely, the Fund may be the primary beneficiary of
the research or services received as a result of securities transactions
effected for such other account or investment company.

The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor (including the Distributor, an affiliate of the Advisor) if it believes
it can obtain the best execution of transactions from such broker. The Fund will
not execute portfolio transactions through, acquire securities issued by, make
savings deposits in, or enter into repurchase agreements with the Advisor or an
affiliated person of the Advisor (as such term is defined in the 1940 Act)
acting as principal, except to the extent permitted by the Securities and
Exchange Commission ("SEC"). In addition, the Fund will not purchase securities
during the existence of any underwriting or selling group relating thereto of
which the Advisor, or an affiliated person of the Advisor, is a member, except
to the extent permitted by the SEC. Under certain circumstances, the Fund may be
at a disadvantage because of these limitations in comparison with other
investment companies that have similar investment objectives but are not subject
to such limitations.

Investment decisions for the Fund will be made independently from those for any
other series of the Trust, if any, and for any other investment companies and
accounts advised or managed by the Advisor. Such other investment companies and
accounts may also invest in the same securities as the Fund. To the extent
permitted by law, the Advisor may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions. When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund and
another investment company or account, the transaction will be averaged as to
price and available investments allocated as to amount in a manner which the
Advisor believes to be equitable to the Fund and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.

SPECIAL SHAREHOLDER SERVICES

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 confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Fund 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 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.

Systematic Withdrawal Plan. Shareholders owning shares with a value of $10,000
or more for Investor Shares and $250,000 or more for Institutional Shares 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) in order to
make the payments requested. The Fund has the capability of electronically
depositing the proceeds of the systematic withdrawal directly to the
shareholder's personal bank account ($5,000 minimum per bank wire). Instructions
for establishing this service are included in the Fund Shares Application,
enclosed in the Prospectus, or are available by calling the Fund. If the
shareholder prefers to receive his systematic withdrawal proceeds in cash, or if
such proceeds are less than the $5,000 minimum for a bank wire, checks will be
made payable to the designated recipient and mailed within seven 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" in the Prospectus). 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 60-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
1-888-626-3863 or by writing to:

Capital Management Energy Fund
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Purchases in Kind. The Fund may accept securities in lieu of cash in payment for
the purchase of shares in 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 readily
marketable portfolio securities 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 committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any 90-day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net asset value 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 above. 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 Fund.

PURCHASE OF SHARES

The purchase price of shares of the Fund is the net asset value next determined
after the order is received. Net asset value per share is calculated for
purchases and redemption of shares of the Fund by dividing the value of total
Fund assets, less liabilities (including Fund expenses, which are accrued
daily), by the total number of outstanding shares of that Fund. The net asset
value per share of the Fund is determined at the time trading closes on the New
York Stock Exchange (currently 4:00 p.m. Eastern time, Monday through Friday),
except on business holidays when the New York Stock Exchange is closed.

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 to 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. In
keeping with this purpose, a reduced minimum initial investment 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. The Fund may also sell shares at net asset value without a sales charge to
such persons. In addition, accounts having the same mailing address may be
aggregated for purposes of the minimum investment if they consent in writing to
sharing a single mailing of shareholder reports, proxy statements (but each such
shareholder would receive his/her own proxy) and other Fund literature.

Sales Charges. The public offering price of Investor Class shares of the Fund
equals net asset value plus a sales charge. The Distributor receives this sales
charge and may reallow it in the form of dealer discounts and brokerage
commissions as follows:
<TABLE>
<S> <C> <C> <C>

- ------------------------------------- ------------------------- ------------------------- -----------------------------------
Amount of Transaction At Public Charge As % of Net Sales Charge As % of Sales Dealers Discounts and
Offering Price Amount Invested Public Offering Price Brokerage Commissions as % of
Public Offering Price
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
Less than $250,000 3.09% 3.00% 2.80%
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
$250,000 but less than $500,000 2.56% 2.50% 2.30%
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
$500,000 or more 2.04% 2.00% 1.80%
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
</TABLE>

From time to time dealers who receive dealer discounts and brokerage commissions
from the Distributor may reallow all or a portion of such dealer discounts and
brokerage commissions to other dealers or brokers. Pursuant to the terms of the
Distribution Agreement, the sales charge payable to the Distributor and the
dealer discounts may be suspended, terminated or amended.

The dealer discounts and brokerage commissions schedule above applies to all
dealers who have agreements with the Distributor. The Distributor, at its
expense, may also provide additional compensation to dealers in connection with
sales of shares of the Fund. Compensation may include financial assistance to
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising campaigns regarding the Fund,
and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

Reduced Sales Charges

Concurrent Purchases. For purposes of qualifying for a lower sales charge
for Investor Class shares, investors have the privilege of combining concurrent
purchases of the Fund and one or more future series of the Trust affiliated with
the Advisor and sold with a sales charge. For example, if a shareholder
concurrently purchases shares in one of the future series of the Trust
affiliated with the Advisor and sold with a sales charge at the total public
offering price of $250,000, and Investor Shares in the Fund at the total public
offering price of $250,000, the sales charge would be that applicable to a
$500,000 purchase as shown in the appropriate table above. This privilege may be
modified or eliminated at any time or from time to time by the Trust without
notice thereof.

Rights of Accumulation. Pursuant to the right of accumulation, investors
are permitted to purchase Investor Class shares at the public offering price
applicable to the total of (a) the total public offering price of the Investor
Shares of the Fund then being purchased plus (b) an amount equal to the then
current net asset value of the purchaser's combined holdings of the shares of
all of the series of the Trust affiliated with the Advisor and sold with a sales
charge. To receive the applicable public offering price pursuant to the right of
accumulation, investors must, at the time of purchase, provide sufficient
information to permit confirmation of qualification, and confirmation of the
purchase is subject to such verification. This right of accumulation may be
modified or eliminated at any time or from time to time by the Trust without
notice.

Letters of Intent. Investors may qualify for a lower sales charge for
Investor Class shares by executing a letter of intent. A letter of intent allows
an investor to purchase Investor Class shares of the Fund over a 13-month period
at reduced sales charges based on the total amount intended to be purchased plus
an amount equal to the then current net asset value of the purchaser's combined
holdings of the shares of all of the series of the Trust affiliated with the
Advisor and sold with a sales charge. Thus, a letter of intent permits an
investor to establish a total investment goal to be achieved by any number of
purchases over a 13-month period. Each investment made during the period
receives the reduced sales charge applicable to the total amount of the intended
investment.

The letter of intent does not obligate the investor to purchase, or the Fund to
sell, the indicated amount. If such amount is not invested within the period,
the investor must pay the difference between the sales charge applicable to the
purchases made and the charges previously paid. If such difference is not paid
by the investor, the Distributor is authorized by the investor to liquidate a
sufficient number of shares held by the investor to pay the amount due. On the
initial purchase of shares, if required (or subsequent purchases, if necessary)
shares equal to at least five percent of the amount indicated in the letter of
intent will be held in escrow during the 13-month period (while remaining
registered in the name of the investor) for this purpose. The value of any
shares redeemed or otherwise disposed of by the investor prior to termination or
completion of the letter of intent will be deducted from the total purchases
made under such letter of intent.

A 90-day backdating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales charge);
the 13-month period would then begin on the date of the first purchase during
the 90-day period. No retroactive adjustment will be made if purchases exceed
the amount indicated in the letter of intent. Investors must notify the
Administrator or the Distributor whenever a purchase is being made pursuant to a
letter of intent.

Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Fund Shares
Application accompanying this Prospectus or is otherwise available from the
Administrator or the Distributor. This letter of intent option may be modified
or eliminated at any time or from time to time by the Trust without notice.

Reinvestments. Investors may reinvest, without a sales charge, proceeds
from a redemption of Investor Shares in Investor Shares or in shares of another
series of the Trust affiliated with the Advisor and sold with a sales charge,
within 90 days after the redemption. If the other Class charges a sales charge
higher than the sales charge the investor paid in connection with the shares
redeemed, the investor must pay the difference. In addition, the shares of the
Class to be acquired must be registered for sale in the investor's state of
residence. The amount that may be so reinvested may not exceed the amount of the
redemption proceeds, and a written order for the purchase of such shares must be
received by the Fund or the Distributor within 90 days after the effective date
of the redemption.

If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number of
shares purchased by reinvestment and the period of time that has elapsed after
the redemption, although for tax purposes, the amount disallowed is added to the
cost of the shares acquired upon the reinvestment.

Purchases by Related Parties and Groups. Reductions in sales charges apply
to purchases by a single "person," including an individual, members of a family
unit, consisting of a husband, wife and children under the age of 21 purchasing
securities for their own account, or a trustee or other fiduciary purchasing for
a single fiduciary account or single trust estate.

Reductions in sales charges also apply to purchases by individual members of a
"qualified group." The reductions are based on the aggregate dollar value of
shares purchased by all members of the qualified group and still owned by the
group plus the shares currently being purchased. For purposes of this paragraph,
a qualified group consists of a "company," as defined in the 1940 Act, which has
been in existence for more than six months and which has a primary purpose other
than acquiring shares of the Fund at a reduced sales charge, and the "related
parties" of such company. For purposes of this paragraph, a "related party" of a
company is: (i) any individual or other company who directly or indirectly owns,
controls, or has the power to vote five percent or more of the outstanding
voting securities of such company; (ii) any other company of which such company
directly or indirectly owns, controls, or has the power to vote five percent of
more of its outstanding voting securities; (iii) any other company under common
control with such company; (iv) any executive officer, director or partner of
such company or of a related party; and (v) any partnership of which such
company is a partner.

Sales at Net Asset Value. The Fund may sell shares at a purchase price
equal to the net asset value of such shares, without a sales charge, to
Trustees, officers, and employees of the Trust, the Fund and the Advisor, and to
employees and principals of related organizations and their families, and
certain parties related thereto, including clients and related accounts of the
Advisor. Clients of investment advisors and financial planners may also purchase
Investor Shares at net asset value if the investment advisor or financial
planner has made arrangements to permit them to do so with the Distributor. The
public offering price of shares of the Fund may also be reduced to net asset
value per share in connection with the acquisition of the assets of or merger or
consolidation with a personal holding company or a public or private investment
company.

Exchange Feature

Investors may exchange shares of the Fund for shares of any other comparable
series of the Trust. Shares of the Fund may be exchanged at the net asset value
plus the percentage difference between that series' sales charge and any sales
charge previously paid in connection with the shares being exchanged. For
example, if a 2% sales charge was paid on shares that are exchanged into a
series with a 3% sales charge, there would be an additional sales charge of 1%
on the exchange. Exchanges may only be made by investors in states where shares
of the other series are qualified for sale. An investor may direct the Fund to
exchange his shares by writing to the Fund at its principal office. The request
must be signed exactly as the investor's name appears on the account, and it
must also provide the account number, number of shares to be exchanged, the name
of the series to which the exchange will take place and a statement as to
whether the exchange is a full or partial redemption of existing shares.
Notwithstanding the foregoing, exchanges of shares may only be within the same
class or type of class of shares involved. For example, Investor Shares may not
be exchanged for Institutional Shares.

A pattern of frequent exchange transactions may be deemed by the Advisor to be
an abusive practice that is not in the best interests of the shareholders of the
Fund. Such a pattern may, at the discretion of the Advisor, be limited by the
Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The Board of
Trustees of the Trust also reserves the right to suspend or terminate, or amend
the terms of, the exchange privilege upon 60 days written notice to the
shareholders.

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 "NYSE") is closed for
other than customary weekend and holiday closings, or that trading on the NYSE
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 practical for
the Fund to dispose of securities owned by it, or to determine fairly the value
of its assets; and (iii) for such other periods as the Commission may permit.
The Fund may also suspend or postpone the recordation of the transfer of shares
upon the occurrence of any of the foregoing conditions. Any redemption may be
more or less than the shareholder's cost depending on the market value of the
securities held by the Fund. No charge is made by the Fund for redemptions other
than the possible charge for wiring redemption proceeds.

In addition to the situations described in the Prospectus under "How to Redeem
Shares," the Fund may redeem shares involuntarily to reimburse the Fund for any
loss sustained by reason of the failure of a shareholder to make full payment
for shares purchased by the shareholder or to collect any charge relating to a
transaction effected for the benefit of a shareholder which is applicable to
Fund shares as provided in the Prospectus from time to time.

NET ASSET VALUE

The net asset value per share of each Class of Shares of the Fund is determined
at the time trading closes on the NYSE (currently 4:00 p.m., New York time,
Monday through Friday), except on business holidays when the NYSE is closed. The
NYSE recognizes the following holidays: New Year's Day, President's Day, Martin
Luther King, Jr. Day, Good Friday, Memorial Day, Fourth of July, Labor Day,
Thanksgiving Day, and Christmas Day. Any other holiday recognized by the NYSE
will be considered a business holiday on which the net asset value of each Class
of Shares of the Fund will not be calculated.

The net asset value per share of each Class of the Fund is calculated separately
by adding the value of the Fund's securities and other assets belonging to the
Fund and attributable to that Class, subtracting the liabilities charged to the
Fund and to that Class, and dividing the result by the number of outstanding
shares of such Class. "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income; realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments;
any funds or payments derived from any reinvestment of such proceeds; and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Income, realized and unrealized capital gains and losses, and
any expenses of the Fund not allocated to a particular Class of the Fund will be
allocated to each Class of the Fund on the basis of the net asset value of that
Class in relation to the net asset value of the Fund. Assets belonging to the
Fund are charged with the direct liabilities of the Fund and with a share of the
general liabilities of the Trust, which are normally allocated in proportion to
the number of or the relative net asset values of all of the Trust's series at
the time of allocation or in accordance with other allocation methods approved
by the Board of Trustees. Certain expenses attributable to a particular Class of
shares (such as the distribution and service fees attributable to Investor
Shares) will be charged against that Class of shares. Certain other expenses
attributable to a particular Class of shares (such as registration fees,
professional fees, and certain printing and postage expenses) may be charged
against that Class of shares if such expenses are actually incurred in a
different amount by that Class, or if the Class receives services of a different
kind or to a different degree than other Classes, and the Board of Trustees
approves such allocation. Subject to the provisions of the Declaration of Trust,
determinations by the Board of Trustees as to the direct and allocable
liabilities, and the allocable portion of any general assets, with respect to
the Fund and the Classes of the Fund are conclusive.

In valuing the Fund's total assets, portfolio securities are generally valued at
their market value. Instruments with maturities of sixty days or less are valued
at amortized costs, which approximates market value. Securities and assets for
which representative market quotations are not readily available are valued at
fair value as determined in good faith under policies approved by the Trustees.

ADDITIONAL TAX INFORMATION

The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders. The discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.

The Fund, and any other series of the Trust, will be treated as a separate
corporate entity under the Code. The Fund intends to qualify and to remain
qualified as a regulated investment company. To so qualify, the Fund must elect
to be a regulated investment company or have made such an election for a
previous year and must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source of
its income for a taxable year. At least 90% of the gross income of the Fund must
be derived from dividends; interest; payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities, or foreign
currencies; and other income derived with respect to the Fund's business of
investing in such stock, securities, or currencies. Any income derived by the
Fund from a partnership or trust is treated as derived with respect to the
Fund's business of investing in stock, securities, or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the Fund in the same manner as by the
partnership or trust.

An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies, and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. The
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.

The Fund will designate any distribution of long-term capital gains as a capital
gain dividend in a written notice mailed to shareholders within 60 days after
the close of the Fund's taxable year. Shareholders should note that upon the
sale or exchange of Fund shares, if the shareholder has not held such shares for
at least six months, any loss on the sale or exchange of those shares will be
treated as long-term capital loss to the extent of the capital gain dividends
received with respect to the shares.

A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to distribute currently an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income prior to the end of each calendar year to avoid liability for this excise
tax.

If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded to regulated investment companies, all of its taxable
income will be subject to federal income tax at regular corporate rates (without
any deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the Fund's
current and accumulated earnings and profits.

The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the Internal
Revenue Service for failure to include properly on their return payments of
taxable interest or dividends, or who have failed to certify to the Fund that
they are not subject to backup withholding when required to do so, or that they
are "exempt recipients."

Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located, or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.

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. Long-term capital gains
distributions, if any, are taxable as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held.

Under current tax law, certain types of expenses incurred by the Fund must be
proportionately allocated as additional income to shareholders. As a result, the
amounts reportable by the Fund as taxable income, if any, may exceed the
dividends actually paid. Such proportionate allocation of Fund expenses, if any,
will be identified when tax information is distributed by 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

The Trust's Declaration of Trust currently authorizes the issuance of shares in
three series: the Capital Management Mid-Cap Fund, the Capital Management
Small-Cap Fund, and the Capital Management Energy Fund. Each series of shares
are divided into two Classes ("Institutional Shares" and "Investor Shares") as
described in the Prospectus. 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 non-cumulative 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: (a) any time by written instrument
signed by at least two-thirds of the number of Trustees prior to such removal;
(b) at any meeting of shareholders of the Trust by a vote of two-thirds of the
outstanding shares of the Trust; 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. Shareholders holding not less than 10% of the shares then
outstanding may require the Trustees to call 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 on the Board of
Trustees shall for any reason exist, the vacancy shall be filled by the
affirmative vote of a majority of the remaining Trustees, subject to certain
restrictions under the 1940 Act. Otherwise, there will normally be no meeting of
shareholders for the purpose of electing Trustees, and the Trust does not expect
to have an annual meeting of shareholders.
<PAGE>
APPENDIX A

DESCRIPTION OF RATINGS

The Fund will normally be at least 90% invested in equities. As a temporary
defensive position, however, when the Advisor determines that market conditions
warrant such investments, the Fund may invest up to 100% of its assets in
investment grade bonds, U.S. Government Securities, repurchase agreements, or
money market instruments ("Investment-Grade Debt Securities"). When the Fund
invests in Investment-Grade Debt Securities as a temporary defensive measure, it
is not pursuing its investment objective. Under normal circumstances, however,
the Fund may invest in money market instruments as described in the Prospectus.
The various ratings used by the nationally recognized securities rating services
are described below.

A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. 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 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
service, each rating is evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the rating services 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.

Standard & Poor's Ratings Group. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay interest and to repay
principal.

AA - Debt rated AA is considered to have a very strong capacity to pay
interest and to repay principal and differs from AAA issues only in a
small degree.

A - Debt rated A has a strong capacity to pay interest and to repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher-rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and to repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and to repay principal for bonds in this category than for
debt in higher rated categories.

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.

Bonds rated BB, B, CCC, CC, and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.

Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.

The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.
<PAGE>

Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc., ("Moody's") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

Aaa - Bonds that 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 edge." 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 that 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 - Debt that is rated A possesses many favorable investment attributes
and is to be considered as an upper-medium-grade obligation. 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 - Debt which is rated Baa is considered as a medium-grade
obligation, i.e., it is 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 debt
lacks outstanding investment characteristics and, in fact, has
speculative characteristics as well.

Moody's applies numerical modifiers (l, 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.

The Advisor does not consider bonds that are rated Ba, B, Caa, Ca, or C by
Moody's "Investment-Grade Debt Securities." Bonds rated Ba are judged to have
speculative elements because their future cannot be considered as well assured.
Uncertainty of position characterizes bonds in this class because the protection
of interest and principal payments often may be very moderate and not well
safeguarded.

Bonds that are rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the security over any long period for time may be small. Bonds that are rated
Caa are of poor standing. Such securities may be in default, or there may be
present elements of danger with respect to principal or interest. Bonds that are
rated Ca represent obligations that are speculative in a high degree. Such
issues are often in default or have other marked shortcomings. Bonds which are
rated C are the lowest rated class of bonds, and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings' trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

The following summarizes the highest rating used by Moody's for short-term notes
and variable-rate, demand obligations:

MIG-l; VMIG-l - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support, or demonstrated broad-based access to the market for
refinancing.
<PAGE>

Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - Bonds that are rated AAA are of the highest credit quality. The
risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.

AA - Bonds that are rated AA are 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 but adequate protection factors. The
risk factors are more variable and greater in periods of economic
stress.

BBB - Bonds rated BBB have below-average protection factors but are
still considered sufficient for prudent investment. There is
considerable variability in risk during economic cycles.

Bonds rated BB, B, and CCC by D&P are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and to make principal payments
in accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.

The rating Duff l is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff l+, Duff 1, and
Duff 1- within the highest rating category. Duff l+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

Fitch Investors Service, Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc., ("Fitch") for bonds that are deemed to be
"Investment-Grade Debt Securities" by the Advisor:

AAA - Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and to repay principal, which is unlikely to be affected by
reasonably foreseeable events.

AA - Bonds are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and to repay
principal is very strong, although not quite as strong as bonds rated
AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term
debt of these issuers is generally rated F-1+.

A - Bonds that are rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and to 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 rated BBB are considered to be investment grade and have
satisfactory credit quality. The obligor's ability to pay interest and
to 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.
The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

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.
<PAGE>

Bonds rated BB, B, and CCC by Fitch are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and to make principal payments
in accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.

The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments, and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+

F-2 - Instruments assigned this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 rating
<PAGE>

Cusip Number 140296609

________________________________________________________________________________

CAPITAL MANAGEMENT SMALL-CAP FUND
A series of the
Capital Management Investment Trust

INSTITUTIONAL SHARES
________________________________________________________________________________

Prospectus
January 12, 1999

The Capital Management Small-Cap Fund seeks long-term capital appreciation.
Current income is a secondary consideration in selecting portfolio investments.
In seeking to achieve its objective, this Fund will invest primarily in equity
securities of small capitalization companies.

Advisor
-------

Capital Management Associates, Inc.
140 Broadway
New York, New York 10005

1-888-626-3863

TABLE OF CONTENTS
-----------------

Page
----

THE FUND.......................................................................2
- --------
Investment Objective.....................................................2
Principal Investment Strategies..........................................2
Principal Risks Of Investing In The Fund.................................2
Fees And Expenses Of The Fund............................................3

MANAGEMENT OF THE FUND.........................................................4
- ----------------------
The Investment Advisor...................................................4
The Administrator........................................................5
The Transfer Agent.......................................................6
The Distributor..........................................................6

INVESTING IN THE FUND..........................................................6
- ---------------------
Minimum Investment.......................................................6
Purchase And Redemption Price............................................6
Purchasing Shares........................................................7
Redeeming Your Shares....................................................9

OTHER IMPORTANT INVESTMENT INFORMATION........................................11
- --------------------------------------
Dividends, Distributions And Taxes......................................11
Year 2000...............................................................11
Additional Information..........................................Back Cover
<PAGE>

THE FUND
--------

INVESTMENT OBJECTIVE

The investment objective of the Capital Management Small-Cap Fund (the "Fund")
is to seek long-term capital appreciation. Current income is a secondary
consideration in selecting portfolio investments.

PRINCIPAL INVESTMENT STRATEGIES

The Fund pursues its investment objective by investing primarily in equity
securities of small capitalization ("small-cap") companies. The Fund considers a
small-cap company to be one that has market capitalization, measured at the time
the Fund purchases the security, within the range of $100 million to $1 billion.

The Fund's investments in small-cap companies will be primarily in equity
securities of such companies, such as common and preferred stocks and securities
convertible into common stocks. The Fund intends to invest in a diversified
group of small-cap companies and will not concentrate it investments in any one
industry or group.

Under normal market conditions, the Fund will invest at least 90% of its total
assets in equity securities, of which at least 65% of its total assets will be
invested in the equity securities of small-cap companies. In selecting portfolio
securities, the Fund's Advisor, Capital Management Associates, Inc., uses
various screens and proprietary models that begin with a potential universe of
over 3,500 companies and seeks to select from that group companies whose current
share price is relatively undervalued. This process often includes visits with
company management and contacts with industry experts and suppliers. Final
investment decisions are made by the Advisor's Portfolio Management Team.

PRINCIPAL RISKS OF INVESTING IN THE FUND

The Fund is intended for aggressive investors seeking above-average gains and
willing to accept the risks involved in investing in the securities of small-cap
companies.

Although investing in securities of small companies offers potential
above-average returns if the companies are successful, the risk exists that the
companies will not succeed and the prices of the companies' shares could
significantly decline in value. Therefore, an investment in the Fund may involve
a greater degree of risk than an investment in other mutual funds that seek
capital growth by investing in more established, larger companies.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:

Shareholder Fees For Institutional Shares
(fees paid directly from your investment)
-----------------------------------------

Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) .......................None
Redemption fee ...........................................None

Annual Fund Operating Expenses For Institutional Shares
(expenses that are deducted from Fund assets)
---------------------------------------------

Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above as well as those upon
redemption.

MANAGEMENT OF THE FUND
----------------------

THE INVESTMENT ADVISOR

The Investment Company act of 1940, as amended ("1940 Act") generally prohibits
the Fund from engaging in principal securities transactions with an affiliate of
the Advisor. Thus, the Fund does not engage in principal transactions with any
affiliate of the Advisor. The Fund has adopted procedures, under Rule 17e-1
under the 1940 Act, that are reasonably designed to provide that any brokerage
commission the Fund pays to an affiliate of the Advisor does not exceed the
usual and customary broker's commission. In addition, the Fund will adhere to
Section 11(a) of the 1934 Act and any applicable rules thereunder governing
floor trading.

THE ADMINISTRATOR

THE TRANSFER AGENT

THE DISTRIBUTOR

INVESTING IN THE FUND
---------------------

MINIMUM INVESTMENT

PURCHASE AND REDEMPTION PRICE

PURCHASING SHARES

Capital Management Small-Cap Fund
Institutional Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the Capital Management Small-Cap Fund - Institutional Class Shares
Acct. # 2000001292938
For further credit to (shareholder's name and SS# or TIN#)

The Board of Trustees reserves the right to suspend or terminate, or amend the
terms of, the exchange privilege upon 60 days written notice to the
shareholders.
<PAGE>

REDEEMING YOUR SHARES

Regular Mail Redemptions. Regular mail redemption request should be addressed
to:

Capital Management Small-Cap Fund
Institutional Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Regular mail redemption request should include:

2) Any required signature guarantees (see "Signature Guarantees" below); 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.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:
<PAGE>

OTHER IMPORTANT INVESTMENT INFORMATION
--------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

Certain additional tax information appears in the Statement of Additional
Information.

YEAR 2000

ADDITIONAL INFORMATION

________________________________________________________________________________

CAPITAL MANAGEMENT SMALL-CAP FUND

INSTITUTIONAL SHARES
________________________________________________________________________________

These reports are available free of charge upon request by contacting us:

By telephone: 1-888-626-3863

By mail: Capital Management Small-Cap Fund
Institutional Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365

By e-mail: [email protected]

On the Internet: www.ncfunds.com
---------------

Investment Company Act file number 811-08822.
<PAGE>

Cusip Number 140296500

________________________________________________________________________________

CAPITAL MANAGEMENT SMALL-CAP FUND
A series of the
Capital Management Investment Trust

INVESTOR SHARES
________________________________________________________________________________

Prospectus
January 12, 1999

Advisor
-------

Capital Management Associates, Inc.
140 Broadway
New York, New York 10005

1-888-626-3863

TABLE OF CONTENTS
-----------------

Page
----

THE FUND.......................................................................2
- --------
Investment Objective........................................................2
Principal Investment Strategies.............................................2
Principal Risks Of Investing In The Fund....................................2
Fees And Expenses Of The Fund...............................................3

MANAGEMENT OF THE FUND.........................................................4
- ----------------------
The Investment Advisor......................................................4
The Administrator...........................................................5
The Transfer Agent..........................................................6
The Distributor.............................................................6

YOUR INVESTMENT IN THE FUND....................................................7
- ---------------------------
Minimum Investment..........................................................7
Purchase And RedemptionPrice................................................7
Purchasing Shares...........................................................8
Redeeming Your Shares......................................................10

OTHER IMPORTANT INVESTMENT INFORMATION........................................12
- --------------------------------------
Dividends, Distributions And Taxes.........................................12
Year 2000..................................................................13
Additional Information.............................................Back Cover

<PAGE>

THE FUND
--------

INVESTMENT OBJECTIVE

PRINCIPAL INVESTMENT STRATEGIES

PRINCIPAL RISKS OF INVESTING IN THE FUND

The Fund is intended for aggressive investors seeking above-average gains and
willing to accept the risks involved in investing in the securities of small-cap
companies.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:

Shareholder Fees For Investor Shares
(fees paid directly from your investment)
-----------------------------------------

Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) .......................3.00%
Redemption fee ...........................................None

Annual Fund Operating Expenses For Investor Shares
(expenses that are deducted from Fund assets)
---------------------------------------------

1. Since the Fund commenced operations on January 12,1999, Other
Expenses are based on amounts estimated for the current fiscal
year. The Advisor has entered into an Expense Limitation Agreement
with the Fund under which it has agreed to waive or reduce its
fees and to assume other expenses of the Fund, if necessary, in an
amount that limits Total Fund Operating Expenses (exclusive of
interest, taxes, brokerage fees and commissions, extraordinary
expenses, and payments, if any, under a Rule 12b-1 plan) to not
more than 1.50% of the Investor Shares average daily net assets.
If the agreement were not in effect, the Total Annual Operating
Expenses for the year ending November 30, 1999 are estimated to be
3.71% of the Investor Shares daily net assets. See "Expense
Limitation Agreement" for more detailed information.

Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above as well as those upon
redemption.

MANAGEMENT OF THE FUND
----------------------

THE INVESTMENT ADVISOR

Brokerage Practices. In selecting brokers and dealers to execute portfolio
transactions, the Advisor may consider research and brokerage services furnished
to the Advisor or its affiliates. Subject to seeking the most favorable net
price and execution available, the Advisor may also consider sales of shares of
the Fund as a factor in the selection of brokers and dealers. Certain securities
trades will be cleared through Shields & Company, a registered broker-dealer
affiliate of the Advisor and Distributor of the Fund. The Investment Company Act
of 1940, as amended (the "1940 Act"), generally prohibits the Fund from engaging
in principal securities transactions with an affiliate of the Advisor. Thus, the
Fund does not engage in principal transactions with any affiliate of the
Advisor. The Fund has adopted procedures, under Rule 17e-1 under the 1940 Act,
that are reasonably designed to provide that any brokerage commission the Fund
pays to an affiliate of the Advisor does not exceed the usual and customary
broker's commission. In addition, the Fund will adhere to Section 11(a) of the
1934 Act and any applicable rules thereunder governing floor trading.

THE ADMINISTRATOR

THE TRANSFER AGENT

THE DISTRIBUTOR

The Distribution Plan provides that the Fund may pay annually up to 0.75% of the
average daily net assets of the Fund's Investor Class shares for activities
primarily intended to result in the sale of those shares, including to reimburse
entities for providing distribution and shareholder servicing with respect to
the Fund's Investor Class shares.

YOUR INVESTMENT IN THE FUND
---------------------------

MINIMUM INVESTMENT

The minimum initial investment is $2,500 ($1,000 for Individual Retirement
Accounts ("IRAs")), Keogh Plans, 401(k) Plans, or purchases under the Uniform
Transfer to Minors Act. The minimum additional investment is $500. The Fund may,
in the Advisor's sole discretion, waive such minimum investment amounts.

PURCHASE AND REDEMPTION PRICE

PURCHASING SHARES

Capital Management Small-Cap Fund
Investor Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the Capital Management Small-Cap Fund - Investor Class Shares
Acct. # 2000001292938
For further credit to (shareholder's name and SS# or TIN#)

Additional Investments. You may also add to your account by mail or wire at any
time by purchasing shares at the then current public offering price. The minimum
additional investment is $500. Before adding funds by bank wire, please call the
Fund at 1-888-626-3863 and follow the above directions for wire purchases. Mail
orders should include, if possible, the "Invest by Mail" stub which is attached
to your Fund confirmation statement. Otherwise, please identify your account in
a letter accompanying your purchase payment. 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 fund 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 21st day of the month. The shareholder may change the
amount of the investment or discontinue the plan at any time by writing to the
Fund.

The Board of Trustees reserves the right to suspend or terminate, or amend the
terms of, the exchange privilege upon 60 days written notice to the
shareholders.
<PAGE>

Rights of Accumulation. The sales charge applicable to a current purchase of
shares of the Fund by a person listed above is determined by adding the purchase
price of shares to be purchased to the aggregate value (at current offering
price) of shares of the Funds previously purchased and then owned, provided the
Distributor is notified by such person or his or her broker-dealer each time a
purchase is made which would so qualify. For example, a person who is purchasing
Small-Cap shares with an aggregate value of $50,000 and who currently owns
shares of the Funds with a value of $200,000 would pay a sales charge of 2.50%
of the offering price on the new investment.

REDEEMING YOUR SHARES

Regular Mail Redemptions. Regular mail redemption request should be addressed
to:

Capital Management Small-Cap Fund
Investor Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Regular mail redemption request should include:

2) Any required signature guarantees (see "Signature Guarantees" below); 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.
<PAGE>

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 252-972-1908). The confirmation instructions must include:

OTHER IMPORTANT INVESTMENT INFORMATION
--------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

Certain additional tax information appears in the Statement of Additional
Information.

YEAR 2000

ADDITIONAL INFORMATION

________________________________________________________________________________

CAPITAL MANAGEMENT SMALL-CAP FUND

INVESTOR SHARES
________________________________________________________________________________

These reports are available free of charge upon request by contacting us:

By telephone: 1-888-626-3863

By mail: Capital Management Small-Cap Fund
Investor Class Shares
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365

By e-mail: [email protected]

On the Internet: www.ncfunds.com
---------------

Investment Company Act file number 811-08822.
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

CAPITAL MANAGEMENT SMALL-CAP FUND

January 12, 1999

A series of the
CAPITAL MANAGEMENT INVESTMENT TRUST

Capital Management Associates, Inc.
140 Broadway
New York, New York 10005
Telephone 1-888-626-3863

TABLE OF CONTENTS
-----------------
Page
----

INVESTMENT OBJECTIVE AND POLICIES...........................................B-1

INVESTMENT LIMITATIONS......................................................B-2

MANAGEMENT AND SERVICE PROVIDERS............................................B-4

ADDITIONAL INFORMATION ON PERFORMANCE.......................................B-7

PORTFOLIO TRANSACTIONS......................................................B-9

SPECIAL SHAREHOLDER SERVICES...............................................B-10

PURCHASE OF SHARES.........................................................B-11

REDEMPTION OF SHARES.......................................................B-14

NET ASSET VALUE............................................................B-14

ADDITIONAL TAX INFORMATION.................................................B-15

CAPITAL SHARES AND VOTING..................................................B-16

APPENDIX A.................................................................B-18

This Statement of Additional Information (the "SAI") is meant to be read in
conjunction with the Prospectuses of the Capital Management Small-Cap Fund (the
"Fund"), dated January 12, 1999, relating to the Fund's Institutional Shares and
Investor Shares and hereby incorporates by reference the Prospectus in its
entirety. Because this SAI is not itself a prospectus, no investment in shares
of the Fund should be made solely upon the information contained herein. Copies
of the Prospectus for Investor Class and Institutional Class Shares of the Fund
and Annual Reports may be obtained at no charge by writing or calling the Fund
at the address or phone number shown above. Capitalized terms used but not
defined herein have the same meanings as in each Prospectus.
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Capital Management Small-Cap Fund (the "Fund") is a diversified series of
the Capital Management Investment Trust (the "Trust"), a registered open-end
management company. The Trust was organized on October 18, 1994, as a
Massachusetts business trust. The primary investment strategies and risks of the
Fund are described in the Prospectus for each Class of shares of the Fund. In
addition to the principal investment strategies discussed in the Fund's
Prospectus, the Fund may also employ the use of the financial instruments
described below in order to achieve its objective. The strategies set forth
below are not principle strategies of the Fund.

Forward Commitment & 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.

INVESTMENT LIMITATIONS

As a matter of fundamental policy, the Fund may not:

3 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 this
limitation);

4. Invest for the purpose of exercising control or management of another
issuer;

5. Purchase or sell commodities or commodities contracts; real estate
(including limited partnership interests, but excluding readily
marketable interests in real estate investment trusts or other
securities secured by real estate or interests therein or readily
marketable securities issued by companies that invest in real estate or
interests therein);

6. Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or
from an underwriter for an issuer, may be deemed to be an underwriting
under the federal securities laws;

7. Participate on a joint or joint and several basis in any trading
account in securities;

8. Invest its assets in the securities of one or more investment companies
except to the extent permitted by the 1940 Act; or

9. Make loans of money or securities, except that the Fund may invest in
repurchase agreements, money market instruments, and other debt
securities.

The following investment limitations are not fundamental and may be changed
without shareholder approval. As a matter of non-fundamental policy, the Fund
may not:

5. Purchase foreign securities other than those traded on domestic U.S.
exchanges;

MANAGEMENT AND SERVICE PROVIDERS

- --------------------------------------------------- ----------------------- ---------------------------------------------------
Name, Age, Position(s) with Position with Principal Occupation(s)
Fund and/or Trust, and Address The Fund During Past 5 Years
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Lucius E. Burch, III, 56 Trustee Chairman and Chief Executive Officer
438 Rosemeade Lane Massey Burch Investment Group, Inc.
Naples, Florida 33999 (venture capital firm)
Nashville, Tennessee
- --------------------------------------------------- ----------------------- ---------------------------------------------------
C. Lennis Koontz, II, 55 President Senior Vice President
President Capital Management Associates, Inc.
140 Broadway (Advisor to the Fund)
New York, New York 10005 New York, New York
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Thomas A. Saunders, III, 61 Trustee General Partner
667 Madison Avenue Saunders Karp & Company
21st Floor (merchant bank)
New York, New York 10021 New York, New York
- --------------------------------------------------- ----------------------- ---------------------------------------------------
David V. Shields, 58 Trustee* Managing Director
140 Broadway Capital Management Associates, Inc.
New York, New York 10005 (Advisor to the Fund)
New York, New York;
Managing Director
Shields & Company
(Distributor of the Fund)
New York, New York
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Joseph V. Shields, Jr., 59 Chairman & Trustee* Chairman and Chief Executive Officer
140 Broadway Capital Management Associates, Inc.
New York, New York 10005 (Advisor to the Fund)
New York, New York;
Managing Director
Shields & Company
(Distributor to the Fund)
New York, New York
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Anthony J. Walton, 55 Trustee Chief Executive Officer
230 Park Avenue Armstrong Holdings Corporation
Suite 1440 (investment and corporate finance advisory firm)
New York, New York 10169 New York, New York, since 1995;
Vice Chairman
Petsec Energy, Inc.
(exploration and production company), Sydney,
Australia, and Lafayette, Louisiana, since
1995; previously
Chief Executive Officer
Llama Company
Fayetteville, Arkansas
- --------------------------------------------------- ----------------------- ---------------------------------------------------
C. Frank Watson, III, 28 Secretary Vice President
105 North Washington Street The Nottingham Company
Rocky Mount, North Carolina 27802 (Administrator to the Fund)
Rocky Mount, North Carolina
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Julian G. Winters, 30 Treasurer Legal and Compliance Director
105 North Washington Street The Nottingham Company
Rocky Mount, North Carolina 27802 (Administrator to the Fund)
Rocky Mount, North Carolina since 1996; previously
Operations Manager, Tar Heel
Medical, Nashville, North Carolina
- --------------------------------------------------- ----------------------- ---------------------------------------------------
Joseph A. Zock, 45 Vice-President Senior Vice President
140 Broadway Capital Management Associates, Inc.
New York, New York 10005 (Advisor to the Fund)
New York, New York
- --------------------------------------------------- ----------------------- ---------------------------------------------------
</TABLE>

The employees of the Advisor control the Advisor. Affiliates of the Advisor also
control the Distributor.

J.V. Shields, Jr. and David V. Shields, affiliated persons of the Fund, are also
affiliated persons of the Advisor and the Distributor.

Legal Counsel. Dechert Price & Rhoads serves as legal counsel to the Capital
Management Investment Trust and the Fund.

ADDITIONAL INFORMATION ON PERFORMANCE

P(1+T)^n = ERV

Where: T = average annual total return.
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000from which
the maximum sales load is deducted.
n = period covered by the computation, expressed in
terms of years.

The Fund may also compute the aggregate total return of the Fund, which is
calculated in a similar manner, except that the results are not annualized.

These performance quotations should not be considered as representative of the
Fund's performance for any specified period in the future.

PORTFOLIO TRANSACTIONS

SPECIAL SHAREHOLDER SERVICES

The Fund offers the following shareholder services:

Capital Management Small-Cap Fund
c/o NC Shareholder Services, LLC
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

PURCHASE OF SHARES

- ------------------------------------- ------------------------- ------------------------- -----------------------------------
Amount of Transaction At Public Charge As % of Net Sales Charge As % of Sales Dealers Discounts and
Offering Price Amount Invested Public Offering Price Brokerage Commissions as % of
Public Offering Price
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
Less than $250,000 3.09% 3.00% 2.80%
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
$250,000 but less than $500,000 2.56% 2.50% 2.30%
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
$500,000 or more 2.04% 2.00% 1.80%
- ------------------------------------- ------------------------- ------------------------- -----------------------------------
</TABLE>

Reduced Sales Charges

Exchange Feature

REDEMPTION OF SHARES

NET ASSET VALUE

ADDITIONAL TAX INFORMATION

CAPITAL SHARES AND VOTING

DESCRIPTION OF RATINGS

AAA - This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay interest and to repay
principal.

AA - Debt rated AA is considered to have a very strong capacity to pay
interest and to repay principal and differs from AAA issues only in a
small degree.

The following summarizes the highest rating used by Moody's for short-term notes
and variable-rate, demand obligations:

AAA - Bonds that are rated AAA are of the highest credit quality. The
risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.

AA - Bonds that are rated AA are 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 but adequate protection factors. The
risk factors are more variable and greater in periods of economic
stress.

BBB - Bonds rated BBB have below-average protection factors but are
still considered sufficient for prudent investment. There is
considerable variability in risk during economic cycles.

BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
to 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.
The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

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.

The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments, and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+

F-2 - Instruments assigned this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.