Efund
The Talking Prospectus
October 5, 1995 as supplemented May 15, 1996
Dear Friend,
This prospectus is probably a bit different from the prospectuses of other
mutual funds. It is written -- not by a lawyer -- but by the people who work for
the E[bullet]fund. I hope you'll take some time to read it carefully (and retain
it for your future reference). I think you'll find we have some new and
interesting ideas about how to make money investing in mutual funds.
We believe there is a revolution going on in business today, and only certain
companies will be able to thrive in this new, faster-paced and environmentally
sensitive business environment. E[bullet]fund invests in these companies --
businesses with the potential to produce strong financial results today, as well
as create a world we will want to live in tomorrow.
Sincerely,
[photo of Sophia Collier]
/s/ Sophia Collier
Sophia Collier
President
The E[bullet]fund is a money market fund and a series portfolio of Citizens
Investment Trust, affectionately known as Citizens Trust or The Trust. Our
objective is current income consistent with safety and liquidity. Shares of
E[bullet]fund are neither insured nor guaranteed by the U.S. Government. We seek
to maintain a stable $1.00 Net Asset Value per share at all times, although
there is no assurance that we will be able to do so.
We also have a "Statement of Additional Information", dated October 5, 1995,
which provides detailed information on investment and operational policies. It
is filed with the Securities and Exchange Commission and incorporated into this
Prospectus by reference. If you would like a free copy please call us.
[Citizens Trust logo]
800-223-7010
Table of Contents
Introduction:
Dear Friend 1
Fee Information 2
Investment
Objectives, Policies and
Risk Factors 3
Organization
and Management of
the Trust 4
How to
Purchase Shares 5
How to
Redeem Shares 6
Mailing Address/
Wiring Instructions 6
Dividends, Distributions
and Taxes 7
The E[bullet]fund is an open-ended, diversified management company, not a bank.
These securities have not been approved or disapproved by the Securities And
Exchange Commission or any State Securities Commission nor has the Securities
And Exchange Commission or any State Securities Commission passed on the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
1
<PAGE>
The Talking Prospectus
TRUSTEES
The Trust is governed by an outside Board of Trustees who are elected by
shareholders to supervise the operations of the Trust in the interest of the
shareholders.
Trustee
[photo of William D. Glenn II]
William D. Glenn II, chair of the board of trustees, is executive director of
Continuum HIV Day Services in San Francisco.
CONFIDENTIALITY OF SHAREHOLDER TRANSACTIONS
"As Trustees we have a firm `no exceptions' policy stating that no such
shareholder information will be sold or shared with anyone, except as required
by law, or with the shareholder's permission."
Fee Information
Shareholder Transaction Expenses:
Maximum Sales Load Imposed
on Purchases (as a % of offering price).................... None
Maximum Sales Load Imposed
on Reinvested Dividends (as a % of offering price)......... None
Deferred Sales Load (as a % of amount redeemed)............ None
Redemption Fees (as a % of amount redeemed ................ None
Exchange Fee (per exchange).................................None
Annual Fee for Citizens Access Account......................$35.00
Annual Portfolio Operating Expenses:
Management Fee..............................................0.10%
Distribution Expense (12b-1 Fee)............................None
Other Expenses..............................................0.40%*
Total Portfolio Operating Expenses
After Reimbursement.........................................0.50%*
*Projected. Total operating expenses prior to reimbursement are expected to be
1.77%
Schedule of Costs for Other Services:
Checkbooks: First 20 are free; Box of 100...................$9.95
Per check fee...............................................None
Outgoing day wire transfer..................................$10.00
Incoming wire...............................................Free
2-day electronic payment (ACH)............................. 2/month free
$.50 each thereafter
Returned checks.............................................$25.00
There are no other costs associated with the E[bullet]fund other than those
listed above.
Example: You would have paid the following expenses on a $1,000 investment
assuming a 5% annual return and redemption at the end of each period:
1 Year 3 Years
E[bullet]fund $ 40 $ 121
This information is intended to assist you in understanding your various direct
and indirect costs and expenses of a $1,000 investment in the E[bullet]fund. The
example should not be considered a representation of past or future expenses or
past or future return. Actual expenses and actual return may be greater or less
than those included in the example above. The example includes the $35 annual
fee for the Citizens Access Account.
[Citizens Trust logo]
Head Office: One Harbour Place, Suite 525, Portsmouth, NH 03801
Research Office: 111 Pine Street, San Francisco, CA 94111
603-436-5152
800-223-7010
2
<PAGE>
Efund
Investment Objectives, Policies
and Risk Factors
We only invest in short-term money market instruments (short-term debt issued by
branches of the government, corporations, banks, or other financial
institutions) that we believe present minimal risk and we maintain a weighted
average maturity of 90 days or less for the Portfolio as a whole.
Government Securities
When we look at government securities, we only buy the ones that are issued or
guaranteed, as to both interest and principal, by agencies or other enterprises
of the United States government.
Commercial Paper
We will also buy high quality "commercial paper," which is short-term debt
issued by well-established corporations. One hundred percent of this short-term
debt must be rated A-1 by Standard & Poor's Corporation or have a comparably
high rating by another nationally recognized rating service. If a security is
only rated by one agency, it must be rated in one of the two highest ratings by
that agency. If a security is not rated, it must be as good as A-1 or P-1 in our
judgment. We also use our own research and experience to help assure our money
market securities have only a minimal credit risk.
Other types of debt that offer us a yield advantage are sometimes issued by
banks. These include certificates of deposit, time deposits, and bankers'
acceptances of U.S. banks or thrift institutions.
Despite our care and caution, the shares of the E[bullet]fund are neither
insured nor guaranteed by the U.S. Government and there is no assurance that it
will be able to maintain a stable net asset value of $1.00 per share.
Investment Policies
Citizens Trust has certain policies that we consider fundamental such as
consistently applying both social and financial screens to all our investment
decisions. This, together with the investment objective and other technical
investment policies described in the Statement of Additional Information, cannot
be changed without the approval of a majority of the outstanding shares of the
E[bullet]fund Portfolio.
Socially Responsible
When we invest we are always seeking profitable investments for our
shareholders. To find them, we favor companies which make good and useful
products and have positive environmental, community and workplace records. We
avoid companies which engage in discrimination or union busting; whose primary
business is the manufacture of alcohol, tobacco, firearms or nuclear power; and
those that use animals to test personal care products or otherwise treat animals
in an inhumane manner.
In addition to our policies on individual companies, we also have some general
policies on the overall structure of our portfolio.
[bullet] We try not to put all our eggs in one basket. This means that 100%
E[bullet]FUND OBJECTIVE
Current income consistent with safety, and liquidity.
Manager
[photo of Danita Wright]
Danita Wright
The primary Manager of E[bullet]fund, Danita is an associate at GMG/Seneca
Capital Management. Previously, Danita was employed by Merus Capital Management.
"Our goal is to earn a market rate of return (or better) for our shareholders by
investing in financially attractive companies whose operations have a positive
impact on the human and natural environment."
3
<PAGE>
The Talking Prospectus
Trustee
[photo of Wilma Mankiller]
WILMA MANKILLER was the principal chief of the Cherokee Nation, in Tahlequah,
Oklahoma, from 1985 to 1995. She presently serves on the board of the Ford
Foundation.
"The responsibility of Citizens Advisers is to translate the Trust's
fundamental policies into a workable investment program and to administer this
program in a smooth and friendly manner."
of a portfolio's assets will never hold more than 5% of any one company.
[bullet] We do not invest more than 25% of the value of the Portfolio in one
industry with the exception of the securities of U.S. government
agencies or domestic banks.
[bullet] We believe Citizens Trust's role is to be a conscientious and alert
investor, not a controlling manager; therefore, across all our
Portfolios, we will not accumulate more than 10% of the voting
securities of any one company.
[bullet] In pursuit of our objectives, we sometimes purchase securities issued
by companies that do not trade in the public market. To maintain a
good investment balance, we will limit these and all other liquid
securities to a total of no more than 10% of each Portfolio's assets.
[bullet] The E[bullet]fund may temporarily borrow money from banks (and pledge
its assets to secure such borrowing) to meet redemption requests, or
for other purposes. We will keep this borrowing down to no more than
10% of the value of each Portfolio's total assets. No purchases
whatsoever will be made while any loan is outstanding.
Organization and Management of the Trust
The E[bullet]fund is a series portfolio of Citizens Investment Trust which began
on November 24, 1982. It is a Massachusetts business trust and an open end
investment company, registered under the Investment Company Act of 1940 as a
diversified management company.
In order to manage the Trust on a day-to-day basis, we have signed a Management
agreement with our Investment Adviser, Citizens Advisers with offices at 111
Pine Street, San Francisco, CA 94111 and One Harbour Place, Portsmouth, NH
03801. Citizens Advisers has managed the Trust's assets since the Trust's
inception.
Citizens Advisers and its wholly-owned subsidiary, Citizens Securities, are both
California corporations. Sophia Collier is the 60% owner. Fellow shareholders
are three brothers, John P. Dunfey, Robert J. Dunfey, Sr., and Gerald F. Dunfey,
who own 12% each, and William B. Hart, who owns 4%.
The Role of Investment Adviser
Our investment adviser's job is to determine which companies meet the Trust's
investment criteria and will be carried on our "Approved List." Our compensation
is 10/100 of 1% of the portfolio's average annual net assets. To assist with
portfolio management they have retained at their own expense a sub-adviser,
named GMG/Seneca Capital Management, for a fee of 8/100 of 1% of E[bullet]fund's
average annual net assets. A registered investment adviser established in 1990,
GMG manages over $2 billion from its offices at 909 Montgomery Street, San
Francisco, CA. Organized as a California limited partnership, GMG/Seneca Capital
management has two general partners, Gail Seneca and Genesis Merchant Group,
L.P., an Illinois Limited Partnership. Genesis Merchant Group, in turn, has four
general partners: William K. Weinstein, Gail
4
<PAGE>
Efund
Seneca, Paul Jones, and Philip C. Stapleton. Prior to starting GMG/Seneca, Gail
was employed by Wells Fargo Bank as a senior investment officer.
The E[bullet]fund Refund
Every time you use your debit card our distributor, Citizens Securities, puts 1%
of the amount of your debit card purchases, not including cash advances or
automatic teller transactions, back into the Fund. This has the potential to
improve the E[bullet]fund's total return, subject to the limit that the amounts
paid to the E[bullet]fund, together with any other "non-qualifying" income
received by the Fund in any fiscal year, cannot exceed 9.75% of the Fund's gross
income for that year.
This limitation is intended to ensure that the Fund continues to meet the
requirement under the Internal Revenue Code that at least 90% of its income
comes from certain permitted sources, so that the Fund can maintain its status
as a "regulated investment company".
Services provided by Citizens Advisers to the Fund under a separate
administrative contract include such things as shareholder servicing and
sub-accounting, telephone and services related to the federal and state
regulatory filings. Citizens Advisers will sometimes contract to have services
provided by third parties, such as investment advisers for pension funds, or
other institutions who maintain omnibus accounts with the Trust.
The E[bullet]fund pays all expenses not expressly assumed by Citizens Advisers.
These include interest, taxes, audit and legal fees, custodian and transfer
agent charges, insurance premiums, cost of registering shares under federal and
state laws, dues, and any litigation costs, as well as the cost of typesetting,
printing, and distributing shareholder reports and prospectuses sent to
shareholders. When a cost is shared by several Portfolios, the staff at Citizens
Advisers will allocate the expense in a reasonable manner under the supervision
of the Board of Trustees.
Voting Rights
Shareholders are entitled to vote in proportion to their shares. Shares of each
Portfolio generally vote separately on matters that only concern that Portfolio.
However, all shareholders of the Trust vote together on the selection of
trustees and other matters as required by the investment Company Act of 1940.
The holders of shares have no preemptive, conversion, or subscription rights,
and voting rights are not cumulative. To save money we do not hold annual
meetings; however, special meetings may be called by our trustees or at the
request of 10% of the Trust shares. We will assist shareholders in communicating
with one another to arrange such a meeting.
How to Purchase and Redeem Shares
How to Buy Shares
The E[bullet]fund is open to clients of the Citizens Access Account. Many
shareholders take advantage of the "E" in the E[bullet]fund by investing
electronically either by direct payroll deposit or through another automated
Trustee
[photo of Azie Taylor Morton]
AZIE TAYLOR MORTON, audit chair, operates an investment management firm. She was
the 36th Treasurer of the United States.
"Among the E[bullet]fund's most important contracts is our arrangement on our
E[bullet]fund debit card. Every time you use it our distributor, Citizens
Securities, puts 1.00% of the amount of your debit card purchases, not including
cash advances or automatic teller transactions, back into the Fund."
5
<PAGE>
The Talking Prospectus
Trustee
[photo of Juliana Eades]
JULIANA EADES is the executive director of the New Hampshire Community Loan
Fund, one of the country's oldest local community economic development
institution.
MAILING AND
WIRING INSTRUCTIONS
Regular U.S. Mail:
Citizens Trust
Attn: PFPC Inc.
PO Box 8962
Wilmington, DE 19899-8962
Overnight Packages
(no U.S. mail, please):
Citizens Trust
Attn: PFPC Inc.
400 Bellevue Pkwy.
Wilmington, DE 19809
Phone: 302-791-1691
Our Wiring Instructions:
PNC Bank, N.A.
Philadelphia, PA
ABA#: 031000053
For Further Credit Acct. # 86-1030-3646
Shareholder name/acct. number
deposit program. This is a safe and easy way to go.
The maximum investment in the E[bullet]fund is $15,000 and we reserve the right
to decline any investment in excess of this limit. This limit is designed to
give investors who use the E[bullet]fund as their everyday account the full
benefit of the amounts generated through the E[bullet]fund Refund. We reserve
the right to refuse any order to purchase shares in the E[bullet]fund from any
shareholder who makes more than 35 withdrawals (other than debit card purchases)
from the E[bullet]fund per month.
Payroll Deduction
Setting up direct payroll deposit is very easy. Simply complete the information
on the payroll deposit section of the application. You can add new payroll
deduction information by writing us with the name, address and phone number of
your payroll administrator. In either case, we will contact your payroll
administrator with all the information they will need.
Funds will be deposited into your E[bullet]fund account using the Electronic
Funds Transfer System. We will provide the account number. Your payroll
department will let you know the date of the pay period when your investment
begins.
How to Redeem Shares
We offer you several convenient ways to redeem your shares in the E[bullet]fund.
Use a Debit Card:
The E[bullet]fund serves as a transaction account for holders of the Citizens
Access Account available through the Fund's distributor Citizens Securities.
Shareholders who use this account may request an optional debit card and use it
to redeem shares for cash at any ATM machine or to make purchases at any
merchant who accepts the debit card.
Call Us
We also have a Telephone Exchange and Redemption option on your account
application. Under this option you can call us and tell us how much you want us
to redeem. Depending upon your instructions, we will then deposit your
redemption into another Citizens Trust Portfolio account, mail you a check, or
electronically transfer your redemption to your pre-designated account. One day
wired funds cost $10, or, we offer two day service via the Automated Clearing
House (ACH). You will earn dividends up to and including the date when we
receive your redemption request.
Telephone Exchange and Redemption
If you do select the Telephone Exchange and Redemption option, you should be
aware that it may increase the risk of error or of an unauthorized party
gaining access to your account. To keep these problems to a minimum we record
all telephone calls. But please remember, neither the Trust, our Adviser, nor
our Transfer Agent will be responsible if we properly act on telephone
instructions we reasonably believe to be genuine. Normally, we will send you
your redemption on the next business day after we receive your request.
6
<PAGE>
Efund
Write a Check
When you open an account in the E[bullet]fund, we will send you a free starter
book of 20 checks with an order form to purchase additional checks ($9.95 for a
box of 100 checks). Although these checks are payable through a banking agent of
Citizens Trust, your account is not FDIC insured and your shares are subject to
fluctuations in value. You can write a check for any amount and there is no
charge per check. There will be a $25.00 charge for any checks returned for any
reason.
Written Request for Redemption
If you do not use Telephone Exchange and Redemption, you can still redeem your
shares at any time, although the process will take longer. Send us a written
request together with a signature guarantee. We may require further
documentation from corporations, fiduciaries, pension plans, and/or
institutional investors.
Redeem Your Shares in Person
Investors may also redeem their shares through Citizens Securities, or through
participating broker-dealers (who may charge a fee for this service). Certain
broker-dealers may have arrangements with the Trust that permit them to order
redemption of shares by telephone or facsimile transmission.
Shareholder Services and Policies
Exchange Privilege
We provide for easy exchanges among our Portfolios. You may make an exchange at
any time and to any Portfolio that is legally registered for sale in your state.
Just call or write with your request. Please see the prospectuses of the
Portfolios you are interested in for further details.
Systematic Withdrawal Plan
You can send us a written request to automatically redeem a portion of your
shares and make a regular monthly, quarterly, or annual payment on your behalf.
Making a Change in Your Account
After your account is set up, you may want to make a change in one of the
options or in the account title. We are pleased to assist, but in many cases
will require a signature guarantee from all registered owners of the accounts.
Escrow Policy
We reserve the right to wait up to seven business days to redeem any investments
that have been made by check or ACH transfer. Therefore, if you need to redeem
shares within seven business days of your purchase, please invest by wire.
Dividends, Distributions and Taxes
Friends, we are now moving into what is probably the least read section of any
mutual fund prospectus. If you have made it with us this far, we encourage you
to press on. Ready? Here we go!
Trustee
[photo of J.D. Nelson]
J.D. NELSON* is chief executive officer of RhumbLine Advisers, an investment
manager specializing in indexed and quantitative techniques.
*Interested person
(inside trustee)
Common
Transactions That
Require Signature
Guarantees:
[bullet] Written request for redemption
[bullet] Changing your account title in any way
[bullet] Authorizing telephone transaction
[bullet] Changing your predesignated wire or ACH instructions
[bullet] Establishing or modifying a systematic withdrawal plan
[bullet] Exchanges between accounts which do not have identical titles
Eligible Guarantors:
[bullet] Commercial Bank
[bullet] Trust Company
[bullet] Savings Associations
[bullet] Credit Unions
[bullet] Members of domestic stock exchange
Note:
Notaries public are not eligible guarantors.
7
<PAGE>
The Talking Prospectus
Trustee
ADA SANCHEZ is director of the Public Service and Social Change Program at
Hampshire College.
Tax Matters
The dividends you have earned are taxable to you as dividends (unless, of course
you are otherwise not subject to taxes). Remember, the exchange of shares is
treated as a sale, and an exchanging shareholder may, therefore, realize a
taxable gain or loss. You may also be subject to state and local taxes on
dividends and distributions from the Trust. Please consult your own tax
adviser.
Each year the E[bullet]fund expects to qualify as a separate regulated
investment company under the Internal Revenue Code by meeting certain income,
distribution and diversification requirements such as distributing all of the
Portfolio's net investment income and realized capital gains to shareholders in
a timely manner.
Unless you give us other instructions, we will automatically reinvest your
dividends and distributions at the Net Asset Value, calculated on the dividend's
payable date, to buy additional shares. We can also pay your dividends and
distributions to you by check or electronic transfer through the Automated
Clearing House to your bank account. The details of your dividends and other
distributions will be included on your statement. Payment of dividends and
distribution of capital gains, if any, are declared daily and paid monthly for
the E[bullet]fund.
How We Report Investment Results
There are a number of ways of reporting performance, and we'll walk through each
one that we use, but, when you look at any mutual fund, remember, actual
mileage may vary.
Every business day E[bullet]fund quotes both a '7-day yield' and a '7-day
effective yield.' To calculate the 7-day yield, we take our Net Investment
Income per share for the most recent 7 days and multiply it by 52 and then
divide by the Net Asset Value per share (expected always to be $1.00) to get a
percentage. The 'Effective Yield' assumes that you have reinvested your
dividends.
Total Return
We also calculate a total return for the E[bullet]fund on a daily basis. We do
this by adding the yield together with the Portfolio's other income including
income from debit card transactions, other income and capital changes, if any.
From time to time, the E[bullet]fund may advertise its total return for various
periods and compare it to unmanaged market indices, and other data and rankings
from recognized independent publishers.
Valuation of Shares
To calculate our Net Asset Value, we add up the total assets of the Portfolio,
subtract all liabilities and then divide by the number of shares outstanding.
To value money market securities we use an accounting system called the
amortized cost method. This system is described in the Statement of Additional
Information. To calculate the amount of the E[bullet]fund's share of the income
from the debit card we use a daily accrual method which is intended to
accurately reflect actual debit card income due from our distributor.
That's It!
[Citizens Trust logo]
Call 800-223-7010
8
